Tech Entrepreneurship ecosystem in the United Arab Emirates 2018

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Tech Entrepreneurship ecosystem in the United Arab Emirates 2018
Tech Entrepreneurship
ecosystem in the
United Arab Emirates
2018

                  Commissioned by
Tech Entrepreneurship ecosystem in the United Arab Emirates 2018
About OC&C
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2   Tech entrepreneurship ecosystem in United Arab Emirates				                                              Tech entrepreneurship ecosystem in United Arab Emirates   3
Preface
The digital era has brought a fundamental           Given the importance of strong fundamentals       Google
                                                                                                      In         has
                                                                                                         our view, thecommissioned        thispreconditions
                                                                                                                       inputs that form the     study to for          For the
                                                                                                                                                                      Based   onpurposes      of thiswe
                                                                                                                                                                                  our assessment,       study,   entrepreneurs
                                                                                                                                                                                                           identified leading and
shift in the global economy, pushing the limits     in attracting both domestic and global interest   success
                                                                                                      identify areas for improvement ineach
                                                                                                               and  the resulting outputs   feed       other and
                                                                                                                                                   policies   in      emergent    countries   in tech  entrepreneurship,
                                                                                                                                                                      are defined as those individuals who focus             putting
                                                                                                                                                                                                                                   on
                                                                                                      an iterative process, which determines the health of            the USA, Singapore, Israel and UK at the top of the list.
of innovation and redefining the boundaries         in the tech entrepreneurship ecosystem,           regulations which affect tech entrepreneurship                  building a rapidly scalable business venture
                                                                                                      a tech entrepreneurship ecosystem. Factors such as              Identifying successful countries provided a filter for
of global trade. Innovations have never been        countries which fail to make broader reforms      in United Arab Emirates (UAE), as part of a six-
                                                                                                      the quality, connectedness, and efficiency of a tech
                                                                                                                                                                      with   the aim of innovating, improving, or
                                                                                                                                                                      selecting best practices as well as setting performance
faster paced, more widespread, or scaled up         in education, good governance and create          country    study that
                                                                                                      entrepreneurship        includes
                                                                                                                          ecosystem        the we
                                                                                                                                      – which  Turkey,    Russian
                                                                                                                                                   refer to as the    transforming      the current
                                                                                                                                                                      indicators that aspiring           way such
                                                                                                                                                                                                   countries   of doing    things.
                                                                                                                                                                                                                    as Turkey   can
                                                                                                                                                                                                                                    3 -4

more quickly, creating billion-dollar “unicorns”.   a business environment that supports                   Federation,
                                                                                                      inputs               South Africa,
                                                                                                             – create the conditions         Nigeria and
                                                                                                                                       for sustainable       the
                                                                                                                                                        success.      Thetoentrepreneurship
                                                                                                                                                                      use                             domain,
                                                                                                                                                                              assess their status, identify        according
                                                                                                                                                                                                               improvement     areas,
Over the last 15 years, the ICT sector – as a       entrepreneurship risk falling behind.2            Meanwhile, Kingdom of Saudi Arabia (KSA).
                                                                                                                   effectiveness  in generating   tangible  results   to our definition, includes the ‘startup’ and
                                                                                                                                                                      and  apply  approaches      that fit the nature  of their own
backdrop to innovation and digital advances                                                           such as growth, employment, the creation of wealth              ecosystems.
                                                                                                                                                                      ‘scale-up’ phases of the business lifecycle
– has seen its share grow from just 1.3 percent                                                       along with further innovation – the outputs – cultivates a      when     companies
                                                                                                                                                                      To  put Turkey’s  statusexperience
                                                                                                                                                                                                in context, wehigh      growth
                                                                                                                                                                                                                  have compared
                                                                                                      stronger ecosystem by attracting more of the required
of the global economy to 3 percent, and it’s                                                                                                                          in revenues
                                                                                                                                                                      input  and outputand   numbers
                                                                                                                                                                                          indicators         of employees
                                                                                                                                                                                                        for Turkey  against a peer
                                                                                                      inputs. This holistic perspective is reflected in the
set to grow even more.¹                                                                                                                                               set
                                                                                                                                                                      while validating their value proposition.stages,
                                                                                                                                                                          of countries   with  comparable      development
                                                                                                      framework we used to assess tech entrepreneurship
                                                                                                                                                                      similar  characteristics,
                                                                                                                                                                      Furthermore,               or geographic
                                                                                                                                                                                         we specifically           proximity.
                                                                                                                                                                                                                address
                                                                                                      success.
Nations that nurture a digital - and innovation-                                                                                                                      technology-driven
                                                                                                                                                                      In the final stage of theentrepreneurship
                                                                                                                                                                                                   study, we conducted –extensive
based culture have pioneered the global                                                                                                                               primary   research  in Turkey   to complement the
                                                                                                                                                                      companies with technology-enabled                      desk
                                                                                                                                                                                                                            business
shift toward knowledge-based industries                                                                                                                               research. Whereas the desk research served to
                                                                                                                                                                      models and a focus on hyperconnectivity
and have enjoyed extraordinary wealth (and                                                                                                                            develop the structure of the tech entrepreneurship
                                                                                                                                                                      between      networks, people, businesses, things,
                                                                                                                                                                      ecosystem and identify current initiatives that are
job creation), while transforming the way                                                                                                                             and   hardware.
                                                                                                                                                                      in place  to cultivate it, we gained insights and
people live and do business. This shift is made                                                                                                                       understood the context and impacts by conducting
possible by substantial tech entrepreneurship                                                                                                                         Using
                                                                                                                                                                      bespoke  these   definitions,
                                                                                                                                                                                 research            we began
                                                                                                                                                                                          with ecosystem            with
                                                                                                                                                                                                            participants,
activity within a supportive environment that                                                                                                                         comprehensive        research    of existing    literature
                                                                                                                                                                      together with Girişimcilik Vakfı (Entrepreneurship
includes both government and private-sector                                                                                                                           to identify factors
                                                                                                                                                                      Foundation).            that
                                                                                                                                                                                     The policy    correlate withthat
                                                                                                                                                                                                recommendations        tech are
contributions. Initiatives by leading countries                                                                                                                       part of this report are suggestions   from
                                                                                                                                                                      entrepreneurship success, grouping them intothe Turkish
are now regarded as best practices for                                                                                                                                entrepreneurial
                                                                                                                                                                      nine components.  community
                                                                                                                                                                                               Some forof
                                                                                                                                                                                                        further
                                                                                                                                                                                                          thesepolicy    initiatives
                                                                                                                                                                                                                   components
                                                                                                                                                                      that will help strengthen the development of the tech
aspiring nations that want to create a similar                                                                                                                        explain the strength of the ecosystem that
                                                                                                                                                                      entrepreneurship ecosystem in Turkey.
impact, and the global conversation around                                                                                                                            supports tech entrepreneurship, while others
regulation and innovation policies is framed                                                                                                                          In total,to
                                                                                                                                                                      point     wethe
                                                                                                                                                                                   interviewed 25 stakeholders (representing
                                                                                                                                                                                       results achieved.
                                                                                                                                                                      different components of the ecosystem), spanning
around such practices.
                                                                                                                                                                      public and private as well as institutional and individual
                                                                                                                                                                      In our view, the inputs that form the
                                                                                                                                                                      perspectives. The full list of participants is presented in
Countries that are more reliant on                                                                                                                                    preconditions for success and the resulting
                                                                                                                                                                      the Acknowledgments section.
manufacturing or natural resources are eager                                                                                                                          outputs feed each other in an iterative process,
to capture a bigger share of the expanding                                                                                                                            which determines the health of a tech
digital economy. In order to deliver on                                                                                                                               entrepreneurship ecosystem. Factors such as
these aspirations, they are exploring ways to                                                                                                                         the quality, connectedness, and efficiency of a
transform the fundamentals of their economic                                                                                                                          tech entrepreneurship ecosystem – which we
structures and to deploy more resources to                                                                                                                            refer to as the inputs – create the conditions for
cultivate competitive tech entrepreneurship                                                                                                                           sustainable success.
ecosystems. Establishing high-impact tech
entrepreneurship as a sustainable source of
employment is especially critical for nations                                                                                                                         1
                                                                                                                                                                        Selvam, M. and Kalyanasundaram, P. “Global IT/IT Enabled Services and ICT
with young populations and a need for new                                                                                                                             Industry: Growth & Determinants.” http://globalbizresearch.org/Chennai_
                                                                                                                                                                      Symposium/conference/pdf/C549.pdf (accessed September 27, 2017)
sources of job creation.                                                                                                                                              2
                                                                                                                                                                        World Bank. “Digital Dividends.” http://www.worldbank.org/en/publication/
                                                                                                                                                                      wdr2016 (accessed September 27, 2017)
                                                                                                                                                                      3
                                                                                                                                                                        Schumpeter, J. 1942. Capitalism, Socialism, and Democracy. New York: Harper
                                                                                                                                                                      & Bros.
                                                                                                                                                                      4
                                                                                                                                                                        Global Entrepreneurship Monitor (GEM) Global Report 2016/17, Global
                                                                                                                                                                      Entrepreneurship Research Association 2017

