Today's Edition
TALAH TURK (ABU DHABI)
International startups are increasingly eyeing the UAE as a global tech hub for growth, according to Flat6Labs, the leading venture capital firm in the Middle East and North Africa (MENA) region.
Analysing over 4,000 applications to its Ignite seed funding and incubator programme from June 2021 to October 2023, the report, which was published on Tuesday, revealed a remarkable 284% increase in applications from startups outside the MENA region over the past two and a half years. This affirms the success of the UAE’s initiatives to attract innovative businesses.
Flat6Labs noted a consistent 2x increase in applications from UAE-based startups over five programme cycles. The types of businesses that applied range from fintech, enterprisetech and healthtech to proptech, HRTech, e-commerce, and web3, among others.
The General Manager at Flat6Labs UAE, Ryaan Sharif, commented saying: “The nation’s highly active VC and investor community, favourable legislation, rich talent pool, high standards of living, and coveted position as the gateway to the thriving MENA region, and indeed the world, make it ideal for disruptive businesses to establish their global headquarters.”
UAE’s One-of-a-Kind Landscape
Sharif elaborated on the local market’s ability to attract and retain international startups saying: “While the challenges of inflation, supply-chain jitters, talent shortages and more have plagued many countries in recent years, the UAE has suffered less from these externalities than many other nations regionally and globally. Moreover, the UAE capital is an economic and transportation hub to the rest of the MENA region, where we have seen extraordinary expansion in startups, especially in the tech space. The MENA region offers a diverse customer base that is more tech-savvy than average because of the region’s relatively young demographic. This should attract tech startups, which are primed to capture market gaps through the latest niche consumer app or efficiency driving B2B platform.”
“Many of the region’s industries are in introspection mode right now - looking at ways of reinventing themselves. This trend also represents a smorgasbord of gaps waiting to be filled by apps and solutions,” he added.
Women Empowerment
The report also highlights a 244% increase in applications from female-founded start-ups over the same period, comprising 32% of all Ignite programme applications. The maturation of the startup ecosystem is evident as more applications come from revenue-generating startups compared to ideation, launch, or minimum viable product stages.
Sharif explained the country’s appeal for startups founded by women saying: “The UAE has made strides in closing the funding gap for female founders. At Flat6Labs, we see an even split in men and women applying to our Abu Dhabi-based Ignite programme, and of the over 2,000 startups supported by our company over the last decade, an impressive 36% have been female-led.
“The UAE offers female founders great scope for securing investment and achieving success. For example, the country has been focused on playing a lead role in the global effort against climate change – demonstrated most recently by the country successfully hosting COP28. Recent research shows women are 20% more likely than men to found companies with a social or environmental purpose, and this aligns strongly with the vision of the UAE government.”
He stressed that “Governments and investors are beginning to realise the positive economic implications of being more inclusive of women in the entrepreneurial ecosystem.
2024 Projections
For this coming year, Sharif expects VCs to continue to follow a similar approach to investing as they did in 2023. “They will stay cautious, seeking valuations based on hardline financial fundamentals, which led to longer evaluation periods.”
Nonetheless, Sharif took the opportunity to share a few words of encouragement saying: “There is still plenty of scope for well-prepared startups to secure the funds they need to thrive.
In my experience, the startups that will be especially well positioned to draw investor attention in 2024 are those that have based their disruptive innovations around sectors that the government is heavily backing. So, despite challenges, 2024 holds promise for Fintech, Generative AI, e-Commerce enablement, Healthtech and
Renewable Energy Tech innovators.”
