Ideas flow rapidly in the UAE

Ideas flow rapidly in the UAE
Ideas flow rapidly in the UAE

The region is a magnet for fintech growth, writes an entrepreneur behind a Dubai start-up. The UAE is known for tall buildings, large projects on sea, oil economy, trading and real-estate projects. The landscape is transformed with e-commerce start-up SOUQ.com taken-over by Amazon for over $650 million. The UAE is a very small country with 10 million people and seven emirates, diversity is huge with people from over 160 countries. So ideas flow rapidly. Given the context of the vision of the UAE and its government's innovative policies are major attractions for start-ups to choose the country as a base. The size of the funds that the UAE market would attract during this year will be close to $1 billion. The current year may see the figures of 2016 - 120 deals valued at $889 million - being topped as the region has seen $36 million in funding so far from 35 disclosed deals and multiple venture capitalists raising a second fund for the region, according to MAGNiTT, the largest online engagement platform for start-ups in the MENA region. The year 2017 has already witnessed the largest MENA technology exit in history i.e. SOUQ.com, at around four times the size of the previous record holder. Exits are key to the growth of the ecosystem. Start-ups should be optimistic that their companies can succeed and proposer with exit options existing in the region. Simultaneously, investors, whether institutional or angel, begin to see returns on their investments. Currently many start-ups are coming in to the UAE in fintech. The Dubai government arm DIFC launched DIFC HIVE to encourage fintech start-ups, similarly the Abu Dhabi government entity launched ADGB Reg Lab - one of the best regulation labs in the world. Here people/companies can bring their ideas where ADGB Reg Lab will customise regulations as per the innovation, RUN it for two years and decide whether it can go big-bang or do we need to sunset the innovation. Other Major Attractions:

  • EXPO 2020 - The UAE government is spending over $5 billion towards services where start-ups and SMEs can participate and have a share of the big pie.
  • 10X Initiative: The UAE has asked all its government departments to be improved by 10 times by using technology which has given rise to mobile application usage and led to government departments being ahead of private companies.
  • Blockchain as a service: The Dubai government will launch Blockchain as a service and all entities are expected to be part of the UAE Blockchain by 2020.
  • The Dubai Start-up HUB by Dubai Chambers which encourages both citizens and residents to access the funds for innovative projects.
  • Introduction of the bankruptcy law.
According to XYZ: “In America, in Silicon Valley, they actually call it the 'PayPal effect' because once you become very successful a bunch of wealthy people are created to put money into the ecosystem but then you have experienced entrepreneurs who have done it before. So it's not a surprise that PayPal kicked out Reid Hoffman of LinkedIn, Elon Musk, and Max Levchin [the chief executive of the digital lending start-up Affirm] and literally hundreds of other people. “I believe that we are going to be talking in a few years of the Souq.com effect because [Ronaldo Mouchawar, the chief executive of Souq.com] is going to kick out a bunch of entrepreneurs and people with wealth that will put this back into the ecosystem, create better companies and more companies and jobs and that's the flywheel of success that I think will happen here as well.” According to research from Magnitt, a networking site for investors and entrepreneurs, 35 per cent of the founders of the MENA region's top 100 start-ups have previously worked at leading regional e-commerce companies such as Yahoo Maktoob, Dubizzle, Bayt and Zawya. As the ecosystem continues to grow we see the emergence of new venture capitalists in the MENA space as well as new funds being raised by existing venture capitalists including MEVP, Wamda Capital and Beco Capital to name a few. Venture capitalists with notable activity in first quarter include Silicon Badia, MEVP, BECO Capital and WAMDA Capital, as per the MAGNiTT report.
Radhakrishna Thatavarti is the founder of Oxyloans, a Dubai-based peer-to-peer lending start-up.

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