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.
Innovation is the key
It’s easy to see Dubai for only its most obvious merits—luxury cars, magnificent hotels and shopping malls. But a deeper look reveals much more. Dubai’s country focus on bringing the best technology and innovation to UAE and generous investments in emerging start-ups is turning Dubai into the leading start-up hub in MENA (Middle East and North Africa) region.
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
• building the infrastructure for robot cops,
• flying cars and autonomous vehicles.
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.
Big ambitions for the future
The UAE’s dedication to innovation has increased its standing in the 2017 Global Innovation Index, which uses key performance indicators such as market sophistication and human capital to determine how active cities are in nurturing new technologies. Dubai is leading the whole MENA region and placing 35th overall globally; it’s also clear that Dubai is not resting on its achievements.
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.
Plenty of fresh, youthful talent
But it’s not just the array of funding that is supercharging Middle Eastern growth. Looking closer, I realized something else – Dubai has an overwhelmingly young and sophisticated workforce at its disposal.
The country is very serious when it comes to crafting the perfect future for the UAE. The promise of the region has attracted plenty of people from all over the world to the area, and the numbers are truly astounding. Of the 9.4 million people living in the UAE, a massive 85% are expatriates. As of 2016, Dubai had some of the highest population growth in the world. And a large number of new immigrants come to Dubai highly trained.
A landscape to be navigated
The opportunity present within the MENA is not without its challenges, and requires diligence and perseverance. The main issue is the fragmentation of the region as a whole. Most of the 22 jurisdictions in this area operate under different regulations, and maintain different currencies and business practices.
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.
Let SVB help open a global gateway
Dubai’s growth is another great example of why we at SVB believe you need a gateway to global opportunities like this. That’s why during the past 15 years, Silicon Valley Bank has been so invested in helping innovators, investors and their partners explore global expansion opportunities. The SVB Global Gateway group works with many international funds and VC-backed technology companies. Through our international network we help U.S. companies expand globally. SVB has offices in the UK, China and Israel, and works with partners in many additional countries. We partner with Stripe to support international entrepreneurs. Through the Stripe Atlas Program, international entrepreneurs may gain access to basic tools to start an international business.
If you are looking for an experienced financial partner as you consider going global, SVB can help you. Connect with us at Global Gateway.
All non-SVB named companies listed throughout this document are independent third parties and are not affiliated with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company.
This material, including without limitation to the statistical information herein, is provided for informational purposes only. The material is based in part on information from third-party sources that we believe to be reliable but which has not been independently verified by us, and, as such, we do not represent the information is accurate or complete. The information should not be viewed as tax, accounting, investment, legal or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment, or to engage in any other transaction.