The UAE is looking to build major start-up investment ties with Britain
As the UAE continues its journey to becoming a fully- fledged tech hub, the government is looking to the UK to draw in talent and investment to the emirate.
Tech investments have become increasingly important for oil-rich Gulf countries as they seek to wean themselves off the oil industry.
In June last year, the Abu Dhabi state investment firm Mubadala made its intentions clear by headquartering its new $400m (£309.5m) European tech start-up fund in London. Japan’s SoftBank is said to be providing half the cash for the new Mubadala tech fund.
The new fund will invest between $5m and $30m in suitable European start-ups, insiders told the Financial Times.
The fund said at the time it would target “founder-led, high growth technology companies with global scale and impact”. It will also help European companies establish operations in Abu Dhabi.
Ibrahim Ajami, head of Mubadala Ventures, the US-based venture capital arm of Mubadala Investment Company, tells Arabian Business in an exclusive interview: “We are interested in attracting founders with great ideas from all over the world. We are particularly interested in start-ups from the UK and Europe as we have launched our fund to invest in technology companies across the continent.”
As part of Mubadala’s investment strategy, Ajami says the firm will be expanding the fund of funds programmes.
“We will be investing in both established and emerging fund managers from our London office,” he says.
The Mubadala Ventures boss says the launch of Hub 71 – the UAE’s new tech hub – is ‘pivotal’ to his global investment strategy.
Hub71, announced in March, will offer $145m (AED535m) of investment to tech start-ups. The hub aims to bring together seven distinct pieces of a start-up ecosystem: start-ups, VCs, accelerators, tech companies, corporations, universities and R&D and government.
According to Hub71 head Mahmoud Adi – who is also Mubadala’s vice president of technology, manufacturing and mining – the hub hopes to attract as many as 100 tech start-ups over the course of the next two to three years, with the first residents officially ‘on-boarded’ in late April.
“This is a global company that focuses on entrepreneurs and global talent, fostering entrepreneurship from Abu Dhabi to the globe,” Adi told Arabian Business in March.
According to Ajami, the hub will place particular emphasis on collaborating with major UK and European tech ecosystems attract STEM and engineering talent to establish their start-up bases in Abu Dhabi.
“The UK is a key market for Mubadala and Hub71 ecosystem of investors,” Ajami says. “Britain has an immense pool of talent, startups, investors and scale-ups and we warmly invite them to establish their start-ups or regional headquarters at Hub71 in Abu Dhabi.”
The Mubadala Ventures head notes that the Abu Dhabi-backed firm has made several strategic investments in the UK, specifically through its $15bn commitment to the SoftBank Vision Fund that aims to invest in technological change and innovation that is transforming global industries.
“Most recently, we have invested in Hyperoptic, the UK’s largest fiber optic broadband provider,” he says.
Ajami cites this year’s record $3.1bn Uber-Careem deal as a prime example of the ‘growing interest’ in the MENA region and the emirates as a hub for business.
“Notwithstanding our long history with the UK, the UAE’s primary language of business is English, the UAE ranks eleventh place in the World Bank’s annual ease of doing business survey and has large market growth potential,” he says.
Britain has an immense pool of talent, startups, investors and scale-ups
According to Ajami, Abu Dhabi’s Hub71 provides the ‘perfect test-bed’ for new technologies and innovations, particularly for mobile apps and IOT.
“The country is reported to have the highest mobile penetration rate in the world, and possesses one of the world’s highest digital literacy rates, so if the MENA region isn’t on your radar, it should be,” he says.
London-based investment firm Hambro Perks will be one of the first British VCs to enter Abu Dhabi, when it sets up shop in the emirate later this year.
Dominic Perks, founder and CEO of Hambro Perks says the firm is ‘keen’ to support its portfolio scale outs to the Middle East.
“We view Abu Dhabi as a gateway for us and our portfolio companies to tap into the Gulf’s $1.5tn market,” Perks tells Arabian Business.
“The opportunity for Hambro Perks and our portfolio companies to set up businesses with 100% foreign ownership and minimum set up hurdles is also particularly attractive, and enables a faster go to market speed and execution,” says Perks.
The Hambro Perks founder says the UK has a long heritage of innovation, with the tech start-up scene blossoming with growing entrepreneurial talent and many innovative companies.
Perks says: “Promoting entrepreneurship became a central tenet of the UK’s economic strategy under the Cameron-Osborne premiership. The vision has worked, because London is now the VC capital of Europe.”
Perks says the UK VC scene is now well established, with a strong track record and a start-up mindset, which makes it a a solid investment case for the Middle East to ‘consider and explore’.
“We are excited to be working closely with the authorities around our move into the UAE, and fully support the vision of Hub71,” he says.
Wes Schwalje, COO of Dubai-based research firm Tahseen Consulting, notes that the Softbank-backed Vision Fund, has not yet placed many investments in UK companies. “These overseas offices look likely to change that,” he says.
If the MENA region isn’t on your radar, it should be
“The recent announcement by Saudi Arabia’s Public Investment Fund that it will open offices in New York, San Francisco, and London, as well as Mubadala’ s pioneering moves to open global offices are signs that a combination of investment and more aggressive pipeline development is needed to attract top global startups,” Schwalje says.
The COO says that while there are currently a number of UAE initiatives in place to promote cross-ecosystem entrepreneurship mobility, more needs to be done to encourage cross-deal flow and collaboration.
“Inbound programmes to attract top international startups providing market access, guidance on localisation, and, in some cases, investment, are a primary strategy for the UAE government.
Scwalje says that programmes like Dubai Future Accelerators, Hub71 and the UAE’s FinTech sandboxes have formed a foundation for the country’s collaborative intentions, but there is still ‘significant room’ for more cross-ecosystem partnerships between accelerators in the UK and UAE to promote more awareness about market opportunities in the MENA region.
“While UK startups have participated in the UAE programmes, their numbers have been eclipsed by startups from other competing startup hubs.
“For many global tech companies, the MENA region remains a non-priority since there is not a lot of awareness about opportunities in the region and access to the UAE does not necessarily guarantee smooth scaling to other regional countries.”
The COO says an ongoing key weakness within the UAE ecosystem is developing initiatives which enable globally-competitive UAE start-ups and SMEs to access global markets like the UK.
“Much of the investment and interest from regional funders and policymakers has been unidirectional with a focus on providing access to global tech startups to the UAE,” Schwalje says.
“The key to getting more UAE companies to think global is ramping up outbound programmes for UAE companies to attain access to global entrepreneurship ecosystems like the UK where they can find the funding and customers to go global.”