This article was originally published on 22 September 2020, by ADGM's Staff Editor
In the 2019/2020 Global Report issued by the Global Entrepreneurship Monitor (GEM), the UAE ranked 5th on the National Entrepreneurship Context Index (NECI), up 2 spots from 2018. This improvement in the international ranking demonstrates the country’s ongoing efforts to provide entrepreneurs with a business-friendly environment where they can thrive and flourish.
In fact, over the past few years, the Abu Dhabi government and all its respective agencies, alongside the private sector have been working together on designing and establishing initiatives and mechanisms to shape and support the UAE startup ecosystem.
Building a founder-centric ecosystem
From the very beginning, Abu Dhabi support institutions have put the needs and the interests of founders at the heart of their ecosystem development agenda.
“We are building a dynamic community in the UAE’s capital, driven by entrepreneurs, for entrepreneurs”, declares Ahmad Alwan, Head of Strategy and Corporate Development at Hub71.
To achieve this goal, the hub facilitates easier access to capital for startup, regional market access, global networks, mentorship, 50-100% subsidised housing, office space and health insurance for up to 25 employees over a period that can reach three years.
All these inputs are highly valued by the entrepreneurs as Walid Daniel Dib, founder of Addenda, a blockchain InsurTech company based in Hub71, confirms highlighting the importance of having the team in one place: “Before joining Hub71, our team was spread out across several continents. Hub71 allowed us to move our team and their spouses from India, Nigeria, and Jordan to one single office in Abu Dhabi. Hub71's ecosystem exposed us through their events and seminars to global VCs, think tanks, and partnerships.”
In addition to incentive packages, public funding plays a key role in helping innovative ventures get their business off the ground, invest in new technologies and ultimately scale.
For H.E. Dr. Tariq Bin Hendi, Director General of Abu Dhabi Investment Office (ADIO) maximum impact requires a mix of funding strategies: “Abu Dhabi offers a range of financial incentives to support early-stage companies in making their ideas a reality, including rebates and grants from ADIO to support investments in innovation; subsidised housing, healthcare and office space from Hub71; and direct investments from ecosystem partners, such as ADQ and Mubadala.”
H.E. Dr. Tariq Bin Hendi also adds: “Each type of support has its own benefits for startups and may be more or less relevant for a particular company based on its growth strategy.”
Lowering the legal barriers
Providing a business-friendly regulatory environment is another fundamental measure to de-risk the critical early phases of setting a new enterprise. And this is where Abu Dhabi Global Market (ADGM) comes into action.
Through its trusted jurisdiction and internationally recognised legal framework, ADGM plays a pivotal role in addressing regulatory challenges for entrepreneurs and startups in the region.
Juma Al Hameli, Senior Executive Director - Strategy & Business Development at ADGM explains: “As one of the key ecosystem enablers, we are an integral component for nurturing the entrepreneurial spirit in Abu Dhabi, by providing a progressive regulatory infrastructure and support services required to enable the growth of a tech ecosystem.”
One of the legal structures offered by the international financial center is ADGM Tech License; a sector-agnostic startup licence that focuses on improving the ease of doing business by reducing set-up costs and related requirements that local and international tech entrepreneurs deal with in the UAE.
Thanks to its innovative and recognised regulations, ADGM allows founders to build trust in their solutions globally while working closely with the regulators and the leading corporates and financial services organisations to build compliant-by-design solutions and grow their market.
These advantages are highlighted by Sky Kurtz, CEO of Pure Harvest Smart Farms, an AgriTech firm located at the financial center: “ADGM regulatory framework and support was extremely important to our ability to access international capital. It provided comfort, visibility and tax clarity. It has enabled us to access a broader set of investors and provided a credible legal company structure. In addition to being a great place to live, the responsiveness and support provided by ADGM and the various Abu Dhabi entities developing the ecosystem has been incredible”.
