The U.A.E.'S Startup Ecosystem and Opportunities for U.S. Investors

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The U.A.E.'S Startup Ecosystem and Opportunities for U.S. Investors InvestUAE.com THE U.A.E.’S STARTUP ECOSYSTEM AND OPPORTUNITIES FOR U.S. INVESTORS MARCH 2017 1 THE U.S.-U.A.E. EMBASSY OF THE BUSINESS COUNCIL UNITED ARAB EMIRATES The U.S.-U.A.E. Business Council is the premier The mission of the U.A.E. Embassy Trade & Commercial business organization dedicated to advancing bilateral Office in the United States is to strengthen the bilateral trade commercial relations. By leveraging its extensive networks relationship between the United Arab Emirates (U.A.E.) in the U.S. and in the region, the U.S.-U.A.E. Business and the United States (U.S.). Our nations’ complementary Council provides unparalleled access to senior decision resources fuel increased economic partnership, expanded makers in business and government with the aim of security cooperation, and innovative cross-cultural investment. deepening bilateral trade and investment. Additionally, the Trade & Commercial Office supports the U.A.E. government in benchmarking U.S. innovation and entrepreneurship best practices in the development of U.S.-U.A.E. Business Council a sustainable startup ecosystem within the U.A.E. This is 505 Ninth Street, NW accomplished through building bridges with venture capital Suite 6010 firms, educational institutions, and U.S.-based incubators Washington, D.C. and accelerators. This is a key priority for the U.A.E. Embassy +202.863.7285 Trade Office and we hope this report helps with these efforts. [email protected] usuaebusiness.org Embassy of the United Arab Emirates Trade & Commercial Office 3522 International Court, NW Washington, DC +202.243.2425 [email protected] uaetrade-usa.org TABLE OF CONTENTS Introduction ...............................................................4 Part I: Burgeoning Startup Scene .............................................6 A. ENTREPRENEURS .......................................................................7 B. STARTUPS, SCALEUPS, AND SUCCESSES ..................................................7 C. E-COMMERCE ...........................................................................8 D. DIGITAL TECHNOLOGY ..................................................................9 Part II: Business-Friendly Environment ........................................10 A. REGULATIONS ..........................................................................11 B. TAXES .................................................................................12 C. FREE ZONES ...........................................................................12 D. PRO-SME POLICIES .....................................................................13 E. INNOVATION AGENDA ..................................................................14 Part III: Strong Startup Support .............................................16 A. CO-WORKING SPACES ..................................................................17 B. INCUBATORS ...........................................................................17 C. ACCELERATORS ........................................................................18 D. ENTREPRENEURSHIP INSTITUTES AND TRAINING PROGRAMS ............................18 E. EVENTS ...............................................................................19 F. RESOURCES AND NETWORKING TOOLS .................................................19 Part IV: Diverse Funding Sources ........................................... 20 A. FINANCIAL CENTERS ...................................................................21 B. VENTURE CAPITAL .....................................................................21 U.A.E.-Based Funds .....................................................................22 Seed-Stage Funds .................................................................22 Early-Stage Funds .................................................................22 Growth-Stage Funds ...............................................................23 Sector-Specific Funds ..............................................................23 U.A.E. Offices of Regional and International Funds ..........................................23 C. ANGEL INVESTMENT ...................................................................24 Angel Funds ...........................................................................24 Angel Networks ........................................................................25 Angel Platforms ........................................................................25 D. PRIVATE EQUITY .......................................................................26 Dubai-Based Funds .....................................................................26 Abu Dhabi-Based Funds .................................................................27 