Dubai’s phenomenal wealth as the crown jewel of an energy rich nation is well documented. What is less known is how Dubai is poised to transform itself to an innovation based economy. The lucrative discovery of oil and diversification into higher value-add economic sectors have propelled what was once a tiny fishing village into a symbol of global affluence. This trend is set to continue, setting up Dubai as a regional hub for entrepreneurship and innovation. I witnessed the transformation first hand when I attended Endeavour Entrepreneur International Selection Panel (ISP) hosted in Dubai and had several meetings with the leading Dubai based VC funds, technology companies and acceleration programs.
The UAE is comprised of seven emirates, including the capital Abu Dhabi, as well as areas such as Sharjah, Ajman, and of course, Dubai itself. Dubai’s ambitious ruler and prime-minister of UAE, Sheikh Mohammed has been leading the transformation of the city into the global innovation hub, and has made education and innovation the main priority.
Structures such as the famous Burj Khalifa represent the pinnacle of modern engineering. The Hyperloop transportation? system will offer unrivalled high speed travel between Dubai and Abu Dhabi, and is expected to launch in 2019. Other ambitious plans include
Dubai plans to become the world’s first block chain-powered government. By 2020, Dubai wants all visa applications, bill payments and license renewals, which account for over 100 million documents each year, to be transacted digitally using block chain.
The UAE government facilitates the commercialization of these and similar ideas by offering free office space, and incubator programs which allow for development of its own innovation industry. These injections of funding have fuelled some of the most promising start-ups in the region thus far, and have led to the impressive growth in the number of new start-ups and dollars invested compared to previous years. According to Bloomberg more than US$3 billion was raised from Middle Easterners for technology investments in the region in 2017.
Venture capital is integral in the pursuit of additional technological breakthroughs. Wamda Capital and BECO Capital, both based in Dubai and backed by the IFC, the leading infrastructure investor, are just two of the many venture capital funds investing in MENA region.
Careem is the most notable example of venture capital success. Dominating Uber in the Middle East, the ride-hailing company is worth over US$1 Billion. Souq.com has been acquired by Amazon for US$650 million, and ecommerce platforms such as Noon are receiving huge investments by real estate investors who see obvious potential.
As it stands, both local and international investors are active participants in the development of start-ups throughout the UAE and wider MENA region. Many large technology brands, including Microsoft and Vodafone, are very active. Accelerator programs such as Endeavour Global and TechStars have also opened offices in Dubai.
However, the UAE and Dubai offer a stable political system and a well developed infrastructure. To allow private business from the West to settle in the mostly government run economy, the city set up multiple free trade zones. These zones use English common law and are exempt from taxation. They have been the key component of attracting international capital and workforce to Dubai for quite some time now. This, combined with strict law enforcement and a priority on protecting intellectual property, makes Dubai one of the safest place in MENA to set up a business.