Some 60% of investment funding for startups in the MENA region was given to projects based in the UAE in 2019, according to a report by startup data analysis company Magnitt.
Not only is this dominance of the startup capital pot historically the highest in the region, the UAE’s share of the profits is also growing year-on-year. And there are lots of reasons why the country is such a hotbed of startup and tech success, but in the main, it’s due to the government’s focus on diversifying the economy (i.e., moving away from a dependence on oil and gas) by 2030. And while the private sector is booming in the UAE, the country’s leadership has taken a leaf out of Franklin Delano Roosevelt’s book and realised that the private sector can’t survive without strong public sector governance and support.
But that also cuts both ways and is part of the reason the UAE has fostered such a strong culture of entrepreneurship and a startup mentality. The country leads the Middle East in the World Bank’s ‘Doing Business’ Ranking, as the 16th ranked country in the world for business friendliness, and the World Bank has also cited the UAE as an inspiration in terms of business-minded reforms.
A youthful approach to problem-solving
Another positive for startup culture is that the country is relatively young, having been incorporated as the United Arab Emirates in 1971 – and it’s that youth and the desire to always evolve that’s created such a buzz around new business in the UAE and in particular, the capital city (and largest emirate) of Abu Dhabi.
Walid Daniel Dib, the young tech founder of AI insurance transaction company Addenda, said he found Abu Dhabi ‘down-to earth’. “It’s a place where you’ll find decisions here are not necessarily always made in boardrooms or people in suits — they’re made by real people that understand the needs of a nimble and agile founder. For a startup, the thing that matters most is investment and clients hungry for innovation. And we found both of these things in Abu Dhabi.”
His Excellency Mohammed Ali Al Shorafa, chairman of the Abu Dhabi Department of Economic Development, as well as chairman of Hub71’s Board of Directors, an Abu Dhabi-based startup ecosystem where Dib’s company is based, agreed with that assessment: “The Abu Dhabi economy is shifting towards a knowledge-based model in which startups are a key priority,” he says. “To cultivate and develop this shift, the Abu Dhabi government has put in place mechanisms to shape and support its domestic infrastructure.”
The Abu Dhabi government’s Covid-19 response, which is part of its overall economic accelerator programme, Ghadan 21, is aimed at alleviating the cost of both setting up and continuing to run a business in the UAE with solutions on 16 different economic challenges for private-sector companies, mostly focused on tech startups.
Hub71 has a large part to play in that programme, says Shorafa: “Over the course of the past year, Hub71 has nurtured the growth of this ecosystem and strengthened the UAE capital’s position as a global hub for innovation. The Abu Dhabi startup community boasts a diverse collective across different sectors such as FinTech, AI, aerospace, education, healthcare and mobility; which originate from countries all over the world, such as USA, UK, Singapore, Canada, Jordan, Egypt, Morocco and many more.”
Hub71 also offers strategic collaboration with important, major players such as Microsoft, the Abu Dhabi Global Market (an international financial centre and free zone), Mubadala Investment Company (a global investment company with a mandate to create sustainable financial returns for Abu Dhabi), SoftBank Vision Fund (a capital fund specialized in growth capital and social impact investments) and leading accelerators like Techstars, Gothams and Plug&Play. In other words: Hub71 and Abu Dhabi are strategic partners for startups who are looking to make the next bold move with their business.
What exactly does Abu Dhabi offer to startups?
In practical terms, it offers an attractive package for foreign investors and startup owners. Recently, Abu Dhabi has loosened the strictures around SMEs, including the introduction of instant business licences – Abu Dhabi Global Market’s Tech Licence, starting at $700 USD, is available online and can be acquired in a matter of days.
In the past year, the Abu Dhabi Department of Economic Development has issued more than 7,400 operating licences to SMEs, such as online businesses and food trucks, allowing them to operate without the need for physical office space – certainly an attractive proposition in the post-Covid-19 world where virtual working is so vital.
When it comes to essential services like education and healthcare, Abu Dhabi earns top marks. The emirate is home to several international education providers, including renowned institutions like New York University Abu Dhabi, Sorbonne University Abu Dhabi, Brighton College Abu Dhabi, and Cranleigh Abu Dhabi. In healthcare, the UAE was rated best in the Middle East and 10th in the world in 2018, according to Bloomberg’s Health Care Efficiency Index.
The UAE has had plenty of success stories, from ride-hailing app Careem, which was acquired by Uber for $3.1bn, to online retailer Souq.com, purchased in 2018 by Amazon for $560m.