DIFC unveils $100 million fintech investment
The Dubai International Financial Centre (DIFC) has established a US$100 million fund to invest in fintech startups, the latest move in the free zone’s bid to position itself as the regional centre for the fast-growing and disruptive sector.
“We really want to consolidate the position of the DIFC to be at the forefront of the changes that are going to happen in the financial sector,” Essa Kazim, the DIFC’s governor, said on the sidelines of the DIFC-organised Global Financial Forum in Dubai yesterday.
“This is something that we really want to support in the region. You can see that it’s underserviced today and that inclusion is very minimal. The allocation of funding going into this business in the Middle East is very limited as a percentage of the total.”
The fund will seek investment from other government entities in Dubai to boost its coffers, said Mr Kazim. It will not initially seek money from private investors. The fund will be managed by the DIFC, he added.
Mr Kazim said investment decisions would be made on a purely commercial basis, with no preset minimum or maximum amount of investment. He said that some fintech ventures may need as little as $50,000 in funding, while others could require as much
The launch of the fund comes days after the DIFC announced the launch of two fintech accelerator programmes, designed to mentor fledgling companies and to provide introductions to more established financial services firms that may be interested in their services.
The DIFC’s fintech initiatives – which also include its Fintech Hive incubator programme launched in January – come amid efforts by other financial centres across the region to attract fintech start-ups and investment.
Abu Dhabi Global Market has launched several initiatives in the space, including its RegLab sandbox programme, and the Fintech Abu Dhabi Innovation Challenge, launched in conjunction with KPMG. Financial centres in Bahrain, Qatar and Saudi Arabia have all launched similar fintech initiatives. But Mr Kazim said the DIFC was unintimidated by the prospect of competition from around the region, saying there is plenty of room for players in the fintech field, especially as it is new and under-represented.
The global fintech sector has attracted more than $50 billion in investment since 2010, according to Accenture, but the Middle East and North Africa has received only about 1 per cent of this figure.
Karim El Solh, co-founder and chief executive of Abu Dhabi private equity firm Gulf Capital, welcomed the launch of the new fund, saying He said there was a need for investors to fund startup companies – including those in the fintech space – that had little or no track record.
Mr El Solh said he was also eyeing the fintech space for possible investments, but that he preferred to invest in companies with a proven track record rather than ones that were starting from scratch.
“It’s a welcome announcement because the start-up and early stage companies need help,” he said.
“You see a lot of private equity firms looking to invest in mature profitable companies, but to get them to that stage they need early stage funding which was lacking in the region. I think this fund will plug that hole and aid the growth. It will jump-start the fintech scene in the region.”