Limited-Time Promo: $588 $470 for Crunchbase Pro | Use code CLOSEOUTQ2

Why Dubai is Becoming a Global Startup Hot Spot

Dubai is about to turn into a global startup hot spot. That’s the key message emerging from the recently launched UAE Venture Outlook 2022 report produced by Dubai Chamber, Mind the Bridge and Crunchbase.

Men and women sitting around a meeting table in Dubai
 

After spending a week in Dubai in meetings with local stakeholders, here are my four main takeaways:

 

1. There is (scaleup) life beyond Israel

There is innovation outside of Israel, “the startup nation,” with 587 scaleups originating across 19 countries in the Middle East and North Africa ranging from Morocco to the Gulf Cooperation Councils. There is still not a large concentration (except for UAE), but the area is growing rapidly. In the past two to three years, numbers doubled year over year, as shown in the table below.

The growth is driven by strong support from governments. One-third of the total funding made available to MENA scaleups comes from rounds that saw the participation of corporate—involved in 63 percent of the rounds—and government institutions or public-supported funds. On the latter, it is worth mentioning that in the past few years, Saudi Arabia has also started investing heavily into innovation and could provide an extra boost (assuming it will improve its international presence).

 
top 15 MENA countries for tech scaleups
 

2. You can smell a “scaling feeling” in the air

All the people visiting Expo 2020 could sense it. As Tomaso Rodriguez, CEO at Talabat (the company that would have been the first Arab Unicorn if it was not acquired by Delivery Hero) told me at the Opening of the MENA Scaleup Summit: “This is the moment of the Middle East. The startup ecosystem is really booming, and MENA is kinda becoming the place to be if you are into tech. I’m really excited for the next 10 years in this region.” Click here to watch the full Mind the Chat.

 
Chart with MENA year over year startup growth
 

3. Dubai is the hub of the region

MTB and Crunchbase data show that UAE contributed to the majority (55 percent) of the $9.1 billion in funding collectively raised by MENA scaleups. Dubai—95 percent of the UAE funding; Abu Dhabi is a ways behind—is attracting scaleups from all over the region. More and more scaleups moved their headquarters to Dubai to boost their growth, while keeping relevant operations in their country of origin. This dual company phenomenon is similar to what we are experiencing in Europe, with about 15 percent of the scaleups relocating outside the Old Continent, mostly to the U.S. and, more specifically, Silicon Valley.

Traditionally Dubai is used to attracting and hosting business from outside the region. It is the first country moving away from the current Sunday to Thursday schedule and switching to a 4-½-day work week ending at midday Friday to make it easier to do business globally. The city has a young new Minister of Economy, Abdulla Bin Touq Al Marri, who is motivated and respected. He was formerly CEO of the Dubai Future Foundation and played a vital role in the successful launch of Dubai 10X and other innovation initiatives.

map of MENA to Dubai startup hotspots
 

4. The Middle East is a huge (quite homogeneous) market

The main difference between the U.S. and Europe is the size of the internal market. U.S. startups leverage a large homogeneous domestic market, while European startups aiming at growing in the Old Continent struggle with different languages and regulation.

The Middle East is definitively an easier market to grasp, as Talabat’s Rodriguez reminds us, “MENA is something in between the U.S. and Europe. There is only one language across the region. Regulation is quite homogeneous across the Gulf countries. Some specifics do remain. Sensibilities and purchase power might differ significantly from one country to another, though.”

 
Chart comparing global tech scaleup ecosystems