U.A.E. Offices of Regional and International Funds ..........................................27 E. PRIVATE-SECTOR LENDING .............................................................28 F. PUBLIC-SECTOR LENDING ..............................................................29 Part V: Opportunities for U.S. Investors .......................................30 A. PROMISING VENTURES AT GOOD VALUATIONS ..........................................31 B. INVESTMENT PARTNERSHIPS AND SOURCES OF CAPITAL .................................32 Arab Angel Fund .......................................................................32 C. IDEAL REGIONAL HEADQUARTERS ......................................................33 Strategic Location and Connectivity .......................................................33 Political Stability and Quality of Life ......................................................34 Financial Free Zones ....................................................................35 Part VI: Resources .........................................................36 A. U.S. GOVERNMENT INSTITUTIONS ......................................................37 B. U.A.E. GOVERNMENT INSTITUTIONS ....................................................38 C. TRADE ASSOCIATIONS ................................................................. 40 Appendices ...............................................................42 APPENDIX A: SUCCESSFUL U.A.E.-BASED STARTUPS .........................................42 APPENDIX B: PROMISING U.A.E.-BASED STARTUPS ..........................................44 APPENDIX C: POPULAR U.A.E. FREE ZONES FOR STARTUPS. .48 APPENDIX D: CO-WORKING SPACES IN THE U.A.E. ..........................................49 2 APPENDIX E: U.A.E.-BASED INCUBATORS AND INCUBATOR PROGRAMS/PLATFORMS ..........50 APPENDIX F: U.A.E.-BASED ACCELERATORS .................................................51 APPENDIX G: U.A.E.-BASED ENTREPRENEURSHIP AND INNOVATION INSTITUTES .............52 APPENDIX H: U.A.E.-BASED ENTREPRENEURSHIP TRAINING PROGRAMS .....................54 APPENDIX I: U.A.E.-BASED STARTUP WEEKENDS, STARTUP COMPETITIONS, AND STARTUP AWARDS ...................................................................54 APPENDIX J: SELECT STARTUP-FRIENDLY CONFERENCES, SUMMITS, AND EXPOSITIONS IN THE U.A.E. ..........................................................55 APPENDIX K: STARTUP RESOURCES AND COMMUNITY FORUMS .............................56 APPENDIX L: VENTURE CAPITAL FIRMS AND FUNDS WITH U.A.E. PRESENCE ..................56 APPENDIX M: ANGEL FUNDS, INVESTOR NETWORKS, AND PLATFORMS WITH U.A.E. PRESENCE ...................................................................59 APPENDIX N: PRIVATE EQUITY FIRMS WITH U.A.E. PRESENCE ...............................61 APPENDIX O: SME-FRIENDLY U.A.E. BANKS AND PRIVATE-SECTOR LENDING INSTITUTIONS ..................................................................65 APPENDIX P: U.A.E. GOVERNMENT PROGRAMS TO SUPPORT LOCAL SMES ...................66 Resources .................................................................67 3 INTRODUCTION “I have been active in the MENA region for over two decades and have seen the U.A.E.’s massive efforts to build a sustainable tech ecosystem first hand. It is gratifying to see the fruits of that labor pay off in the form of many highly investible ventures across multiple sectors.”1 - Christopher Rogers, Partner, Lumia Capital 4 The U.A.E. has long served as a magnet for entrepreneurs All of this bodes well for enterprising U.S. investors looking from throughout the region who are looking to start or to enter this space. Investors will find numerous startups scale businesses. This is particularly true for businesses in that are set up to succeed by strong underlying economic the e-commerce sector, where the U.A.E. has given rise currents and a supportive environment. Moreover, investors to blockbuster successes such as Souq.com, Namshi, and will discover relatively attractive valuations given the recent MarkaVIP. decrease in oil prices. At the same time, investors will enjoy a business-friendly environment in which to establish their own This trend shows no signs of abating. After all, the U.A.E. operations, forge meaningful investments partnerships, and provides startups with a relatively favorable regulatory attract capital for ventures both inside and outside the U.A.E. framework, low taxes, and strong government support. The U.A.E. also offers startups numerous co-working spaces, This report will begin by providing an overview of U.A.E. incubators, accelerators, training programs, and networking startups. The next three sections will then demonstrate in opportunities to get their businesses off the ground. In detail why startups are making the U.A.E. their home and addition, the U.A.E. – as the
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