Raising the profile of the local tech scene
Abu Dhabi support institutions’ efforts do not stop at the local level. They are continuously working on attracting foreign well-established organisations, companies, startups and funds into the ecosystem in order to enhance its international reputation.
Hub71 has been very active on this front. It has, for example, partnered with Microsoft to deliver the Reactor Programme, an initiative that helps startups access mentorship. It has, as well, initiated collaborations with Aldar and ADCB to allow Hub71’s ventures to potentially gain new customers.
“These partnerships support our mission to showcase Abu Dhabi, the UAE and the wider MENA region to international startups, highlighting ways for businesses to explore lucrative opportunities. They create significant opportunities to boost access to market opportunities for high caliber international startups, and create opportunities for Hub71’s startups to expand into new markets”, explains Ahmad Alwan.
ADGM is also a major player in this field. On the strength of its English Common Law principles, arbitration and dispute resolution framework, and comprehensive portfolio of digitally innovative financial and regulatory services, it has become home to global powerhouses such as Citibank, HSBC, BNP Paribas, Standard Chartered, Siemens in addition to Plug and Play, one of the leading accelerators in the world.
Internationally-renowned startups, like the FinTech unicorn TransferWise and the RegTech company Cynopsis Solutions, have also selected ADGM as their jurisdiction of choice in the region to expand their business.
“The opening of our new office in Abu Dhabi will allow Cynopsis to better serve its existing clients in the region and act as a platform for further growth and partnership opportunities. Abu Dhabi being the first country in the region to license a digital bank made it a natural choice to open our first office in MENA”, admits Avere Hill, Co-founder & CEO (EMEA) of Cynopsis Solutions.
Forming strategic alliances
To strengthen and accelerate the growth of Abu Dhabi’s tech ecosystem, the different enabling entities have come together to establish valuable and practical collaborations among them.
One example is the partnership between ADIO and ADQ where both organisations aim to create, using a combination of equity investments and incentives, winning propositions for companies by allowing them to fully benefit from Abu Dhabi’s digital infrastructure, regulatory framework and research and development capacities. Under this structure, ADQ helps drive equity investments in early-stage firms as well as in venture capital funds, while ADIO is responsible for managing incentives and other forms of support to the ventures.
“Abu Dhabi has invested heavily into fostering a safe ground for innovation and building an environment where startups are able to access the support they need to grow. This is only possible because of our collaborative ecosystem where key players work together to ensure that innovators have everything they need to succeed”, comments H.E. Dr. Tariq Bin Hendi.
Another robust alliance is the cooperation agreement between Hub71, ADIO and ADGM where Hub71 provides the startups with incentive packages, virtual and physical office facilities in addition to access to knowledge, mentorship and networking opportunities; whereas ADIO offers them the possibility to reach out to VCs and raise funds; and ADGM supports them with a progressive and sound regulatory framework along with a comprehensive network of potential industry partners.
This strategic partnership perfectly illustrates how Abu Dhabi institutions are joining forces to create an end-to-end innovative environment for startups. As Juma Al Hameli points out: “Ensuring a holistic ecosystem is an integral part of ADGM offer and our partnerships and collaborations are a critical component of it.”
The way forward
Today, Abu Dhabi already has all the right ingredients to develop and sustain its tech ecosystem. Nonetheless, it does not intend to stop down its forward thinking path.
The Emirate has recently inaugurated the Advanced Technology Research Council; a public body in charge of setting the priorities for technology development in Abu Dhabi and financing standards for research and development contracts.
With its array of incentives and support programmes, Abu Dhabi is uniquely positioned, and nurtures a progressive and inclusive tech ecosystem allowing startups to grow exponentially in the coming years.
“Abu Dhabi has proven itself as an epi-centre where new frontier of innovations thrive and inspire. It will continue to excel as a centre of technology and innovation excellence well into the future and for many decades to come”, acknowledges Juma Al Hameli from ADGM.