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Ranking 2nd, Abu Dhabi ranks as fastest-growing emerging ecosystem in MENA

Ranking 2nd, Abu Dhabi ranks as fastest-growing emerging ecosystem in MENA
10 June 2024 18:38

MOHAMMAD GHAZAL (ABU DHABI)

With its $1.5 trillion of sovereign wealth, Abu Dhabi is continuing its march as a thriving entrepreneurial hub as evident in its ranking as the fastest-growing emerging ecosystem in the Middle East and North Africa (MENA) region, marking a 28% growth in ecosystem value in the 2024 Global Startup Ecosystem Report (GSER). 

The report, by Startup Genome and the Global Entrepreneurship Network, was launched on Monday at London Tech Week. 

The report is a comprehensive analysis of the current state of startup ecosystems worldwide based on extensive research and analysis of data from 4.5 million startups across 300 global ecosystems and over a decade of independent research and providing policy advice to more than 160 economic and innovation ministries and public/private agencies in over 55 countries.

The report found that Abu Dhabi’s ecosystem created $4.2 billion in Ecosystem Value from July 1, 2021 to December 31, 2023, representing 28% compound annual growth compared to July 1, 2019 to December 31, 2021 time period. Ecosystem Value is a measure of economic impact, calculated as the value of exits and startup valuations. Abu Dhabi’s ranking jumped 15 spots compared to the previous year, landing in the 61-70 group, it added.

The UAE capital also came in second in MENA in ecosystem performance, which measures the size and performance of an ecosystem based on the accumulated tech startup value created from exits and funding.

According to the report, total early-stage funding between July 1, 2021-December 31, 2023 was $284m and total venture capital funding for 2019 - 2023 was $1.06 billion.

In the category of ecosystem in funding, Abu Dhabi came in fifth in the MENA region and in the category of ecosystem in talent and experience it stood at the  fifth place, according to the GSER.

“Our technology ambitions are being realised by Abu Dhabi’s underlying commitment to supporting transformative ventures that are making an impact globally while advancing our Falcon Economy for the long-term prosperity of the Emirate,” H.E. Ahmed Jasim Al Zaabi, Chairman of the Abu Dhabi Department of Economic Development (ADDED), and Chairman of Hub71, said in the report

Ahmad Ali Alwan, Chief Executive Officer of Hub71, said the ranking was a testament to the emirate’s achievements.

“We are excited to see Abu Dhabi ranking go up. It is a testament to the great work that Abu Dhabi has done across the board, but also to the support and the focus of HUB71, and ensuring that we are creating value within the tech ecosystem that we have,” Alwan told Aletihad during an interview.

“The UAE is establishing its capital city as one of the world's most prominent destinations for high-growth technology companies,” read the report.

It referred to Hub71, Abu Dhabi's global tech ecosystem, which has grown to accommodate over 315 startups that have collectively raised $1.5 billion in funds since its 2019 inception. Hub71 applications doubled in 2023, with 38 onboarded startups and 77 new commercial deals worth $134 million. In the past year, the tech ecosystem extended its reach into specific sectors aligning with Abu Dhabi's economic priorities. 

Hub71+ specialist ecosystems were born to cater to startups innovating in Web3 and Digital Assets and Climatetech, with more on the horizon.

"Thanks to the excellent work of Hub71, Abu Dhabi is one of the rare places where everyone comes together to create a world-class startup ecosystem at an incredible pace," said Marc Penzel, Founder & President of Startup Genome. "Whether it's digital assets, CleanTech, or other fast-growing opportunities, Abu Dhabi should be on the radar of any entrepreneur with outsized global ambitions."

The report added that Abu Dhabi Global Market (ADGM), one of the world's largest financial districts, is renowned for its innovative regulatory frameworks and role in fostering economic diversification. 

Many tech companies are choosing to establish their global headquarters in ADGM, including ABHI from Pakistan. This embedded finance platform is part of Hub71 and has received support from the Abu Dhabi Investment Office. 

Another success story is RemotePass, which partnered with Hub71 to help founders attract highly skilled remote talent worldwide. Andalusia Labs, a US-based digital asset security firm, achieved unicorn status after closing a $48 million Series A round in December 2023, it added.

Top Sectors

The report highlighted the sub-sectors' strength including Fintech, Climatetech and Web3 and Digital Assets.

ADGM's 2023 Abu Dhabi Finance Week attracted more than 18,000 delegates from over 100 countries. One of its pillar events was Fintech Abu Dhabi, spotlighting leading fintech conversations. It delved into topics such as investing in the next human agenda, how social media is rewriting the banking playbook, and digital payment trends. Breakout events included Blockchain Abu Dhabi, Al Abu Dhabi, and Risk 4.0. Separately, First Abu Dhabi Bank partnered with Microsoft to launch the Al Innovation Hub.

The UAE's leadership on addressing climate change took centre stage when it hosted COP28 in November 2023. 

Another noteworthy mention is that Abu Dhabi invested $1.4 billion of the total $1.85 billion investment in energy and mobility-related technology companies in the region. 

Furthermore, Hub71 launched ClimateTech+ to support the UAE's Net Zero by 2050 objective. UK-based Climatetech company Levidian established its HQ here in November 2023. Hong Kong-founded Archireef launched their global HQ here, embarking on marine restoration projects with various Abu Dhabi entities including AD Ports Group, supported by a $27 million ADQ R&D fund.

Abu Dhabi's Web3 and digital assets ecosystem is growing rapidly. Hub71+ Digital Assets is a specialised Web3 and blockchain ecosystem. ADQ-backed Zero Two, a digital assets infrastructure company, opened its HQ here to cater to Web3, ADGM partnered with Solana Foundation to promote Distributed Ledger Technology (DLT) solutions and blockchain innovation after pioneering the introduction of the DLT Foundations Regulations. Klumi Ventures, the UAE's first Web3 VC firm, launched two specialised funds: a $15 million Qualified Investors Fund for early-stage Web3 startups and a $100 million fund promoting technologies and decentralised sectors.

Why Abu Dhabi?

The report highlighted the Golden Visa, the government support and Abu Dhabi’s strategic location as key factors in reinforcing the emirate’s position.

The UAE Golden Visa offers foreigners a pathway to long-term residency with reduced investment thresholds and added flexibility, including the option to purchase off-plan properties. Benefits for holders include tax optimisation, no mandatory UAE residence, access to top-tier healthcare and education, and an easier visa acquisition process, it added.

Abu Dhabi's economic reforms include TAMM, an integrated digital platform providing over 700 government services; the Electricity Tariffs Incentive Program, offering competitive electricity tariffs to industrial SMEs; and the Open Data Portal, facilitating access to company data for informed investment decisions. The Smart Manufacturing Incentive Programme was also launched in 2023, establishing the Smart Manufacturing Competence Centre to support transition to Industry 4.0.

Abu Dhabi now stands as an international business nexus, being a gateway to markets across the Middle East, Africa, and South Asia with world-class infrastructure and connectivity. A third of the globe is reachable within a four-hour flight and 80% is accessible in under eight hours, it added.

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