4   Tech entrepreneurship ecosystem in United Arab Emirates			                                                                                                                 Tech entrepreneurship ecosystem in United Arab Emirates            5
Based on our assessment, we identified
leading and emergent countries in tech                           OC&C’s framework for assessing tech
entrepreneurship, putting the USA, Singapore,
Israel and UK at the top of the list. Identifying                entrepreneurship success
successful countries provided a filter for
selecting best practices as well as setting                      FIGURE I: TECH ENTREPRENEURSHIP ECOSYSTEM STRENGTH AND RESULTS ACHIEVED FEED EACH
performance indicators that aspiring countries                   OTHER FOR GREATER SUCCESS
such as UAE can use to assess their status,
identify improvement areas, and apply                                               TECH ENTREPRENEURSHIP ECOSYSTEM                                                          RESULTS OF TECH ENTREPRENEURSHIP
approaches that fit the nature of their own                                                                                                            Market
                                                                  Financial                   Skilled Talent            Networks
ecosystems.                                                       Capital          $
                                                                                       $                                                              Potential
                                                                                       $
                                                                                                                                                                               Economic                         Innovation
To put UAE’s status in context, we have                                                                                                                                       Contribution                       Creation
compared input and output indicators for                                Culture               Regulations                ICT Infrastructure
UAE against a peer set of countries with
comparable development stages, similar
characteristics, or geographic proximity.

In the final stage of the study, we conducted                                      Describes the INPUTs necessary                                                                       Indicates the OUTPUTs
extensive primary research in UAE to                                          to cultivate thriving tech entrepreneurship                                                                 generated by tech
complement the desk research. Whereas the                                                                                                                                                  entrepreneurship
desk research served to develop the structure
of the tech entrepreneurship ecosystem and                                                                                                                                ECONOMIC                      INNOVATION
identify current initiatives that are in place to                                               FINANCIAL CAPITAL                SKILLED TALENT                           CONTRIBUTION                  CREATION
cultivate it, we gained insights and understood                                                   • Grants/subsidies               • Educational
                                                                                                                                                                            • Size of tech e-ship       • Innovation
                                                                                                                                                                               – Revenue
the context and impacts by conducting                                                             • Individual investors             foundations                               – Number of startups      created by tech

bespoke research with ecosystem participants,                                                        – Crowdfunding                • Skills development                        – Share in GDP            entrepreneurs
                                                                                                     – Angel investors                – schools, courses,                   • Workforce                    – Number of
together with Wamda, tech ecosystem fund                                                             – Personal networks                programs                              employed in tech               innovative products,
                                                                                                  • Venture capital                   – on the job training                   entrepreneurship
and platform. The policy recommendations                                                                                           • R&D and innovative                                                    – process,
                                                                                                  • Public funding                                                          • Growth rate
that are part of this report are suggestions                                                      • Corporate                        skills                                    – Revenue, Number           – business models
from the UAE entrepreneurial community                                                              investment (CVCs               • Attracting local                       • Value creation                 introduced in the
                                                                                                    and M&A)                         talent to tech                            – Market cap, Unicorns        country in a given
for further policy initiatives that will help                                                     • Securities market                entrepreneurship
                                                                                                                                                                            • Global reach                   year
                                                                                                                                   • Acquiring                                 – Share of int’l
strengthen the development of the tech                                                            • Debt financing                   international talent                        revenues
entrepreneurship ecosystem in UAE.                                                                                                                                             – Number of int’l
                                                                                                                                                                                 operations
                                                                   NETWORKS                     CULTURE                            REGULATIONS
In total, we interviewed 19 stakeholders                           • Mentors and coaches         • Society’s attitude to           • Ease of doing
(representing different components of the                          • Accelerators /                entrepreneurship                  business
                                                                     incubators
ecosystem), spanning public and private                                                          • Entrepreneurial                 • Compliance
                                                                   • Diaspora networks             aspirations and
as well as institutional and individual                            • International linkages        appetite                        • Trading across
                                                                                                                                     borders
perspectives. The full list of participants is                     • Events                      • Promotion of role
                                                                                                                                   • Digital policies
presented in the Acknowledgments section.                          • University-industry           models / success
                                                                                                   stories
                                                                     partnership                                                   • Government R&D
                                                                   • Tech transfer offices       • Media coverage of                 policies
                                                                                                   entrepreneurship
                                                                   • Physical clusters
                                                                      – Co-working spaces
                                                                      – Technoparks
                                                                  ICT INFRASTRUCTURE            MARKET POTENTIAL

                                                                   • Accessibility and           • Digital literacy /
                                                                     affordability of              readiness
                                                                     Internet (mobile /             – individual use
                                                                     fixed )                        – cloud migration
                                                                                                    – digitization of gov’t
                                                                   • Cloud & data                     services
                                                                     center experience           • Domestic market size
                                                                                                    – B2B
                                                                                                    – B2C
                                                                                                    – Public procurement
                                                                                                 • Local market
                                                                                                   efficiency
                                                                                                 • Internationalization

6   Tech entrepreneurship ecosystem in United Arab Emirates			      Source: Literature Research, OC&C analysis                                                    Tech entrepreneurship ecosystem in United Arab Emirates           7
Tech Entrepreneurship
Ecosystem – Inputs
The tech entrepreneurship ecosystem and its                  Benchmarks demonstrate a superior level of                      FIGURE II: TECH ENTREPRENEURSHIP ECOSYSTEM FRAMEWORK
components constitute the inputs in OC&C’s                   network development that is characterized by
tech entrepreneurship success assessment.                    the availability of entrepreneurial networks,                                                                                                                      Market
                                                             startup associations, accelerators, incubators,                   Financial                 $   Skilled Talent         Networks
                                                                                                                                                                                                                               Potential
One definition of an entrepreneurial                         co-working spaces, technoparks, etc. There                        Capital               $
ecosystem is:                                                                                                                                            $
                                                             are stronger innovation linkages between
                                                             academia and the private sector such as joint-
“a set of interconnected entrepreneurial                     venture/strategic alliance deals, and industry-
actors, organizations (e.g. firms, venture                   university collaborations.
capitalists, business angels, banks), institutions                                                                                         Culture           Regulations              ICT Infrastructure
(universities, public sector agencies, financial             In the best-practice countries, there is a higher
bodies), and entrepreneurial processes                       individual risk appetite, coupled with cultures
(e.g. the business establishment, growth,                    that are more supportive of entrepreneurship.
levels of ‘blockbuster entrepreneurship’,                    It is easier and less bureaucratic to start and
number of serial entrepreneurs, degree of                    run companies as an entrepreneur, and the
sell-out mentality within firms and levels of                risk of failure is better managed.                              Source: OC&C analysis
entrepreneurial ambition) which formally
and informally coalesce to connect, mediate                  Supportive digital policies – laws related
and govern the performance within the local                  to data flow, cybersecurity, data privacy,
entrepreneurial environment.” 5                              IP protection, etc. – and strong innovation
                                                             capacity steered by governments’ R&D
OC&C’s Tech Entrepreneurship Ecosystem                       policies provide a sturdy backbone for the
Framework (Figure II) presents the attributes                ecosystem. Open foreign trade policies                         Role of the government in strengthening the tech
outlined above, and the way in which they                    enable these countries to internationalize their               entrepreneurship ecosystem
interact and influence one another. These                    businesses.
seven components, working together, provide                                                                                 While many actors are involved in the             In the benchmark countries, the shift to
the habitat needed to generate successful tech Another fundamental differentiator is reliable                               ecosystem, the role of government                 knowledge-based industries has taken place
entrepreneurships.                               fixed and mobile internet infrastructures                                  deserves attention. Government policy             both via favorable policies that support the
                                                 at affordable prices. Digital policies that                                can affect all entrepreneurial actors and         development of each component of the
Best-in-class countries are able to offer equity support cross-border data flows lead to higher
                                                                                                                            components of the ecosystem: resource             ecosystem and greater government funding
funding sources in greater volume and variety utilization of efficient, cost-effective global
                                                                                                                            providers, entrepreneurial connectors within      for high-growth firms.4 Governments have
(i.e. business angels, venture capital firms,    cloud services.                                                            the ecosystem, and the entrepreneurial            played a leading role in successfully facilitating
and government investment funds). Deep and
                                                                                                                            environment of the ecosystem. The                 tech entrepreneurship ecosystems through
efficient stock markets and the high frequency Lastly, we also see that leading countries
                                                                                                                            government’s contribution is important            their impact on all seven components of the
of deals make the entrepreneurial challenge      possess considerable (rich) market potential
                                                                                                                            because of its direct impact on the ecosystem     ecosystem.
financially worthwhile and are instrumental      and those that don’t have a big enough
                                                                                                                            through the creation of favorable terms and
in drawing in more resources – in terms of       market are globally oriented from the start. In
                                                                                                                            the provision of incentives for high-growth
funding, skilled talent, and support – into the  the domestic market, consumer digital literacy
                                                                                                                            startups. Moreover, government exerts
ecosystem.                                       is of great importance as consumers are then
                                                                                                                            its influence on all components to create
                                                 more likely to try new digital products, thus
These countries have a larger number of                                                                                     a constructive environment and facilitate
                                                 creating attractive market conditions for B2C
highly skilled employees and a labor force                                                                                  interconnectivity between these components.
                                                 companies. In addition, advanced markets
created by education systems and talent          are efficient and competitive, with minimum
attraction initiatives that support tech         barriers of entry for business startups.
entrepreneurship. These ecosystems are
characterized by a greater pool of scientists,
engineers, and research universities that foster
an innovation culture.                              Mason, Collin and Brown, Ross. “Entrepreneurial Ecosystems and Growth
                                                              5

