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Roadmap to Abu Dhabi: Access to capital

19th February 2021 (Last Updated February 19th, 2021 10:30)

Sponsored by Hub71 Sponsored by Hub71 Visit Company
Roadmap to Abu Dhabi: Access to capital

The MENA region has emerged stronger and more resilient from the Covid-19 pandemic. Increasing access to capital for startups in Abu Dhabi means entrepreneurs can seize this moment as an opportunity to launch and realise their ambitions within a supportive and dynamic business environment.

The Covid-19 pandemic has had a devastating impact on communities and businesses. Although there is less uncertainty this year as the global vaccine roll out continues, and growth opportunities exist for ambitious startups and entrepreneurial businesses, the road to full recovery later in 2021 won’t be a smooth one.

As PwC describes in its 2020 Middle East Working Capital Study, businesses must be in good financial shape to fare well on this journey, which is why access to capital remains front-and-centre for so many business leaders. As the report says: “Economic conditions will most likely remain challenging for the immediate future, therefore the focus on liquidity has never been more critical.”

The UN Conference on Trade and Development’s 2020 World Investment Report showed the UAE to be the largest recipient of FDI inflows in the region in 2019, with a total of $13.79bn. Boasting the MENA region’s largest startup capital pot and competitive tax rates, the business-friendly Abu Dhabi government’s ambition to nurture and support enterprise is undimmed by the pandemic.

It is committed to not only attracting the best entrepreneurial minds and talent to the region but helping them scale up and succeed by providing investment and access to capital. This means founders can seize opportunities and makes Abu Dhabi a dynamic place to do business, invest, live and work.

While infrastructure, talent, connectivity, a vibrant location and simple regulatory environment are essential to the ease of doing business and quality of life, many startup founders will be prioritising investment and capital this year as they look to develop and expand beyond the unpredictability and challenges of Covid-19.

In Abu Dhabi, startups and growth-phase SMEs are particularly well catered for because the range of funding sources, accelerator programmes, subsidies and packages is accessible and diverse. There are currently 69 investors active in Abu Dhabi, including venture capital, private equity, accelerator, investment banks, and corporate venture capital.

From sovereign wealth funds, leading institutional investors and VC firms to angels, family offices and corporates, there is an established community of founders, partners and business accelerators with the scale, resources and capital to help founders build tomorrow’s leading companies. Abu Dhabi Global Market, Hub71, Abu Dhabi Investment Office, ADQ, Mubadala Investment Company all are primed to drive more investment towards Abu Dhabi’s enterprise ecosystem.

As Dr Tariq Bin Hendi, director general of Abu Dhabi Investment Office explains, the enterprise mindset in Abu Dhabi is as much about flexibility as it is about being proactive. “When we need to react in terms of policy, regulation or programs, on financial instruments or the support that businesses are looking for, we do it quickly. The other thing is that we’re always looking at how businesses that come here can grow. There’s so much opportunity in Abu Dhabi and the UAE that startups can use us as a springboard to the wider region.”

John Hensel did just that, and has reaped the financial rewards. He moved his US-based fintech Securrency to the ADGM and was successfully admitted as an emergent startup for the Hub71 Incentive Program, receiving 50% subsidies on housing, office space in WeWork x Hub71, as well as health insurance for three years. This enabled his business to save and reinvest capital and Securrency has attracted over $26m in funding to date.

Hensel says: “Government and industry leaders have established a remarkable set of resources to support startups and SMEs. The conditions are incredibly inviting and as a result, attract some of the best new ventures to now call Abu Dhabi home.”

All under one roof

Since the future-focused government diversified its economy, the UAE has become a hotbed of enterprise. Just look at ride-hailing app Careem, which was acquired by Uber for $3.1bn, and online retailer Souq.com, purchased in 2018 by Amazon for $560m. Indeed, some 60% of investment funding for startups in the MENA region was given to projects based in the UAE in 2019, according to a report by Magnitt.

The vibrant Hub71 ecosystem in particular grows from strength to strength, introducing new programs for startups, corporations and investors alike. Being a sector-agnostic tech hub has meant that healthtech startups are rubbing shoulders with big data companies, and cross-sector innovation and transferrable skills can be shared ad hoc or more formally, via webinars and meetings. Backed by Mubadala Investment Company, its growing international community of tech giants, venture capitalists, tech ecosystem players, and global startups can benefit from this interconnected global network.

