With a number of initiatives in play to embrace the future, the UAE city of Dubai is gunning to become the next big tech startup hub.
Dubai smart city innovation
US seed accelerator Techstars announced its foray into Dubai through a partnership with Ginco Investments, the investment arm of the Gheyath family’s Ginco Group, in 2017.
“When launching the venture capital arm of Ginco Investments, we were keen to create the first globally competitive accelerator in Dubai,” says investment partner at Ginco Investments, Gary Sheynkman.
“That meant that whether an entrepreneur was in Hong Kong or San Francisco, he or she considered Dubai as a place to kickstart their journey, versus programmes in California, New York, London, Berlin and other traditional tech centres.”
Managing director of Techstars Dubai, Vijay Tirathrai, adds: “Dubai is an emerging hub with a rich tradition as a trading nation. The narrative is built around a public sector-led vision to be a city of the future, driven by technology. This has put Dubai on the map, drawing ‘technopreneurs’ from the East and West.”
Focusing on the future is not a recent development, says Maha al-Mezaina, head of Area 2071, a Dubai Future Foundation initiative. “We have been successful in transforming ourselves constantly in the past few decades.”
Area 2071 is home to the second batch of cohorts in the three-month-long Techstars Dubai programme. It enables dialogue and partnerships between startups, private sector, investors and government entities.
Techstars Dubai and Ginco provide an initial investment of $120,000 to 10 startups selected from more than 700 applications, while Area 2071 provides a physical hub for the entrepreneurs to work from, located in Emirates Towers. The startups, focused on a range of sectors, are introduced to potential partners and investors from the region while working closely with government entities to promote their ideas.
Yacob Intelligent Health is the first Emirati startup company to secure Techstars Dubai funding. Yacob allows food tracking and payments, providing reports on nutritional intake.
“Being familiar with the market does help us understand and cater to our customers’ needs,” says Yacob’s CEO and founder, Faisal al-Hammadi. “Having said that, we are building a product that meets a global need, therefore we need to consider factors beyond what is applicable to this market.”
The application has found a footing in schools, allowing parents to monitor the eating habits of their children. In addition to the funding from Techstars, it has also received grants from Emirates Foundation and Sandooq Al-Watan, as well as from local investor Sanad AD.
Bengaluru-based Three Wheels United (TWU) is financing electric ‘tuk-tuks’ or auto-rickshaws in India and has more than 12 million clients. Instead of renting rickshaws by the day, tuk-tuk drivers can purchase a vehicle from TWU. TWU has cut default rates from 30 per cent to 1 per cent and reduced operational costs by half. The startup also addresses the problem of pollution by supporting electric vehicles.
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When asked how Dubai compares to the startup culture of Bengaluru, TWU CEO Cedrick Tandong says: “Bengaluru is a great startup hub, but typically has a focus on India. Dubai has given us the opportunity to explore other markets and see our full global potential.
“We have been able to set up a global debt fund, as well as develop partnerships with organisations such as New York University Abu Dhabi to co-develop our technology with graduate students and, in turn, provide the students with an opportunity to carry out research on real-life projects,” he continues.
Some of the other startups qualifying for the Techstars Dubai programme include Nestrom, a software company specialising in technologies for field service management, led by a Jordanian team; and Element 16, which has developed a thermal battery capable of storing heat instead of electricity and is led by a California-based team.
At a recent demo day, where the startups pitched to investors, Dubai Future Foundation CEO Khalfan Juma Belhoul announced that the 10 selected startups will be granted long-term, five-year visas. In early April, the UAE similarly granted long-term term visas to the top 100 Arab startups shaping the fourth industrial revolution, at the World Economic Forum (WEF).
The way ahead
There is little to prevent Dubai from becoming the go-to place for tech startups. However, the emirate has to tackle several hurdles if it is to become a global hub. Engagement of public and private sector partners, development of funding initiatives, easing of visa restrictions and reduction of licensing fees are just some of the areas that the emirate will need to address if it is to attract entrepreneurs.
A recent white paper published by the Dubai Chamber of Commerce & Industry highlights funding challenges faced by startups in the UAE, which include “high hurdle rates to qualify for capital on the equity side, and insufficient risk appetite on the debt lenders side”.
The White Paper calls for greater cooperation between universities, government agencies and investment funds.
“Startup culture is no longer the future – it is the present,” says Sheynkman. “[Globally,] we are seeing fast-moving, tech culture-driven companies outmanoeuvring traditional business. Companies that do not embrace the future will be left behind.”
This article is sourced from Verdict Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme. https://www.meed.com/registration/
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