Dubai's Global Attractiveness: Perspectives from Venture Capitalists

Dubai's Global Attractiveness: Perspectives from Venture Capitalists

By Ashok Raman, 21 June 2023

Previously: Driving Digital Economy: Dubai's Initiatives in Building a Resilient Tech Startup Landscape

Unlocking Opportunities through the Abraham Accords: Regional Collaborations and Business Expansion for Startups between Israel and UAE

In a bid to increase collaboration, reduce geopolitical tensions and normalize Arab-Israeli ties, the Abraham Accords came into place in August 2020. The treaty was signed between Israel and the UAE, as both countries were interested in diversifying their economies and engaging with each other to achieve that goal. Bahrain joined the treaty one month later.

The UAE is set to benefit from Israel’s technological advancements in innovative agriculture and water technologies, as the Emirates doubles down on food security. Israel is also a leader in cybersecurity and healthcare and has a tech ecosystem 20 times the size in the UAE, despite having similar population sizes. Tel Aviv serves as a strong tech hub, catching the attention of Silicon Valley investors, and provides Dubai with an opportunity to bring strong Israeli tech talent to the city.

Mr. Walid Hanna, Chairman and co-CEO at Middle East Venture Partners, confirmed that he has seen increased cooperation between Israeli and Dubai-based startups, with an increasing number of Israeli investors entering the UAE market. “We have also seen Israeli startups opening offices in Dubai, which has helped to further strengthen the city’s start-up ecosystem.”

Tammer Qaddumi, Co-founder and General Partner at VentureSouq, confirmed that he has seen material cross-fertilization among VCs, with both investors and tech firms meeting, sharing ideas and exploring businesses together. He said, “most of what we’ve seen has come from large government groups [and] the rest of the market will take their cue from the government entities, but only once that has proven to have some level of permanence.” What is clear is that the Abraham Accords has created new opportunities for startups to access new markets, share knowledge and expertise, and expand businesses.



Growing Interest from Global Investors

Regulatory authorities across the region are becoming more proactive and progressive and this is resulting in new opportunities, heralding new tech industries like the fintech sector. While the ecosystem has been largely supported by investments from regional investment firms, the heavy top-down support in the region is a factor that international VCs are watching closely as a key driver for quick growth.

As startups begin to mature, there is a sense prevailing among many investors that local startups will require both experienced local VCs, as well as powerful regional and global investors, to help local startups scale across the region and beyond. Though global VCs are increasingly joining investment rounds in the region, the list of the most active VCs investing in Dubai-based startups, based on the previous five years from 2018 to 2022, is primarily dominated by regional investors. 500 Global (U.S.), Global Founders Capital (Germany), Techstars (U.S.), and Bossanova Investimentos (Brazil) are just a few of the international investors that have actively invested in Dubai-based startups over the past five years. 

In fact, Noor Sweid, Managing Partner at Global Ventures, a Dubai-based venture capital firm, shared with us that “we are seeing more and more international investors in the region, as they accounted for 48% of the total investors who have funded UAE-based startups in 2022”. Going forward, it is reasonable to expect that at least half of all UAE-based scaleups will have investors from abroad on their cap table.

Rankings: Top Investors in Dubai-based Tech Startups Between 2018 to 2022

Walid from Middle East Venture Partners stated that the “trend of increased participation from global funds in funding rounds in Dubai-based startups is expected to continue, as Dubai positions itself as a hub for technology startups in the region.” The increase in global investor interest is seen as largely driven by the success of local government initiatives and its push to focus on innovation and support the ecosystem. 

To get the lay of the investor landscape across Dubai and MENA, and for insights provided by the investors backing the start-ups and scale-ups that are changing the face of entrepreneurship in the region, read the report by clicking here.

Next: Expected Headwinds in Dubai’s Funding Landscape

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Dubai's Venture Capital Ecosystem

There are 749 scale-ups that have raised over US $1 million in fundraising in the Middle East and North Africa region; collectively raising over US $19.5 billion, cumulatively, as of December 2022. Over 40% of these scale-ups call Dubai home.

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