“Hub71 doesn’t have a local mindset – it’s a global platform with global players and leverages global ideas, capital and networking,” says Rabih Khoury of Middle East Venture Partners, the MENA region’s oldest and longest-operating venture capital firm.

This embedded framework makes for a favourable union, agrees Dr Shafi Ahmed, co-founder of several startups and an oncological surgeon at the Royal London Hospital: “The advantage between, say, Britain and the UAE is that you may get more capital and more support, because there is simply more investment capital there,” he says. “If you move your project to Abu Dhabi it has big chances, because the UAE can go bigger, offer more money and more resources.”

Abu Dhabi provides investment opportunities across diverse sectors

High-growth startups in healthtech, edutech, fintech, enterprise tech and software as a service (SaaS) are proving attractive propositions for investors. According to Alaa Halawa, the Silicon Valley-based head of US ventures at Mubadala Investment Company, Abu Dhabi has become a magnet for ambitious US-based tech startups looking for growth opportunities. The reason? Because its progressive, future-led and flexible regulatory environment enables companies to expand their target markets earlier in their journey than they originally were able to.

Meanwhile, exciting strategic partnerships are underway to encourage investment in innovation and help Abu Dhabi stay ahead of the curve. Take TechWadi – a non-profit formed in 2006 by a group of Arab-American business owners to further relations between the MENA region and Silicon Valley.

“We are continually assessing and improving our offering and quest to help startups to thrive,” explains Nader Museitif, head of partnerships and business development at Hub71. “Our partnership with TechWadi creates value for both our international communities of founders as well as any US startups looking for growth opportunities in the Middle East. Companies on both sides will gain cross-border knowledge sharing, support, access to capital and new market opportunities to scale their businesses abroad.”

Abu Dhabi is the most entrepreneurial city in the world, believes May Habib, one of TechWadi’s board members and CEO of Writer.com: “Because of that, we now have tens of billions of dollars of deals going back and forth and so many cool things have happened between the two countries, and it’s just the beginning.”

What are investors looking for?

A significant number of startups fail due to lack of funding, especially during that critical period between seed and early-stage funding. So what catches an investor’s eye? Meera Sultan Al Suwaidi, head of value creation at Mubadala’s investment arm, Mubadala Capital, explains: “A strong business model and a trusted leadership team are two critical factors. Also, we’ll look at suitability for the market. Does your product fit our market, or can it be enhanced or changed to fit the market? And the product or service needs to be answering a need. It doesn’t have to be novel or high-tech. But it has to answer or fix something. And lastly, your company has to be sustainable. We have to see that there is a realistic growth path, and a value proposition.”

Hala Fadel, co-founder and managing partner at VC firm Leap Ventures, agrees good management is crucial. She adds: “Times of crisis reveal good or bad management teams. Faced with disruption and uncertainty, resourceful managers, country leaders and governments take times of challenge as an opportunity for change and to help sustain the economy, including startups.”

Venture investing, more than anything, is about investing in people, says the co-founder of Shorooq Partners, Mahmoud Adi: “Ecosystems like Hub71 allows investors and startup founders to co-exist in a common space to explore synergies and build trust in the most organic way. It is the mindset and energy level you are geared into when you are physically working alongside hundreds of hand-picked, top-tier founders, who wake up every day to strive towards their purpose and make a change in the world.”

Free Whitepaper

BLUEPRINT FOR SUCCESS

How Abu Dhabi is attracting top tech startups from across the world

Named after the UAE’s formation in 1971, Hub71 is a tech ecosystem located in Abu Dhabi that brings together several key elements for startup success: access to capital, access to market opportunities, access to talent and a favourable business environment.

Hub71 has unique selling points that have made investors and entrepreneurs worldwide take note. Its rapid growth is one proof of its success and within 12 months of launch, it has had 348 applications from startup founders in 47 different countries, showing how much demand there is for holistic tech ecosystems that support startups in their early stages.

With 75 startups in its vibrant ecosystem today, Hub71 has introduced new programs for startups, corporations and investors. Being sector-agnostic has meant that healthtech startups rub shoulders with big data companies, with cross-sector innovation and transferrable skills shared ad hoc or more formally, via webinars and meetings.

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