Moonbase Capital, a prominent search fund investment firm based in Spain, has launched its second investment fund valued at USD 15 million. The new vehicle aims to support entrepreneurs in acquiring and scaling small and medium-sized enterprises (SMEs) globally, with a strong focus on emerging markets like Latin America, Southeast Asia, and the Middle East. This expansion builds on the success of Moonbase’s first USD 10 million fund and targets a more diverse portfolio in terms of geography and investment scale.

Targeting Emerging Markets

This new fund signifies Moonbase Capital’s continued commitment to emerging markets, particularly in regions such as Saudi Arabia and the UAE, which will see 40% of the fund's allocation. The fund’s strategy aligns with the increasing opportunities presented by fast-growing economies where SMEs play a critical role in economic development. Moonbase Capital will target scalable, asset-light, and cash-rich companies with high profitability and recurring revenue models, predominantly in the B2B service sector.

According to Tarek El Gammal, Managing Partner of Moonbase Capital, “The appeal of search fund investing lies in its ability to combine venture capital’s high returns with private equity’s lower risk profile. Our new vehicle is poised to deliver a diversified portfolio that offers attractive returns.”

Fund Strategy and Focus

The USD 15 million fund will focus on acquiring stakes of 10-15% in roughly 15 companies over a 3-4 year period, with an average investment size of EUR 1.25 million. The primary goal is to back established businesses with strong fundamentals that demonstrate solid growth potential. This approach follows Moonbase’s established investment model of replacing the company’s CEO with an experienced entrepreneur who drives growth until the fund exits the investment, typically within 4-5 years.

Moonbase's approach is particularly well-suited for SMEs that require expertise and capital to scale operations. Its focus on emerging markets is a strategic move to tap into the growing demand for investment in the region, especially in areas with significant potential for innovation and development.

Expanding Geographical Reach

Building on the success of its first fund, which backed 35 searchers mainly across Europe, Moonbase’s second vehicle will have a more global focus. While Europe remains a core market, with 60% of investments allocated there, the firm has identified significant growth potential in Latin America, Southeast Asia, and the Middle East. Notably, Egypt is not currently a focus, although opportunities are being explored in Saudi Arabia and the UAE.

Moonbase's Managing Partner, Tamer El Bahay, emphasized the firm's eagerness to support searchers in identifying and scaling businesses in these regions. "Search funds represent an exciting asset class that enables talented operators to become entrepreneurs through acquisition. We're excited to leverage our networks and experience to help searchers drive these businesses to the next level."

Leadership and Expertise

Moonbase Capital’s leadership team, which includes experienced professionals like Tamer El Bahay and Tarek El Gammal, plays a crucial role in the firm’s operations. Both partners bring decades of experience in investment, operations, and finance across various industries, particularly in the SME sector. This extensive expertise allows the firm to provide not just capital, but also strategic support to the businesses in which it invests.

The entire leadership team, composed of Egyptian nationals, distinguishes Moonbase from many other firms. According to El Gammal, “We’ve all operated SMEs in developing markets, which sets us apart from other search fund investors. Our hands-on experience gives us a deeper understanding of the challenges and opportunities these businesses face.”

Moonbase Capital’s new investment vehicle is set to begin its fundraising process shortly, with the first close anticipated in Q1 2025. The firm expects the majority of capital to come from family offices and high-net-worth individuals, particularly in Europe, Egypt, and the Gulf Cooperation Council (GCC) countries. The new fund's structure and focus reflect the firm's ambition to continue supporting high-growth companies in rapidly expanding markets.

As Moonbase Capital moves forward with its plans, the launch of this second fund marks a significant milestone in its efforts to expand its global presence and influence within the search fund investment landscape. The combination of an experienced leadership team, strategic focus on emerging markets, and commitment to high-return, low-risk investment opportunities positions Moonbase Capital as a leader in the SME investment space.