In the past few years, startups and venture capitalists have experienced a boom comparable only to the original dot-com moment. In the wake of a global pandemic, many are saying that there’s never been a better time to be an entrepreneur.
But is it really as good as it seems? What exactly does the global picture look like?
Today, there’s a whole new breed of entrepreneurs, just like you, with unprecedented access to innovation, talent and capital. The global startup landscape is fast changing shape too, with regions like the UAE taking the lead in creating vibrant and financially sustainable startup eco-systems.
Let’s dig into this evolving landscape.
1. Where is the startup scene?
Rewind a decade and it’s easy to pinpoint the world’s startup strongholds – Silicon Valley, Seattle, New York City. But now, with the rise of digitalisation, startup hotspots are emerging in all corners of the globe, accompanied by record injections of venture capital.
True, the US still dominates the landscape, but other regions are closing the gap – fast.
In Europe, the number of billion-dollar exits tripled in 2020. Meanwhile, the MENA region featured four of the world’s fastest emerging ecosystems in 2021 – Dubai, Cairo, Riyadh and Abu Dhabi. Tokyo also made it into the global top 10 startup ecosystems.
Innovation is happening everywhere. Right on your doorstep.
Take your pick of the world’s most innovative cities.
There are now more than 1,600 companies that have achieved ‘unicorn’ status in 170 cities around the world. Investment in startups is accelerating too. In the first half of 2020, global venture funding was at USD 148bn. This jumped to USD 288bn in the first half of 2021, a 95% increase.
When it comes to starting or scaling your startup, it’s time to think outside the box.
2. Why are cities investing in startups?
Entrepreneurs like you play an ever more important role in the global economy. Startups have become a leading source of job growth, growing around three times faster than the traditional economy.
Tech is now a recognised job growth engine that is more resilient to external shocks, like Covid-19. It’s now a USD 35tr industry.
Leverage incentives from younger startup ecosystems
Governments are rapidly re-thinking their approach to the traditional economy and introducing sweeping pro-startup legislation to accelerate investment.
This includes many of the world’s younger startup ecosystems too. In 2019, the Saudi Public Investment Fund launched a USD 1bn project to support SMEs by investing in venture capital to improve access to investment. In 2020, the Tokyo Metropolitan Government established Startup Ecosystem Tokyo Consortium, an association of businesses, universities and local governments aimed at nurturing local startups.
The tide is shifting.
3. What factors determine successful startup ecosystems?
There are at least a dozen drivers for successful ecosystems, but talent pool, global connectedness and funding networks are key. Startups add new jobs three times faster when they are venture capital backed.
Density is important too. Think about your favourite restaurant. It’s probably on a busy road sitting alongside a handful of other good restaurants. The same applies to startups. That’s part of the appeal of the Dubai Startup Hub, which supported 8,000 entrepreneurs in the UAE between 2016 and 2020.
Success begets success.
Consider what your business needs to succeed.
If you’re looking to build your business in another city, there are a few questions you need to ask first. For example, does the city or region have any top-tier universities and a steady stream of talent on its doorstep? Does it have easy access to venture capitalists and angel investors? How about commercial banks, incubators and accelerator programs?
4. Where does the UAE fit into the global landscape?
The UAE experienced a major acceleration in startup numbers and funding opportunities from companies at all stages of the startup cycle in 2020.
In the past year across MENA, there was a record high of 256 active investors deploying USD 1bn in venture capital. Startups in the UAE secured USD 577m in venture funding during the same period, accounting for 56% of the MENA total. Meanwhile, this year Dubai-based cloud kitchen Kitopi Kitchen raised a record 415m.
Looks promising, doesn’t it?
Is the UAE your perfect fit?
The UAE’s sophisticated infrastructure, strong culture of innovation and large talent pool is well documented and paints a picture that is not dissimilar to Silicon Valley at the start of its innovation journey.
It also boasts a high concentration of investors, accelerators and incubators. The numbers of angels and venture capitalists is increasing across the region, shifting from traditional sectors to information-driven tech startups. In the first half of 2021, UAE venture capital investment stood at USD 1.3bn.
As well as tapping into a high concentration of venture capital, entrepreneurs can also enjoy benefits including 45 existing free zones, no corporate taxes, no import and export duties, full repatriation of revenues and profits and a smoother recruitment and visa processes.
Government-backed initiatives such as ‘Thrive in Abu Dhabi’ offer long-term golden visas and easier access to citizenship for international talent. Dubai Expo 2020 is underway, and the largest event in the region’s history is expected to attract a total of 25 million visitors from across the globe, adding an estimated USD 33.4bn to the UAE economy between 2013 and 2031.
Massive change is afoot.
A promising outlook for startups and entrepreneurs.
There’s never been a more exciting time to be an entrepreneur. The global startup landscape is thriving, producing more unicorns and attracting more investment than ever.
And the UAE is no exception. Bolstered by a promising economic landscape and government commitment to startup programs, funding, incentives and talent, the UAE is transforming into a region full of entrepreneurs pushing the boundaries – at a global scale.