UAE aims to turn oil wealth into technical prowess – MovieUpdates

The Middle East has long been thought of as an oil region, but the United Arab Emirates is looking to change this with an intense focus on growing the country’s technology and startup scene.

For the first half of 2022, the Middle East region brought in $1.73 billion in investment across 354 deals, up from more than $1.2 billion in the first half of 2021 – a 64% year-over-year growth . The UAE took up 46% of the total venture capital received in the Middle East and Africa in 2021, according to the country’s Ministry of Economy.

SHE Omar bin Sultan Al Olama

HE Omar bin Sultan Al Olama, United Arab Emirates Minister of Artificial Intelligence

The UAE started focusing on the purpose of their technology and startup hub in 2016 by establishing the Sharjah Research Technology and Innovation Park to breed companies in various industries including water resource management, renewable energy, transportation, manufacturing and agriculture .

MovieUpdates highlighted some of the more recent tech activity that has come out of the United Arab Emirates, including that the country would put $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 UAE 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 sector.

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

MovieUpdates: Is venture capital presence in UAE fairly 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. That’s interesting, but if you really look at the size of the population, it gets a lot more interesting because you’re talking about a very high concentration of very high-quality talent, as well as an ecosystem that enables thriving startups and start-ups that don’t just get started, but actually go through different scaling up phases.

TC: In terms of venture capital and investment in the region, I saw it was over a billion dollars last year. Do you see this year increasing or being the same as last year?

HE Al Olama: For the first half of this year, investment has been much higher than we expected. Of all investment in the first six months, $1.73 billion was invested in the Middle East, of which 37.2% in the UAE. So it’s actually quite substantial. If we look at the comparison from 2022 to 2021, January was 2.5 times like February, and March was 1.5 times, April was 1.5 times, May was 1.4 times and June was 1.2 times. That’s for the whole region. What you can see from that is the interest that the global investors have in the region. And the theory that the UAE still gets the bulk of that compared to other countries in the region with larger populations or seemingly larger market size shows that the snowball started rolling a few years ago with the startups that we’re doing. and it just keeps getting bigger. I think we’re just getting started.

TC: How have you been able to attract technology companies to the UAE?

HE Al Olama: Being tax-free is certainly an incentive, but the UAE is now also a financial hub for our region and one of the most important financial hubs worldwide. There is a lot of capital ready to be deployed here. One big advantage is that many investors feel more comfortable investing in a company in the UAE because of the transparency of the legal system. Government legislation is friendly to the private sector. It is an environment in which people can thrive because they do not feel marginalized or disadvantaged because of their ethnicity, gender or nationality. It is known that it can be a place where anyone, anywhere in the world, can actually succeed. In addition, the infrastructure is also quite advanced in terms of road quality and smartphone penetration – we have the highest smartphone penetration in the world.

TC: The government has introduced many different incentives over the years, including startup-friendly policies. If someone were to move to the UAE, what would they need to know?

HE Al Olama: We looked at all the different sectors that support the startup landscape and tried to put incentives in place to make sure that people actually prefer something in the UAE over anywhere else. In most countries it is very, very difficult to get a visa. If you are a talent and specifically work in a digital economy that we are very focused on, you can get a permanent or long term residency right away. Another thing is that you can start the business within 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’s AI mandate come about and what was your plan to get started with it?

HE Al Olama: We asked what are we really trying to decipher? What exactly is the potential for the UAE, be it a positive or a negative potential, and how can we ensure that we are deploying AI effectively across the country in a way that improves quality of life. Quality of life is actually the main driver for AI. It is not an economic gain, as in many countries. Second, it is difficult to ensure that our policies or legislation actually give us an advantage regarding the negative impacts of deploying AI, whether it be local or global. If AI goes wrong somewhere else, how do we make sure it doesn’t affect us as quickly? Our motto from day one was to build a responsible artificial intelligence that is useful for the present, but also for the future.

TC: Do you expect the UAE to face challenges in attracting American talent and investment because the region is known for its human rights violations?

HE Al Olama: The Middle East has a reputation for being something of a ‘difficult neighborhood’ for a variety of reasons, from conflict to failed governance. We see the Emirates as differentiated, with a highly tolerant, multinational community made up of people of more than 195 nationalities who live, work, learn and play together in an atmosphere of peace, stability and security.

TC: Why has supporting startups and venture capital been such a major boost for the region?

HE Al Olama: A few reasons: Firstly, if you look at our history, the UAE has always been a country of traders and always looking to support business and unleash opportunities. The second is that we have been very adamant and very vocal about our ambition to diversify away from oil and that can be seen through investment in renewables and other parts of our economy, namely the digital economy, to ensure that we be competitive and comparative to advanced and developed countries from all over the world. Finally, we are not a large country, so we will not be able to compete in certain sectors with other countries that have lower labor costs. But if you look at the digital economy and sectors that are emerging right now, due to the advancement of technology, you can get incredible returns from talent that – even if they are quite expensive – are able to create output, and that’s what we’re actually striving for.

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