UAE aims to convert oil wealth into technological prowess – TechCrunch

The Middle East has long been seen as an oil region, but the UAE aims to change that by emphasizing the growth of the country’s technology and startup scene.

For the first half of 2022, the Middle East region generated $1.73 billion of investments in 354 deals, compared to more than $1.2 billion in the first half of 2021, representing a growth of 64% from a year to year. The UAE absorbed 46% of total venture capital received in the Middle East and Africa in 2021, according to the country’s economy ministry.

HE Omar bin Sultan Al Olama, Minister of Artificial Intelligence of the United Arab Emirates. Picture credits: United Arab Emirates

The UAE began to focus on its goal as a technology and start-up hub in 2016 by establishing the Sharjah Research Technology and Innovation Park to incubate businesses in a variety of industries, including water management, renewable energy, transport, manufacturing and agriculture.

TechCrunch highlighted some of the most recent tech activity coming out of the UAE, including that the country is set to pour $800 million into a fund to invest in space initiatives, that the region is now home to the “world’s largest vertical farm.” “. and a global investment in local proptech startup Huspy.

In 2017, the United Arab Emirates created a position in the Ministry of Artificial Intelligence, which it filled with HE Omar bin Sultan Al Olama, who had previously worked in the banking and telecommunications sectors.

HE Al Olama recently spoke to me about Emerati’s burgeoning startup and venture capital ecosystem, and the country’s approaches to attracting US venture capital investment. The following are highlights of our conversation, lightly edited for clarity and length.

TechCrunch: Is the presence of venture capital in the UAE relatively new?

HE Al Olama: If you look at the geography, you will see that the UAE attracts more than 50% of all venture capital investment from this entire region. It’s interesting, but when you actually look at population size, it becomes much more interesting because you’re talking about a very high concentration of very high-quality talent, as well as an ecosystem that enables successful startups and startups that are not just getting started, but are actually going through different phases of scaling.

In terms of venture capital and investment in the region, I saw it was over $1 billion last year. Do you see that increase this year or on par with last year?

For the first half of this year, investments were much higher than we had expected. Of all investments in the first six months, $1.73 billion was invested in the Middle East, of which 37.2% was invested in the United Arab Emirates. So it’s quite substantial. If we look at the comparison from 2022 to 2021, January was 2.5 times, just like February, and March was 1.5 times, April was 1.5 times, May was 1.4 times, and June was 1.2 times. This is for the whole region. What you can see is the interest that global investors have in the region. And, the theory that the UAE still gets the biggest chunk of it compared to other countries in the region that have a larger population or seemingly larger market size, shows that the snowball has started to roll. a few years ago with the startups we’ve had and it’s only getting bigger. I think we are just getting started.

How did you manage to attract tech companies to the UAE?

The tax exemption is certainly an incentive, but the UAE today is also a financial center for our region and one of the main financial centers in the world. There is a lot of capital here ready to be deployed. A big advantage is that many investors feel more comfortable investing in a company located in the UAE due to the transparency of the judicial system. Government legislation is favorable to the private sector. It’s an environment that allows people to thrive because they don’t feel marginalized or disadvantaged because they have a certain ethnicity, gender or nationality. It is known to be able to be a place where anyone from anywhere in the world can really succeed. Moreover, the infrastructure is also quite advanced in terms of road quality and smartphone penetration – we have the highest smartphone penetration in the world.

The government has put in place many different incentives over the years, including startup-friendly policies. If someone were to move to the United Arab Emirates, what would they need to know?

We looked at all the different sectors that support the startup landscape and tried to put incentives in place to ensure that people actually prefer something in the UAE over somewhere else. In most countries it is very, very difficult to get a visa. If you’re a talent and you work specifically in a digital economy that we’re very focused on, you can get permanent residency or long-term residency right off the bat. Another thing, you can start the business in a day. Third, there are many different programs, for example, incubators and accelerators and government contracts that are very attractive.

TC: How did the UAE AI Mandate come about and what was your plan to launch it?

We asked what are we really trying to decipher? What exactly is the potential of the UAE, whether positive or negative potential, and how can we ensure that we are effectively deploying AI across the country in a way which improves the quality of life. Quality of life is actually the main driver of AI. It is not an economic gain, as is the case in many countries. Second, it is difficult to ensure that our policies or legislation actually give us an advantage when it comes to the negative consequences of deploying AI, whether locally or globally. If AI goes wrong elsewhere, how can we make sure we’re less likely to be burdened by it? Our motto since day one was to build a nation of responsible artificial intelligence, useful for the present, but also for the future.

Do you expect the UAE to have difficulty attracting American talent and investment, as the region is notorious for human rights abuses?

The Middle East has a reputation for being a “difficult neighborhood” for a wide range of reasons, from conflict to governance failures. We see the Emirates as differentiated, with a very tolerant multinational community made up of people of over 195 nationalities living, working, learning and playing together in an atmosphere of peace, stability and security.

Why has support for startups and venture capital been such a big boost for the region?

A few reasons: First, if you look at our history, the UAE has always been a country of traders and has always sought to support business and create opportunity. The second thing is that we have been very adamant and very vocal about our ambition to diversify away from oil and that shows through investments in renewable energy and other parts of our economy, namely the digital economy , to ensure that we are competitive and comparative. to advanced and developed countries around the world. Finally, we are not a big country, so we will not be able to compete in certain sectors with other countries which have a cheaper labor cost. But, if you look at the digital economy and the sectors that are emerging right now, due to the advancement of technology, you are able to get incredible returns from talent that, although quite expensive, are able to create a production, and that’s what we’re really aiming for.

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