Abraaj Capital, the Dubai private equity firm, invested US$28 million (Dh102.8m) under its Riyada Enterprise Development (RED) fund into five regional start-up companies yesterday.
The fund, valued at $500m, is to be invested in health care, agriculture, technology and media.
RED was launched this year to serve as a investment platform to help to boost small businesses across the Middle East. It has received $150m from a unit of the US State Department, an additional $50m from Abraaj, and the rest from its investment base.
Abraaj declined to specify the size of each investment but said it represented a "significant minority" in all of the companies.
"The SME [small and medium enterprises] segment is very important to this region," said Tom Speechley, a partner with Abraaj Capital and the chief executive of RED.
"Quite simply, unless SMEs prosper, we have no prospect in addressing the social and economic challenges over the next 10 years.
"Unless we create 50 million new jobs in the region, the economic situation would be nothing short of catastrophic."
Some of the better-known companies RED has invested in include Teshkeel Media Group, home of The 99, a comic book series based on Islamic culture and society, and D1G.com, a Jordanian web portal.
Teshkeel's fortunes have risen thanks to a recent crossover series, with Batman and Superman appearing in issues of The 99 comics. D1G.com has released tools to help its users create their own social-networking sites.
"We look at this investment as a validation of D1G as a business model," said Majied Qasem, the company's co-founder.
"The number of Arab online users is reaching a tipping point and is giving birth to a new sustainable business model which will help to grow the amount of Arabic content online."
The fund has also invested in E3, a technology company that specialises in healthcare service management, and OMS, a technology consultancy based in Egypt. It also invested in an Egyptian food company that specialises in growing artichokes.
E3 will use its funding to expand across the MENA region, said Muwaffa Lahham, the chief executive of the company, which manages technology services for 25 hospitals in Saudi Arabia, Qatar and the UAE.
Meanwhile, Egypt's ministry of communications and information technology has announced it will invest $12m into Abraaj Capital's Egyptian fund, which falls under the RED umbrella.