                                                  Oriented Entrepreneurship.” OECD-LEED. http://www.oecd.org/cfe/leed/
                                                              entrepreneurial-ecosystems.pdf (accessed October 2, 2017)

8   Tech entrepreneurship ecosystem in United Arab Emirates			                                                                                                                     Tech entrepreneurship ecosystem in United Arab Emirates   9
Executive summary                                                                                                1. Financial
                                                                                                                                                               Exit paths have only started to emerge in the
                                                                                                                                        $                      young UAE ecosystem, although 2017 has

UAE at a glance                                       on STEM, both within universities and as part of
                                                                                                                 Capital            $   $
                                                                                                                                                               been a record year with Souq.com’s sale to
                                                                                                                                                               Amazon for c. USD 600 m, and the acquisitions
                                                      innovation projects, are likely to yield results in                                                      of E-commerce sites JadoPado and Namshi.
The UAE – the MENA region’s third-largest
                                                      the long term.
country by population – is a constitutional
federation of c. 10 million people with a GDP         The output performance comparison of UAE
of 349 billion. The income per capita (PPP)           against the benchmark set can be found on
of USD 68,092 makes the country one of the                                                                                                                               2. Skilled Talent
                                                      page 23.
wealthiest in the world, where all but 15% of                                                               The UAE is home to some of the world’s
the workforce are guest workers. Although it          The UAE tech entrepreneurship ecosystem               largest funds and wealthiest individuals. The
has the seventh-largest oil reserves worldwide,       overview – Inputs                                     country might have as much as USD 1 trillion
the country has invested to shift its economy                                                               in available investment capital, yet the formal
from oil dependence to other sources of               The UAE benefits from an extraordinarily              investment structure of angel groups and
government revenue, which now make up c.              high commitment by government and                     venture capital funds is still evolving as the
70% of GDP. Heavily dependent on 85% expat            independent programs to support the                   ecosystem matures. Funding that went into
workers, the UAE’s workforce are mainly drawn         tech ecosystem. Youth entrepreneurship                UAE tech companies grew 10x in just two
                                                      is a key focus designed to stimulate citizen                                                             The UAE’s unique draw for highly skilled
to the country for employment at multinationals                                                             years, to USD 1 billion in 2016, and 2017 has
                                                      participation in the private sector and create                                                           workers has created a talent pool well suited
and large established local entities. A liberal                                                             been a record year for exits. A growing number
                                                      high-quality jobs in the knowledge economy.                                                              to business-oriented roles and young tech
business environment permits 100% foreign                                                                   of angel networks are joining family offices,
                                                      This is especially important, given that 94%                                                             companies. At the educational level, STEM
ownership in the country’s 45 free zones                                                                    formal VC funds, and holding companies to
                                                      of local citizens are employed by the public                                                             skills are still under development, with
and SMEs contribute 30% to the economy.                                                                     invest into tech companies.
                                                      sector. A ‘CEO of Innovation’ role exists across                                                         continued improvements predicted based on
Supporting this is the USD 82 billion Science,
                                                      different government sectors, but no central          Tech funding will be accelerated amid              initiatives that are underway, and these are
Technology and Innovation’s Higher Policy of
                                                      authority oversees the country’s innovation           continuing interest from abroad and more           likely to drive Emiratis into knowledge-based
the government and 100 initiatives designed
                                                      efforts. Key initiatives targeted include the         exits. Most local and international investors      roles in the future.
to stimulate innovation. Some of the world’s
largest investment funds and large-scale              USD 270 million Khalifa Fund, as well as the          have preferred to invest in tech companies
                                                      Dubai Future Foundation and Dubai Future                                                                 The UAE has been successful in attracting
innovation projects point to the country’s                                                                  registered outside the UAE, given the proven
                                                      Accelerators, which were set up to drive the                                                             global brands in education, and the country
capability for long-term innovation, including                                                              nature of dispute resolution and share class
                                                      Dubai government’s future agenda.                                                                        is now home to campuses from New York
Abu Dhabi’s Masdar City, tech entrepreneurship                                                              provisions. However, new jurisdictions such as
                                                                                                                                                               University, Paris-Sorbonne, Harvard Medical
classes at the universities, driving public-private   Current UAE startups are mainly in E-commerce,        Abu Dhabi’s Global Markets (ADGM), which
                                                                                                                                                               School, and business schools INSEAD, London
partnerships, and refining the regulatory             marketplaces, and infrastructure/software as a        mirrors the English common law found in
                                                                                                                                                               Business School, and Hult. This helps drive
infrastructure to make it as attractive as possible   service (69 percent of total startups). Most UAE      offshore havens such as the Cayman Islands, is
                                                                                                                                                               good foundational education as well as
to private sector development, investors, and         startups (52 percent) are B2C ventures, and 93        designed to attract UAE company registrations
                                                                                                                                                               entrepreneurship skills.
skilled capital.                                      percent of all startups are located in Dubai.         and reassure investors of the appropriateness of
                                                                                                            the legal framework for tech investment.           The government has invested heavily in
Results of tech entrepreneurship – Outputs            In our review and field research of the pain
                                                      points of the tech entrepreneurship ecosystem                                                            embedding entrepreneurship in school
                                                                                                            Later-stage rounds are more difficult to secure
Across the UAE, the strength of government            in the UAE, three key areas were identified:                                                             programs and is now targeting tech skills
                                                                                                            than earlier ones, with larger startups often
commitments to innovation has yielded both a                                                                                                                   across the Arab world. A variety of initiatives
                                                      •   Business setup and first-year operating costs     seeking funding in other ecosystems such
high startup density as well as a rich network of                                                                                                              range from an annual hackathon at prestigious
                                                          for tech startups are some of the highest         as Silicon Valley when they resemble market
support services and foundational programs to                                                                                                                  university NYUAD, a program to train 1 million
                                                          globally, although the low-tax nature of the      leaders in their categories or can demonstrate
drive long-term innovation. The country scores                                                                                                                 coders across the Arab world, and mandatory
                                                          ecosystem means that ongoing costs are            their international market potential. Logistics
relatively highly on a number of indicators,                                                                                                                   entrepreneurship courses at the university
                                                          lower than in other places.                       startup Fetchr’s USD 11 million raise in Silicon
making it a rising star in tech entrepreneurship,                                                                                                              level, designed by Stanford University faculty.
                                                                                                            Valley is one example of this.
poised to become a global frontrunner. The            •   The UAE ecosystem is remarkably active and                                                           All these are aimed at raising the foundational
UAE is responsible for nearly 40 percent of the           highly resourced, yet the early-stage nature      The large number of high-net-worth or family       level of tech and business skills in the UAE,
region’s top exits. E-commerce play Souq.com’s            of the regulatory framework means that            office Limited Partners (LPs) are increasingly     but these initiatives will take time to impact
acquisition by Amazon for USD 600 million set             some gains will only come over time.              bypassing VC funds to invest directly into         the job market and achieve the government’s
the record for the region.                                                                                  tech companies, affecting a traditionally          performance goals.
                                                      •   The market potential of tech startups is
                                                          shaped by their ability to go cross-border        strong source of investment in venture capital
Innovation capability is still under development,                                                                                                              Egypt and Jordan are key markets for tech
                                                          to other Gulf and non-Gulf MENA countries,        funds. In many cases, the VC firm is retained
but investments in R&D projects at the public                                                                                                                  companies to outsource tech talent from,
                                                          given diverse cross-border requirements and       for selected services, such as deal flow and
and private sector levels, and a sustained focus                                                                                                               given the relatively high costs of employment
                                                          the small market size of the UAE.                 transaction advisory.
10   Tech entrepreneurship ecosystem in United Arab Emirates					                                                                                                  Tech entrepreneurship ecosystem in United Arab Emirates   11
within the UAE at the early stages of a tech       The diversity of programs, coupled with                                                             DIGITAL POLICIES
company. These markets provide a sizable           a strategic focus on development of the                     5. Regulations
pool of talent at a favorable cost, without the    local population, mean that local and expat                                                         Overall, the UAE has strong IP and
administrative effort of managing immigration      entrepreneurs are largely served by a distinct                                                      cybersecurity laws that create the necessary
into the UAE.                                      sets of programs. This may lead to missed                                                           protections for safe use of the Internet. Rules
                                                   opportunities for knowledge sharing that                                                            on freedom of speech and content are not
The UAE’s attractiveness as a hub for big          would come from more blended teams.                                                                 seen as restrictive, but just appropriate to the
business has meant it is home to a high
                                                                                                                                                       business context. Voice Over Internet Protocol
number of professionals with strong business
                                                                                                                                                       (VOIP) remains one area of restricted services
skills, many of whom have aspirations of
entrepreneurship. Sectors such as energy, real                                                      The UAE is a relatively young country, and the     that is unique, given security concerns.
estate, finance, professional services, media,                                                      regulatory framework is continually evolving       Challenges accessing these services has
and retail are home to skilled executives with                   4. Culture                         to fit the needs of the existing and projected     meant that startups are unable to use this
strong sector knowledge.                                                                            business environment. This is also true for the    low-cost communication method. For startups
                                                                                                    legislation relating to tech entrepreneurship      that feature international operations or rely on
                                                                                                    and often means that changes are in place or       international customers, this can raise the cost
                                                                                                    in process that have not yet taken effect.         of operations significantly.
        3. Networks                                                                                 BUSINESS PROCEDURES                                GOVERNMENT R&D POLICIES
                                                   The UAE’s long history as a trading port         The requirement to rent office space, in           The UAE government is planning to triple
                                                   and cosmopolitan meeting point has meant         addition to setup costs related to the trade       its R&D spending in the six years leading
                                                   that there is an entrenched culture of           license and employment visas, means that           up to 2021, through universities and by
                                                   entrepreneurship in the country, although
                                                                                                    some young companies need as much as USD           using public-private partnerships as a key
                                                   Emirati culture is more reserved and places
                                                                                                    25,000 for their first year of operations, which   mechanism to maximize impact. Existing
                                                   a high value on following social norms.
                                                   Among the immigrant population that makes        might delay some from starting companies.          projects have featured large-scale R&D centers
Strong commitment by the UAE government                                                             Administrative requirements for visas mean         at universities, in part funded by the country’s
                                                   up the bulk of the private sector workforce,
to entrepreneurship and innovation has                                                              that the growth of fast-growing companies          sovereign wealth funds, as well as R&D centers
                                                   ecosystem participants report a high respect
yielded a high number of initiatives, funds,                                                        could be affected, which in turn could affect      within the many free zones.
                                                   for tech entrepreneurship. The ambitious real
programs, and accelerators aimed at                                                                 their job creation opportunities.
                                                   estate, art, architectural, and technological
supporting tech entrepreneurs, although no                                                                                                             TRADING ACROSS BORDERS
                                                   projects achieved by the country are reflected
central authority oversees this activity. Global                                                    Trade license requirements for young
                                                   in a highly ambitious attitude of the private
brands such as Egypt’s Flat6 Labs, the US’s                                                         companies require a finalized view of              The framework for a Customs Union for
                                                   sector workforce. But while most in the tech
Techstars and 1776 accelerators, and global                                                                                                            the GCC is in place and this operates as a
                                                   entrepreneurship ecosystem embrace the           business activities, which may be difficult
social innovation hub Impact Hub in addition                                                                                                           common external tariff that is assessed only
                                                   experimentation required of innovation, the      for young startups that are still proving their
to local accelerators such as in5 and Astrolabs                                                                                                        once goods have entered the union. However,
                                                   larger business community can be failure         business model, or young companies whose
benefit from sponsorship or proximity to large                                                                                                         ecosystem participants report that differences
                                                   averse.                                          activities combine different business elements.
tech companies such as IBM, Google, and
                                                                                                    The introduction of new free zones that            in how the union is handled administratively
Microsoft.                                         The open and tolerant rules of the UAE, and
                                                                                                    mirror jurisdictions such as the British Virgin    means complexity for some startups
                                                   particularly Dubai, make it highly attractive                                                       operating across borders.
University programs in the UAE have scanned                                                         Islands represent a significant opportunity
                                                   to talent from the MENA region and beyond.
the globe to build networks for their tech                                                          to attract UAE registrations of young tech
                                                   Ethnic and religious minorities are free and
entrepreneurship programs, pulling global                                                           companies looking for cheaper alternatives to
                                                   protected, which is a big draw for many from
mentors or teams for accelerators, and                                                              international offshore jurisdictions.
                                                   the MENA region, while the weather and
retaining international faculty to design
                                                   lifestyle make it attractive to Westerners.
entrepreneurship programs.                                                                          A recent addition of 5 percent VAT to all sales
                                                   The visa system means that most                  in the GCC (starting with the UAE and Saudi
Some of the programs that operate in the
                                                   entrepreneurs are more mature and                Arabia) may introduce financial discipline
UAE are uniquely forward-looking. The
                                                   established rather than young and                and pave the way for standardized financial
Dubai Future Foundation, Area 2071, and the
                                                   experimental, favoring business ideas that       reporting.
Mars Scientific City are projects that target
                                                   reflect long experience over disruptive
achievements in decades or even generations.
                                                   innovation.

