BY Venture Partners Closes US$60 Million Fund III for AI-Native Startups

BY Venture Partners has closed its third fund at US$60 million, a vehicle reserved for AI-native startups. The close lifts the Dubai-headquartered firm's assets under management above US$200 million.

The Dubai Future District Fund anchors Fund III. Regional institutions, corporate venture arms and family offices make up the rest of the investor base, among them MultiLane, an AI and high-speed data infrastructure company, Transmed Capital, and Saudi Arabia's Idriss Family Office.

Fund III writes cheques of up to US$1 million per company and targets rounds from pre-seed to Series A. The thesis centres on startups using AI to rework enterprise workflows, and on businesses built to sell into international markets from the outset rather than proving themselves at home first.

Fifteen companies are already in the portfolio, against a plan for 40. The holdings include PQ Shield, Cosyne, Isometric, Huspy and Invisible. Fifteen positions against a 40-company target, with a US$1 million ceiling on each cheque, points to a long tail of small early bets rather than a handful of concentrated ones, and to a deployment schedule with room left in it.

Ghaith Yafi, a founding partner, said Fund III is built around backing AI-native companies with global ambitions. He said he wants to pull innovative AI businesses into the Middle East and connect them to the region's technology ecosystem.

Cross-border dealflow is the firm's established pattern. BY Venture Partners invests across more than 16 international markets, and two-thirds of its capital goes to work outside MENA, in North America and Europe. Its first two funds backed NymCard, Toters, Huspy, Onfido and Invisible Technologies; Huspy appears on both that list and Fund III's. Four companies from the first two funds reached unicorn status, two from each vehicle.

Four partners run the firm: Ghaith Yafi, Abdallah Yafi, Rami Jisr and Sohrab Jahanbani. All four built and exited companies before becoming investors, a record that carried weight with the anchor.

Nader Albastaki, managing director of DFDF, said the firm's ability to connect Dubai with international founders was central to the decision to commit. He described a model that brings global AI-native companies into Dubai while taking regional founders into international markets, an exchange he said Dubai's Economic Agenda D33 asks of the fund. He cited the partners' history of building and exiting companies and of managing capital through a full market cycle. How companies and founders flow across that bridge, he said, will be the basis for measuring the partnership.

The allocation sits in tension with the anchor's stated aim. Two-thirds of the firm's money is deployed outside MENA while DFDF is paying for a bridge into Dubai. The case for the split is that the traffic runs both ways: global companies pick up a regional base, and regional founders get introductions abroad.

Beyond the fund, BY Venture Partners holds a mandate backed by Lebanon's Ministry of Technology and AI to manage and operate the Lebanese Angel Investor Network. LAIN pairs Lebanese diaspora capital with early-stage founders in Lebanon and is meant to develop a pipeline of regional angel investors. The firm will reinvest 50% of its carried interest into rebuilding the country's startup ecosystem, routing part of its own profit share into a market where it is also assembling that angel pipeline.

The Gulf's appetite for AI and deeptech is widening, and Fund III lands in a more crowded field than its predecessors did. Oman's Phaze Ventures has launched two funds aimed at raising more than US$75 million for AI and deeptech investments. For BY Venture Partners, the differentiator on offer is distance travelled: a chequebook in Dubai, holdings spread across three continents, and a pitch to founders that the region is a market to enter rather than a headquarters to settle for.