The Center East and North Africa (MENA) is changing into a number one vacation spot for fast-growing tech startups. In 2020, the area reached a document $1 billion in startup investments, signaling a voracious investor urge for food within the expertise sector.
The maturing digital financial system coupled with region-wide innovation initiatives make MENA a gorgeous place to launch or scale a startup for an rising variety of world entrepreneurs. Heavy hitters like Microsoft, Google, and Amazon are additionally investing within the area, and up to date investments are trending in the direction of later-stage offers, indicating that the land is ripe for alternative.
For fintechs specifically, Dubai has develop into a gorgeous hotspot from which founders can scale their operations throughout the Center East and the broader MENA area.
The UAE is now dwelling to 33 of the area’s 50 most funded startups, adopted by Saudi Arabia and Egypt, with a overwhelming majority of success tales born in Dubai. There’s Uber’s acquisition of Careem for $3.1 billion. Then there’s Dubai unicorn Swvl’s itemizing on the Nasdaq, and fintech chief PayTabs taking the area by storm.
These successes, amongst others, have created a groundswell of pleasure concerning the Emirate’s potential for world startup domination.
For founders looking for to broaden past their present borders, right here’s what it is advisable to learn about Dubai’s fintech ecosystem.
Funding alternatives abound
When selecting a base in a brand new area, the supply of funding alternatives is among the key deciding components. In keeping with Magnitt’s Rising Enterprise Markets Report, in 2021 UAE primarily based startups acquired the lion’s share of whole funding and the best variety of offers within the MENA area.
One of many prime 5 fintech funding rounds in Q1 went to Dubai-based NOW Cash at $7 million. Co-founders Ian Dillon and Katharine Budd will now use the funding to develop their UAE primarily based operations additional and broaden their enterprise into Saudi Arabia.
Q2 and Q3 noticed even bigger offers with ‘purchase now, pay later’ (BNPL) startup Tabby closing a $50 million spherical in August. In keeping with Chief Govt, Hosam Arab, the corporate is planning to keep up its Dubai base, whereas persevering with to broaden into new markets.
SEZs provide business-friendly laws and licensing choices
One of many largest challenges of building your self in a brand new market is overcoming the market processes, from getting accustomed to the native laws to getting the proper licenses for your corporation to begin operations.
To assist develop native enterprise and entice worldwide founders, the UAE arrange various particular financial zones with their very own impartial jurisdictions and business-friendly civil and industrial legal guidelines.
The main platform within the MEASA area is Dubai Worldwide Monetary Centre (DIFC) established in 2004 to facilitate the expansion of the Emirate’s finance scene. It’s now ranked within the prime 20 monetary centres on the earth and hosts over 3,200 energetic firms together with over 1000 finance and innovation associated firms.
As a particular financial zone, DIFC presents key advantages similar to zero tax on enterprise revenue and earnings, 100% international possession, and no restrictions on international alternate or capital/revenue repatriation. As well as, the DIFC is based on business-friendly legal guidelines, derived from English frequent legislation rules, addressing insolvency, superior employment and pension provisions, and globally suitable knowledge safety laws. Its strong but versatile enterprise and authorized framework gives a secure setting for market newcomers. One other profit for fintechs specifically is the zone’s licensing choices, together with subsidies and a testing license launched to permit for higher experimentation.
A novel facet of DIFC is the group hub it’s facilitated for tech corporations via the DIFC Innovation Hub, an vital pillar of the brand new Dubai Future District. It’s dwelling to the most important innovation ecosystem within the area and paves the best way for early stage startups, progress stage startups, unicorns, and massive Tech corporations to come back collectively.
Because of this Julian Dixon, CEO of cybersecurity fintech Napier, determined to launch the corporate’s Center East operations within the DIFC Innovation Hub. In a current podcast with Innovate Finance, Dixon mentioned:
“It provided us a frictionless method of organising a presence within the Center East. This allowed us to give attention to scaling quickly, with out the issues we had skilled in different elements of the world similar to complicated legal guidelines and banking operations.”
Digital infrastructure and tech expertise
Together with favorable laws, for innovation to occur, you want a stable digital infrastructure. And it simply so occurs Dubai’s important goal is to rework itself into a world expertise hub. Consequently, it’s adopting rising applied sciences at a fast fee and, extra importantly, introducing new laws to maneuver the method ahead.
One in all its first targets has been to develop into the ‘first blockchain powered metropolis’ with the aim to have 50% of economic transactions completed on the blockchain. DIFC hosted the inaugural Blockchain week at its Innovation Hub, to debate the adoption and regulation of blockchain tech with stakeholders throughout the ecosystem.
Past this, tech corporations centered on the crypto growth will likely be to know that the Dubai Monetary Providers Authority (the impartial regulator of economic providers carried out in or from the DIFC) not too long ago launched a regulatory framework for Funding Tokens.
Town additionally launched a Chamber of Digital Economic system which is ready to develop a digital-centric financial progress plan centered on attracting funding, worldwide expertise, and entrepreneurs, and proposing digital financial system pleasant insurance policies and laws.
In fact, even with the most effective digital infrastructure in place, you possibly can’t construct an awesome fintech with out tech expertise. In keeping with the IMD World Competitiveness Centre’s newest World Expertise Report, the UAE maintained its place as the highest nation for tech expertise within the Arab world and second place within the MENA area (after Israel). Within the world rating, it reached twenty third place.
Dubai specifically continues to draw worldwide expertise with its prime quality of life. It’s been ranked the most effective metropolis to dwell and work within the MENA area by Kearny’s International Cities Report for eight consecutive years. InterNations’ Expat Metropolis Rating 2021 noticed Dubai attain third place out of 57 cities that had been ranked.
Nonetheless undecided if Dubai is true on your fintech?
In fact coming into a very new market might be intimidating, particularly if you happen to don’t have contacts or expertise in that area to start with.
In keeping with Daumantas Grigaravicius, Nation Supervisor UAE at Ebury, organising their startup’s presence in Dubai felt like ranging from scratch. Not being accustomed to the market, they determined to go for a sandbox strategy, organising a brief workplace in DIFC to get a greater sense of the enterprise dynamics and perceive the consumer base.
This allowed us to successfully dip our toes in and see how issues work. Then, once we determined to maneuver ahead, DIFC had been very supportive in serving to us get the mandatory licenses and organising.
Going into a brand new market might be daunting, however having a accomplice that can provide you a direct contact and path to friends helps.