A thriving innovation system, excellent regulatory environment, progressive government policies, and geographical location that offer strategic access to global markets are the basic components that can attract Venture Capital (VC) firms to a country. Going by this dictum, it is no wonder Dubai has emerged as the hotbed for VC funding since the emirate offers everything that VC firms are looking for in an investment friendly destination.
Venture Capital (VC) Investors’ rising flow of investments in the emirate’s startups is evidence enough and is attributed to the nation’s quick economic recovery from the pandemic-induced slowdown and a host government measures that create a congenial climate for VC funding. “VC plays an important role in increasing the competitiveness of our startups, particularly in innovative and technology-based areas,” asserts President and CEO, Dubai Chamber of Commerce and Industry, H.E. Hamad Buamim.
VC investments, undoubtedly, are happening across several sectors. They have, however, become a main source of funds for startups operating in food and health sectors especially after Covid-19. VC investors were encouraged by the increase in the demand for medical services during the pandemic, Buamim reveals, to support more health-tech companies. The United Arab Emirates (UAE), interestingly, is ranked among the most attractive countries in the world for entrepreneurs to start a business.
Latest Dubai Chamber statistics show MENA Region hosts 587 scaleups that raised VC funding to the tune of $9.1 billion which is a 47% increase since 2020. The UAE, however, leads the show hosting 251 scaleups raising 60% of the total VC funding at $ 5.4 billion. The data further confirms that it holds to its position as the de facto tech city hub of the region, aggregating 40% of MENA startups attracting the majority of funding and being home to most of the region’s tech giants.
“We have become a hub for VC investors,” says Hassan Al Hashemi, Vice President of International Relations at Dubai Chamber, and he lists out various government initiatives like free zone incubator programs that offer business-setup framework, co-working space, knowledge and partnerships. “We will continue supporting a growing number of startups and contribute to the country’s digital economy,” Hashemi assures.
Having found success in attracting VC funds, Dubai meanwhile, does not hide its ambition to emerge as a regional hub for crypto currencies. “This will bring in more VC investments,” adds Buamim pointing out how global VC investments in blockchain and crypto currencies reached a peak of $ 26 billion. “Many global investors and venture capitalists,” Buamim says, “are already supporting our home-grown crypto business.”
He is optimistic that the country’s blockchain and crypto initiatives would further accelerate the growth and expansion of crypto companies in the region with Dubai playing a key role. Interestingly, Dubai-based venture capitalist firm Cypher Capital recently launched $ 100 million seed fund aimed at investing in digital assets and crypto currencies. The company’s founder Bijan Alizadeh is also planning to open a crypto, blockchain and digital asset hub in Dubai.
The integrated-hub that Cypher is planning reportedly will offer a workspace to startups where they can pitch their ideas to potential investors. The startups would also be offered mentoring, legal and technical advice. Cypher’s ultimate idea, it appears, is to develop the hub into an industry-focused networking community. With a thriving startup ecosystem, industry experts say, the UAE and Dubai have successfully created a space making it attractive for venture capitalists to channelize their funds.
Disclaimer: This article is a part of featured content series on Business in Dubai