12   Tech entrepreneurship ecosystem in United Arab Emirates					                                                                                          Tech entrepreneurship ecosystem in United Arab Emirates   13
The region may look homogenous to                        EASE SETUP REQUIREMENTS                   CONTINIUE DEVELOPING A REGULATORY           PLAY A ROLE IN EASING MARKET
                                                                                                            AND REDUCE OPERATING COSTS                STRUCTURE THAT’S CONDUCIVE TO TECH          ACCESS FOR TECH ENTREPRENEURS
                                                   an outsider, but the distinct cultural and                                                         ENTREPRENEURSHIP AND OPERATIONS
                                                   dialect differences of MENA mean that
         6. ICT Infrastructure                     companies going cross-border must have
                                                   dedicated market entry plans to ensure local
                                                   partnerships are sound and marketing plans
                                                                                                          Develop a general-purpose                   Ensure the new entrepreneurship
                                                   strike the right tone. The UAE’s position as         Innovation Trade Lincense that                                                         Ease cross-border regulatory
                                                   a hub for finance, media, content, tourism/                                                         visas are aligned to the unique           differences between the
                                                                                                           allows tech companies to                      needs of young companies
                                                   hospitality, natural resources, and smart cities          experiment while they                                                                     UAE and KSA
                                                                                                                                                              and global talent
                                                   has created a number of specializations that          finalize their business model
                                                   signify market and talent access advantages
UAE’s ICT coverage is among the best in the
                                                   for local and international startups. Projects
world, however broadband internet data                                                                                                                 Create a Ministry of Innovation
                                                   such as Marriott’s TestBED accelerator                Create exemptions from the                                                                Form partnerships with
plans are one of the most expensive in the                                                               office space requirement that                that unifies innovation and tech           chambers of commerce in
                                                   represent some of the B2B and partnership
Gulf region, often related to the duopolistic                                                             allow startups to operatefor                entrepreneurship efforts across             target markets to create
                                                   opportunities the UAE offers.                                                                          ministries and emirates
nature of the UAE’s telecom sector. Cost                                                                        a defined period                                                                    cross-border linkages
efficient VOIP and VPNs alternatives are out
of reach for tech companies due to local                                                                                                          Maintain focus on and publicize
license requirements. The government follows       Recommendations designed to strengthen                Partner with incubators and                 transparency in court cases
through its commitment to a strong ICT                                                                  accelerators to distribute free             in new jurisdictions to attract            Open market development
                                                   the tech entrepreneurship ecosystem                                                                                                         offices in key cities including
infrastructure and good coverage with large-                                                              trade licenses and other                 foreign investors and reassure
                                                                                                              public resources                    local ones of the strength of the             Cairo, Riyadh and Amman
scale projects such as providing broadband         Most of the challenges faced by the UAE                                                              regulatory framework
to Abu Dhabi public schools, or providing free     tech entrepreneurship ecosystem require
WiFi in public spaces across Dubai.                addressing the foundation that tech
                                                   entrepreneurship ecosystems rest upon.                                                              Lead the creation of an
                                                                                                                                                    entrepreneurship association
                                                   Ensuring that government targets for                                                           that liaises between young tech
          7. Market Potential                      innovation development are achieved is                                                          companies and the goverment
                                                   likely to depend on maintaining focus on
                                                   the regulatory infrastructure and educational
                                                   foundations, which are a top priority.                                                                Develop a program that
                                                   Accordingly, the UAE will need to continue                                                           targets growth-stage tech
                                                   aligning its digital policies with the frontier                                                       enterprises in the region
                                                   nations in order to become a viable partner                                                           and beyond to relocate
                                                                                                                                                                to the UAE
                                                   and supplier.
The UAE’s unusual demographics and
socioeconomics make it an ideal consumer           However, many challenges currently being           Legend
market for some selectors such as the luxury       addressed will improve only in the long            FINANCIAL CAPITAL   SKILLED TALENT   NETWORKS         CULTURE         REGULATIONS       ICT INFRASTRUCTURE MARKET POTENTIAL
market, where UAE residents purchase more          term. In the interim, adopting a focused
than USD 8 billion in goods annually. Apps         and targeted approach to relieving current
ad services that rely on smartphone use are        tension points at the heart of the tech             Details of the recommendations can be found on page 53.
helped by the extraordinarily high Internet        entrepreneurship activity could provide early
use and smartphone penetration in the              success stories and working models that can         Conclusion
country of 92% and 81%, respectively.              be replicated across the country.                  The impressive spending and focus on                             scale of the initiatives mean that many will only
                                                                                                      developing the tech entrepreneurship                             bear fruit in the long term.
The relatively small population of the country     The pressing recommendations to address            ecosystem and the innovation agenda are in                       Continuing to take a centralized yet loose
(c. 10m), means that to achieve scale-up           gaps and foster a strong ecosystem based           line with the government agenda to create                        view of the ecosystem, provide opportunities
stage most UAE tech companies must go              on interview insights are grouped under four       high-quality jobs in the knowledge economy,                      for both local and expat entrepreneurs, and
cross-border, typically into Saudi Arabia and/     three main headings:                               while attracting local citizens to take them up.                 build the regulatory foundation of innovation
or Egypt. Most of this expansion happens
following successful funding rounds, and most                                                         These efforts, in some cases globally unique                     will ensure that efforts are maximized.
of the country’s largest scale-ups operate in up                                                      or formed with global leaders, are likely to                     Long term, the UAE has the potential to be
to 13 countries.                                                                                      deliver the governments’ aims to build a solid                   an example of rapid development of an
                                                                                                      foundation and shift the country toward non-                     innovation-based ecosystem.
                                                                                                      oil revenues. However, the recent nature and

14   Tech entrepreneurship ecosystem in United Arab Emirates					                                                                                                           Tech entrepreneurship ecosystem in United Arab Emirates   15
Table of Contents                                                                                    Table of Figures

UAE at a glance												18                                                                        Figure 1. Macroeconomic indicators for the UAE								18

Results of tech entrepreneurship - Outputs									22                                                Figure 2. Global competitiveness index scores of the UAE							                                                 19

UAE tech ecosystem overview										                                                           26   Figure 3. Profile of Top 100 tech startups in the UAE ecosystem						                                           26
Insights into ecosystem components									                                                     32
                                                                                                     Figure 4. Major actors within the UAE ecosystem								                                                         28
       1. Financial Capital											32
                                                                                                     Figure 5. Souq.com - An e-commerce success story								                                                        36
       2. Skilled Talent											36
                                                                                                     Figure 6. TIMSS Maths scores for 10-year-olds								                                                           36
       3. Networks												                                                                  39
                                                                                                     Figure 7. Campuses of internationally acclaimed schools							                                                  38
       4. Culture												                                                                   42
                                                                                                     Figure 8. BitOasis – The digital currency exchange platform of Middle East				                                  39
       5. Regulations 											                                                               44
                                                                                                     Figure 9. Accelerator density											                                                                        40
       6. ICT Infrastructure											                                                         48
                                                                                                     Figure 10. State-sponsored innovation initiatives								                                                       41
       7. Market Potential											                                                           50
                                                                                                     Figure 11. Careem - The first “unicorn” of the UAE								                                                      42
Policy Playbook: Recommendations designed to strengthen the tech entrepreneurship ecosystem		   53

Conclusion													                                                                         58   Figure 12. Sample cost analysis of setting up a business in a free zone					                                    45

Acknowledgements												                                                                    59   Figure 13. Broadband Internet (mobile and fixed) accessibility and affordability				                            48

Appendix													60                                                                              Figure 14. Digital economy drivers										                                                                    52

Disclaimer													                                                                         63   Figure 15. Policy recommendations designed to strengthen the UAE tech entrepreneurship ecosystem                53

16   Tech entrepreneurship ecosystem in United Arab Emirates				                                                                                               Tech entrepreneurship ecosystem in United Arab Emirates   17
UAE at a glance                                        and economic issues such as unemployment
                                                       or poverty are at minimal levels. However, other
                                                       areas of focus have driven the government
                                                                                                                                              Apart from oil and gas (31% of GDP), key
                                                                                                                                              industries for the UAE include real estate (22%),
                                                                                                                                              retail (12%), tourism (9%), and logistics (8%).15
                                                                                                                                                                                                                     multinationals seeking to establish a regional
                                                                                                                                                                                                                     presence. Now, many of the world’s biggest
                                                                                                                                                                                                                     multinationals are choosing the UAE for
                                                       to institute large-scale economic plans aimed                                          The country also serves as a hub for media and                         offices or regional hubs including Google,
At USD 349 billion, the United Arab Emirates           mainly at shifting both the balance and                                                television broadcasting, as well as a finance hub,                     IBM, Microsoft, Facebook, CNN, and Pfizer.
(UAE) is the world’s 30th largest economy and          demographics of certain industries and sectors.                                        and is home to some of the largest investment
                                                       The main aim of an ongoing Emiratization                                               funds in the world, both private and sovereign                         The high numbers of immigrants and guest
the 3rd largest economy in the Middle East/
                                                       program is to increase the proportion of Emiratis                                      wealth funds (SWF). Abu Dhabi Investment                               workers mainly arrive on work visas, although
North Africa (MENA) region. It consists of a
                                                       in the private sector, luring them away from                                           Authority (ADIA), controls close to USD 800 billion                    a sizable number set up small businesses. The
relatively new constitutional federation of seven
                                                       the public sector where c.94% are currently                                            in assets, making it the second-largest SWF in                         regulatory structure is favorable to businesses,
states6 with a population of c. 10 million7. This
                                                       employed. 13                                                                           the world.16 Other apital – invest and acquire                         although there are restrictions that govern
combination of federated monarchies is one
                                                                                                                                              large-scale infrastructure and private-sector                          the business’s registration depending on
of the larger countries in the Gulf Cooperation
                                                       Though the current levels of unemployment are                                          entities in the UAE and abroad, putting them in                        its ownerships structure. 100% foreign
Council, the network of wealthy, oil-rich nations
                                                       low, the ratio of the citizen population aged 15-                                      a good position to stimulate knowledge sharing                         ownership is permissible in the country’s 45
known as the GCC. Abu Dhabi, the capital,
                                                       19 to those aged 55-59 of 1.5 suggests a rapidly-                                      and public-private partnerships. For example,                          free zones, most of which have a sector focus
and Dubai are the two largest emirates, and
                                                       growing citizen workforce that will demand                                             Mubadala subsidiary Advanced Technology                                ranging from finance to flowers.18 The free
they regularly get global attention for their
                                                       a large number of jobs in the long term. To                                            Investment Company’s (ATIC) mandate is to drive                        zones are physical and in some cases virtual
investments and government plans.
                                                       address this need, the emirates of the UAE are                                         technology development in the UAE, and it has                          areas that accommodate multinationals,
As a constitutional federation, the UAE has            executing long-term plans to grow and create                                           already made multi-billion-dollar investments                          large local entities, and small businesses.
legislation at the federal and emirates levels,        the number of high-value jobs and they are in                                          in semiconductor makers Global Foundries and                           Anchor tenants are often the world’s biggest
with each emirate maintaining a system of              the process of transforming into a knowledge                                           Chartered Semiconductor Manufacturing. 17                              companies or brands, such as HSBC, Visa,
government controlled by its royal family. The         economy. The UAE’s Science, Technology and                                                                                                                    CNN and Google.
                                                       Innovation’s Higher Policy, announced in 2015,                                         FIGURE 2. GLOBAL COMPETITIVENESS INDEX
civil jurisdiction legal system is based on a mix
                                                       includes 100 initiatives with upwards of AED 300                                       SCORES OF THE UAE, 2016
of English, Egyptian, and Sharia law. This shapes
and informs the legal framework for criminal,          billion in investment (USD 82 billion). 14                                                                                         Score (1-7)   Rank (138)

social, and business activity.8                                                                                                                Global Competitiveness Index                 5.3           16
                                                       FIGURE 1. MACROECONOMIC INDICATORS
                                                                                                                                                           Institutions
                                                       FOR THE UAE, 2016
The seven emirates that make up the UAE have                                                                                                                                                                          The UAE government. “The political system“. https://government.ae/en/about-
                                                                                                                                                                                                                     6

                                                                                                                                              The quality of legal and administrative       5.8            7         the-uae/the-uae-government/political-system-and-government (accessed
varying degrees of dependence on oil revenues                                                             Value          Rank (192)
                                                                                                                                              framework that regulates interactions                                  December 14, 2017)
                                                                                                                                              between government, firms and people
and the nation has the world’s seventh-largest oil                                                                                                                                                                   7
                                                                                                                                                                                                                      Gulf News. “UAE population and statistical trends”. http://gulfnews.com/news/
                                                                                                                                                                                                                     uae/government/uae-population-and-statistical-trends-1.1931464 (accessed
reserves.9 Yet the country has invested to shift the                                                                                                     Infrastructure
                                                                            GDP                          349 B            30                                                                                         December 14, 2017)
economy from oil dependence to other sources                               (USD)                                                               Existence of extensive and efficient
                                                                                                                                                                                            6.3            4          Arabian Business. “Decoding the legal framework for entrepreneurs in
                                                                                                                                                                                                                     8

                                                                                                                                               infrastructure to supply required                                     the UAE”. http://www.arabianbusiness.com/decoding-legal-framework-for-
of government revenue and non-oil revenues                                                                                                     services                                                              entrepreneurs-in-uae-666321.html (accessed December 14, 2017)
now make up c. 70% of GDP, a number that is                      GDP per capita                                                                            Market Size
                                                                                                                                                                                                                     9
                                                                                                                                                                                                                         US Embassy of the UAE. “The UAE and Global Oil Supply” https://www.
                                                                                                         68 K              8
projected to grow to 80% by 2021.8 Vision 2021,                    (PPP adj. USD)                                                                                                           4.9           27
                                                                                                                                                                                                                     uae-embassy.org/about-uae/energy/uae-and-global-oil-supply (accessed
                                                                                                                                                                                                                     December 14, 2017)
the national plan for the country, has highlighted                                                                                             Size of the economy
                                                                                                                                                                                                                      The UAE Cabinet. “National Agenda”. https://uaecabinet.ae/en/national-
                                                                                                                                                                                                                     10

six pillars – including developing a knowledge                       Population
                                                                                                                                                                                                                     agenda (accessed December 15, 2017)
                                                                                                           10             94                    Macroeconomic environment
economy – and in the process aims to “make                        (millions), 2016                                                                                                                                        Gulf News. “UAE population edging closer to 10m”. http://gulfnews.
                                                                                                                                                                                                                     11

the UAE the economic, tourism and commercial                                                                                                   Stability of the economy
                                                                                                                                                                                            5.3           38         com/news/uae/society/uae-population-edging-closer-to-10m-1.1579486
                                                                                                                                                                                                                     (accessed December 15, 2017)
capital for more than two billion people”. 10                Rate of population aged                                                                                                                                 12
                                                                                                                                                                                                                       IMF. “World Economic Outlook Database October 2017”. https://www.imf.
                                                                 15-19 over those                         1.46                                                                                                       org/external/pubs/ft/weo/2017/02/weodata/index.aspx (accessed December
                                                                                                                                                   Goods market efficiency
                                                                   aged 55-59
Demographically, the UAE is highly diverse, with                                                                                                                                                                     14, 2017)
                                                                                                                                               Intensity of local competition, ease of      5.6            3         13
                                                                                                                                                                                                                       The National. “Shorter work hours and patriotism main reasons Emiratis
a local population of 15% and the vast majority                                                                                                doing business, tax rates, imports ratio                              prefer public-sector jobs: study”. https://www.thenational.ae/uae/
                                                                                                                                               and buyer sophistication in a country
of residents are immigrants from other MENA                      SME contribution                         30%                                                                                                        government/shorter-work-hours-and-patriotism-main-reasons-emiratis-
                                                                   to GDP, 2016                                                               Source: World Economic Forum                                           prefer-public-sector-jobs-study-1.202046 (accessed December 15, 2017)
countries, Asia, and the West. 11 The UAE is                                                                                                                                                                         14
                                                                                                                                                                                                                       Gulf News. “Dh300b projects in UAE to spur knowledge economy”. http://
heavily dependent on expat workers, most of                                                                                                   Government investment in the infrastructure,                           gulfnews.com/news/uae/government/dh300b-projects-in-uae-to-spur-

who are attracted to the country to work in large          Consumer expenditure                                                               private sector, and culture of tolerance has made                      knowledge-economy-1.1623814 (accessed December 15, 2017)
                                                                                                          59%                                 the country one of the most attractive destinations
                                                                                                                                                                                                                     15
                                                                                                                                                                                                                       Trends Institution. “UAE GDP composition by sector 2015 (%)”. http://
multinationals or established local entities. A               as a % of GDP                                                                                                                                          trendsinstitution.org/wp-content/uploads/2016/06/Radwa-Graph-1.png

PPP adjusted per-capita income of USD 68,092                                                                                                  to foreign skilled talent. Branding itself as a haven                  (accessed December 15, 2017)

                                                                                                                                              of tolerance, all faiths are respected and the                           SWFI. “Fund Rankings”. https://www.swfinstitute.org/fund-rankings/
                                                                                                                                                                                                                     16

makes the UAE one of the wealthiest countries in               Stock market cap                           61%                                                                                                        (accessed December 15, 2017)

the world 12 and it remains a destination for the                as a % of GDP                                                                religious and cultural diversity is a strong point in                  17
                                                                                                                                                                                                                       Gulf News. “Abu Dhabi gets full ownership of Global Foundries”. http://

super-rich for both living and leisure.                                                                                                       the region. With infrastructure and amenities that                     gulfnews.com/business/sectors/investment/abu-dhabi-gets-full-ownership-
                                                                                                                                                                                                                     of-global-foundries-1.992025 (accessed December 15, 2017)
                                                                Stock market traded                                                           resemble the West and weather that surpasses                           18
                                                                                                                                                                                                                       Gulf News. “45 free zones in the UAE: Find the right one for your new
Given the high income levels and non-citizen                       as a % of GDP                          14%                                 that of Europe, the attractiveness of the country                      business”. http://gulfnews.com/guides/life/community/45-free-zones-in-
                                                                                                                                                                                                                     the-uae-find-the-right-one-for-your-new-business-1.1716197 (accessed
population that is almost fully employed, social                                                                                              to professionals makes it the natural home for                         SME’s, defined differently across the
                                                                                                                                                                                                                     December 15, 2017)
                                                         Source: IMF, World Bank, Global Entrepreneurship Monitor, Euromonitor, AT Kearney,
                                                         Economist, World Economic Forum
18   Tech entrepreneurship ecosystem in United Arab Emirates				                                                                                                                                                           Tech
                                                                                                                                                                                                                           Tech entrepreneurship
                                                                                                                                                                                                                                entrepreneurship ecosystem
                                                                                                                                                                                                                                                 ecosystem in
                                                                                                                                                                                                                                                            in United
                                                                                                                                                                                                                                                               United Arab
                                                                                                                                                                                                                                                                      Arab Emirates
                                                                                                                                                                                                                                                                           Emirates             19
                                                                                                                                                                                                                                                                                                19
SME’s, defined differently across the emirates but
generally under 50 employees or AED 250m in
turnover, make up a relatively smaller proportion
of the economy at just 30% contribution to
GDP, despite being 90% of the total number of
companies and 94% of the workforce.19 Within
this sector innovative young companies have
launched and grown, making it an important sub
sector for a government shifting from oil and
gas to innovation. Yet the low contribution from
SMEs has at times meant limited influence on the
developing banking and regulatory infrastructure.
As a result, many changes are now being made to
make the country more accommodating to young
businesses, a change that’s expected to drive the
formation of many new ventures.

The UAE government has put large amounts
of capital and focus into large-scale innovation
projects such as Abu Dhabi’s Masdar City,
instituting tech entrepreneurship classes at the
universities, driving public-private partnerships,
and refining a regulatory infrastructure to make
it as attractive as possible to private-sector
development, investors, and skilled capital.

 Souq al Mal. “How do you define an SME in the UAE?”.https://www.souqalmal.com/financial-education/ae-en/how-do-you-define-an-sme-in-the-uae/ (accessed
19

December 15, 2017)

20   Tech entrepreneurship ecosystem in United Arab Emirates				                                                                                          Tech entrepreneurship ecosystem in United Arab Emirates   21
United Arab Emirates vs.
                                                                    benchmark countries
                                                                                            TECH STARTUP PREVALENCE IN A COUNTRYa                                                  Tech startup longevity
                                                                                                                                                                                   (1=highest, 0= lowest)
                                                                                            PER MILLION URBAN POPULATION
                                                                                            IRELAND (IE)                                                                                   337 0.30
                                                                                            ISRAEL (IL)                                                                             214           0.49
                                                                                            SINGAPORE (SG)                                                                     176                0.68

The results of tech                                                                         UNITED STATES (US)
                                                                                            UNITED KINGDOM (UK)                                                         122
                                                                                                                                                                             160                  0.48
                                                                                                                                                                                                  0.53

entrepreneurship –
                                                                                            LUXEMBOURG (LU)                                                     101                               0.62
                                                                                            INDIA(IN)                                                       92                                    0.59
                                                                                            NETHERLANDS (NL)                                           76                                         0.67

Outputs                                                                                     UNITED ARAB EMIRATES (AE)
                                                                                            GERMANY (DE)
                                                                                            KOREA (KR)                                  20
                                                                                                                                             34
                                                                                                                                                  40                                              0.68
                                                                                                                                                                                                  0.68
                                                                                                                                                                                                  0.32
                                                                                            CHILE                                       20                                                        0.41
Across the UAE, the strength of government
                                                                                            TURKEY (TR)                             16                                                            0.16
commitments to innovation has yielded both                                                                                                                                                        0.57
                                                                                            CHINA (CN)                             12
a high startup density as well as a rich network                                            MALAYSIA (MY)                          11                                                             0.77
of support services and foundational programs                                               SOUTH AFRICA (ZA)                     10                                                              0.36
to drive long-term innovation potential. The                                                RUSSIA (RU)                       6                                                                   0.42
country scores relatively highly in a number of

                                                                    ECONOMIC CONTRIBUTION
                                                                                            JAPAN (JP)                        4                                                                   0.61
indicators, making it a rising star and it is on                                            EGYPT (EG)                        4                                                                   0.48
track to become a global frontrunner in tech                                                NIGERIA (NG)                      3                                                                   0.60
entrepreneurship.                                                                           SAUDI ARABIA (SA)                2                                                                    0.76

The UAE is responsible for nearly 40 percent of
the region’s top exits, although few have been                                              NUMBER OF EXITS OVER USD 100M
over 100 million. E-commerce play Souq.com’s                                                2012-16
acquisition by Amazon for USD 600 million set                                               UNITED STATES (US)                                                                  1,946
the record for the region, but this was quickly                                             UNITED KINGDOM (UK)                                                    215
joined by acquisitions of Namshi (USD 151                                                   GERMANY (DE)                                                         65
million for a 51% stake), and JadoPado (for an                                              CHINA (CN)                                                      49
undisclosed amount).                                                                        INDIA (IN)                                                   40
                                                                                            ISRAEL (IL)                                             37
Innovation capability is still under development,                                           NETHERLANDS (NL)                                       33
but investments in R&D projects at the public                                               IRELAND (IE)                                          20
and private-sector levels, and a sustained focus                                            JAPAN (JP)                                        16
on STEM within universities and as part of                                                  SINGAPORE (SG)                                   15
innovation projects, are likely to yield results in                                         RUSSIA (RU)                                       7
the long term.                                                                              KOREA (KR)                                       6
                                                                                            TURKEY (TR)                                      6
                                                                                            SOUTH AFRICA (ZA)                                6
                                                                                            CHILE (CL)                                   4                            Other countries in scope of tech
                                                                                            EGYPT (EG)                                   4                            entrepreneurship study

                                                                                            LUXEMBOURG (LU)                              4
                                                                                            NIGERIA (NG)                                3
                                                                                            UNITED ARAB EMIRATES (AE)               2
                                                                                            MALAYSIA (MY)                           1        Note: The definitions of the output indicators can be found
                                                                                            SAUDI ARABIA (SA)                       1        in the appendix
                                                                                                                                             a. Density shows proportional values among ecosystems.
                                                                                                                                             Scales are only comparable within each indicator

22   Tech entrepreneurship ecosystem in United Arab Emirates					                                                   Tech entrepreneurship ecosystem in United Arab Emirates                        23
ENTREPRENEUR’S GROWTH ASPIRATION SCOREb                                                                                                                                                                            INNOVATIVE OUTPUT DENSITY
                        A scoring based on percentage of entrepreneurs with a sophisticated growth strategy aspiring                                                                                                                       The abundance of knowledge creation and intangible assets in a country (out of 100)
                        to grow at least 50% in the next 5 years and attract VC funding (1=highest, 0=lowest)
                                                                                                                                                                                                                                            75        69        67
                         1.0      1.0       1.0      1.0                                                                                                                                                                                                                61
                                                                                                                                                                                                                                                                                 60       60
                                                              0.8       0.8      0.8      0.8       0.8                                                                                                                                                                                             57
                                                                                                             0.7      0.6      0.6                                                                                                                                                                          54       52
                                                                                                                                         0.5      0.5      0.5      0.5                                                                                                                                                        47
                                                                                                                                                                              0.4         0.4     0.2   0.2                                                                                                                             43        38       38
                                                                                                                                                                                                              0.1                                                                                                                                                   29        28       27        27         25    22
                                                                                                                                                                                                                                                                                                                                                                                                                        19   18

                          AE       JP       SG        US        IE       SA       IL       CL        TR      UK        DE       CN       ZA       NL        LU        EG       RU         KR      NG    IN    MY
ECONOMIC CONTRIBUTION

                         30.7 N/A          N/A       30.7 36.7 5.3              22.1 34.2 48.1 28.4 21.5 26.7 27.6 17.2 21.7 25.4                                             18.7 21.6 N/A             5.2   8.2

                                                                                                                                                                                                                    INNOVATION CREATION
                         HIGH JOB CREATION EXPECTATION (% OF ENTREPRENEURS)                                                                                                                                                                KR        CN         DE     NL        LU       UK        US      JP       IL       TR        IE        SG       RU       CL        ZA       MY        IN         AE    SA    EG   NG
                                                                                                                                           Other countries in scope of tech entrepreneurship study

                        ABILITY TO CREATE GLOBALLY RECOGNIZED                                                                                  CONTRIBUTION OF KNOWLEDGE SECTORS
                        “UNICORNS”c                                                                                                            TO THE ECONOMY                                                                              ENTREPRENEURIAL INNOVATION CREATIONd
                        Technology start-ups with over USD 1 billion valuation in benchmark countries                                          ICT & High-tech exports, international data flows and                                       Rate of entrepreneurs involved in new product or service creation
                                                                                                                                               IP receipts (1=highest, 0=lowest)

                                                                                                      Benchmark country set
                                                                                                                                                                                                                                              57%
                                                                                                                                                                                                                                                          45%         40%
                                                                                                                                                                                                   0                                                                             37%           33%       33%        31%
                                                                                                          278               1,174                                                                                                                                                                                             30%       30%        29%       28% 27% 25% 23%
                                                                                                                                                                                           0.33                                                                                                                                                                              22% 13% 5%
                                                                                                                                                                                                                                                                                                                                                                                                                        4%

                                                                                                                              $                                                      0.67

                                                                                                        Total            Total value                                             1
                                                                                                       number             (USD B)
                                                                                                                                                                                                                                                CL         LU         IE          US           UK         KR         TR         IL        NL         CN        IN      AE        DE         EG        ZA     SA    RU   MY

                                                                                                          1                   1
                                                                                                                                                                                                                                           Other countries in scope of tech entrepreneurship study

                                                                                                                                                                                                                                          Note: The definitions of the output indicators can be found in the appendix
                                                                                                                                                                                                                                          a. Density shows proportional values among ecosystems. Scales are only comparable within each indicator
                                                                                                                                                                                                                                          b. A scoring based on percentage of entrepreneurs with a sophisticated growth strategy aspiring to grow at least 50% in the next 5 years and attract VC funding
                        Note: The definitions of the output indicators can be found in the appendix                                                                                                                                       c. Unicorns in tech-related categories are taken into consideration
                        b. A scoring based on percentage of entrepreneurs with a sophisticated growth strategy aspiring to grow at least 50% in the next 5 years and attract VC funding                                                   d. Some benchmark set countries are not shown due to data availability
                        c. Unicorns in tech-related categories are taken into consideration
                                                                                                                                                                                                                                          Source: OC&C analysis based on World Bank, GEM, GEDI, Crunchbase, INSEAD, McKinsey, CB Insights
                        24    Tech entrepreneurship ecosystem in United Arab Emirates					                                                                                                                                                                                                                                                            Tech entrepreneurship ecosystem in United Arab Emirates                 25
UAE tech entrepreneurship                                                                                                                                         The government’s strong commitment to
                                                                                                                                                                  stimulating youth entrepreneurship – both tech
                                                                                                                                                                  and non-tech – is a cornerstone of its strategic
                                                                                                                                                                                                                                                         •     Khalifa Fund – has distributed over AED
                                                                                                                                                                                                                                                               1bn (USD 270 million) in loans to Emirati
                                                                                                                                                                                                                                                               entrepreneurs, and recently launched the
ecosystem overview                                                                                                                                                aim of increasing the proportion of local
                                                                                                                                                                  citizens employed in the private sector. This is                                       •
                                                                                                                                                                                                                                                               IBTIKARI innovation incubator 26
                                                                                                                                                                                                                                                               Dubai Future Foundation and its
The UAE benefits from an extraordinarily high                                      empower, and connect” entrepreneurs in the                                     also designed to address the looming need for                                                incubator Dubai Future Accelerators
commitment by government and independent                                           Middle East.20-21, Wamda now includes an                                       a large number of new jobs to accommodate                                                    have been created to shape the future of
programs to support the tech ecosystem.                                            investment fund, media arm, and events, and                                    a growing youth population that is about                                                     Dubai through medium and long-term
This commitment, coupled with the country’s                                        has been joined by a number of incubators,                                     to enter the workforce. The proportion of                                                    investments and to help achieve Dubai’s
attractiveness to expat professionals and its                                      private and government programs targeting                                      local citizens employed by the government                                                    Future Agenda. 27
location as a regional hub for certain industries                                  entrepreneurship, and other services that are                                  is one of the highest in the world at 94%, a
                                                                                                                                                                  level that is not viewed as sustainable in the                                         Private sector and independent initiatives have
such oil and gas and finance, has made this                                        improving the health of the tech ecosystem.
                                                                                                                                                                  long term. By making the private sector more                                           shaped the development of the tech startup
an ideal mixture of inputs to develop the
                                                                                   The country has traditionally been dominated                                   attractive to citizens and encouraging them                                            ecosystem, often located in the UAE but
entrepreneurship ecosystem.
                                                                                   by large multinational and established                                         into entrepreneurship, the governments of the                                          targeting companies across the region or the
Given the high level of independence of                                            local companies, with an SME contribution                                      emirates hope to both stimulate the growth                                             world:
different emirates, most of the government                                         of just 30%22 In addition, the research and                                    of the non-oil economy as well as provide a                                            •     Wamda and its fund Wamda Capital – an
initiatives happen at the emirate level and do                                     development infrastructure is in its early                                     sustainable source of attractive employment                                                  ecosystem platform designed to connect
not apply across the whole country. Although                                       stages, with strong public and private-sector                                  for its citizens.                                                                            entrepreneurs in the MENA region, and
research was conducted with players across                                         commitments that will demonstrate their value                                                                                                                               a related seed and follow-on investment
multiple emirates, most participants were from                                     over time.                                                                     The UAE government has instituted a national                                                 fund.
Abu Dhabi and Dubai.                                                                                                                                              entrepreneurship program for schools, 23
                                                                                   The high number of expats in the country                                       alongside other youth-targeted initiatives                                             •     Astrolabs – A co-working space and
Some ecosystem participants credit the formal                                      who participate in entrepreneurship and the                                    such Abu Dhabi’s annual Akoun business idea                                                  innovation hub sponsored by Google and
launch of the UAE tech ecosystem with the                                          many government programs targeted at local                                     competition that takes place at universities.24                                              other private-sector companies.
2010 event Celebration of Excellence (COE),                                        citizens suggest that not all startups have
                                                                                                                                                                  The UAE has introduced a ‘CEO of Innovation’                                           Other initiatives, such as Dubai SME are
in which PE firm Abraaj Capital and its seed                                       practical access to all programs and initiatives.
                                                                                                                                                                  role across different government agencies                                              tasked with supporting the needs of young
fund Riyada Enterprises held a conference                                          Over time, this could indicate some missed
                                                                                                                                                                  to champion the innovation agenda across                                               companies overall and at times provide
to launch Wamda, a platform to “inspire,                                           opportunities for knowledge sharing.
                                                                                                                                                                  different public sector functions.25 However,                                          meaningful support to tech startups.
                                                                                                                                                                  without a central authority overseeing efforts
                                                                                                                                                                  at the federal or emirates level, most activity
                                                                                                                                                                  happens at the federal, emirate, or free zone
 FIGURE 3: PROFILE OF THE TOP 100 TECH STARTUPS IN THE UAE ECOSYSTEM
                                                                                                                                                                  level. A number of programs and funds
                                                                                                                                                                  form the cornerstone of the government’s
      Business Model Breakdown                               Location Breakdown                                          Sector Breakdown
                                                                                                                                                                  commitment to tech entrepreneurship,
                                                                                                                            Social                                particularly for local citizens:
                                                                      Sharjah                                    e-finance Platform
         Mixed                                       Abu Dabhi
                                                                                                            High Tech
                                                                      1%                                                  4% 2%
                11%                                              6%                                  Advertising       5%
C2C
          5%                                                                                         & Big Data                                      e-retail
                                                                                                                                    25%
                                                                                                                   8%
                               52%
                                                                                                       Content
                                             B2C                                                       (VMG)       12%

            32%                                                                                                                            22%
                                                                           93%                                            22%
                                                                                                                                                    Marketplace
      B2B
                                                                            Dubai                                   SaaS & Iaas
VMG: Video, Music, Games
Source: OC&C analysi s based on Crunchbase

                                                                                                                                                                   The National. “Entrepreneurship and innovation must be taught at UAE universities: survey”. https://www.thenational.ae/uae/entrepreneurship-and-innovation-
                                                                                                                                                                  23

                                                                                                                                                                  must-be-taught-at-uae-universities-survey-1.154165 (accessed December 16, 2017)
20
  Balakrishnan, M. Stephens; Michael, Ian. “Abraaj Capital Limited: Celebration of Entrepreneurship (CoE)”. http://www.skyonefze.com/images/uploads/newspdfs/     24
                                                                                                                                                                     Gulf News. “UAE backs up winning spirit of entrepreneurship”. http://gulfnews.com/news/uae/education/uae-backs-up-winning-spirit-of-
case_study.pdf (accessed December 16, 2017)                                                                                                                       entrepreneurship-1.1160836 (accessed December 16, 2017)
 Wamda. “Announcing the new Wamda: A 360 degree approach to supporting entrepreneurship in MENA “. https://www.wamda.com/2012/01/-announcing-the-
21                                                                                                                                                                25
                                                                                                                                                                     Gulf Business. “UAE Creates ‘CEO Of Innovation’ Post For Government Agencies”. http://gulfbusiness.com/uae-creates-ceo-innovation-post-government-agencies/
new-wamda-a-360-degree-approach-to-supporting-entrepreneurship-in-mena (accessed December 16, 2017)                                                               (accessed December 16, 2017)
                                                                                                                                                                  26
                                                                                                                                                                     Gulf News. “Khalifa Fund to launch first incubator for innovation in UAE”. http://gulfnews.com/news/uae/government/khalifa-fund-to-launch-first-incubator-for-innovation-
22
     Global Entrepreneurship Monitor. “GEM 2016/2017 Global Report”. http://www.gemconsortium.org/report (accessed December 16, 2017)
                                                                                                                                                                  in-uae-1.1455322 (accessed December 16, 2017
                                                                                                                                                                  27
                                                                                                                                                                     Dubai Future Foundation

26      Tech entrepreneurship ecosystem in United Arab Emirates				                                                                                                                                                                                               Tech entrepreneurship ecosystem in United Arab Emirates                  27
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