Falcon’s view: UAE’s start-up ecosystem

This is the first in a series of articles called HI-TRAC. To know more about becoming a HI-TRACker, you are invited to read on.

In the hunt for value, it is critical to understand the terrain. In this part of the world, the sharp eyes and expertise of the individual entrepreneur have long been celebrated. Caravans laden with pearls, spices, gems, perfumes, precious metals, art, carpets have crisscrossed barren, unmapped deserts guided by the finest traders and experts. Millennia before contemporary start-up capitals came in to being, businesses and business people in the Gulf ran prosperous enterprises, fully understanding what it means to create value.

Which is why it is critically important to understand the unique value of the UAE as an emerging start-up capital.

Entrepreneurs instinctively look for six key signs when deciding where to start-up. They need to have the hunting instinct of a falcon to find the right terrain and opportunities.

The UAE does very well on each of these signs or HI-TRAC which is shorthand for: 1 Happiness index The Happiness Index is critical to ensuring that entrepreneurship flourishes. It’s self-evident to say that human beings seek happiness. Great ideas need greater inspiration to excel and perform which comes from a promising environment. Out of 156 countries ranked globally, the UAE ranks as the 28th happiest country in the world, according to World Happiness Report 2016. The ability to work with like-minded people, indulge in exquisite cuisines from around the world at truly affordable prices, a much lower cost of living compared to other start-up centres, well-run public transport, a booming culture and arts scene and a staggering array of leisure choices give the human spirit an outstanding opportunity to express itself. Wealth creation is not the only value to be measured. 2 infrastructure Infrastructure is a critical component to the success of a start-up. UAE, according to WEF Global Competitiveness Index report 2014–15, has moved up to the 12th position out of 144 countries. According to the report, the UAE’s institutional framework, infrastructure, macroeconomic stability and ICT are globally competitive and are improving rapidly. Strong macroeconomic stability (seventh), a high level of business sophistication (16th) and innovation (28th), no tolerance for corruption, a low crime rate and an enabling tax regime, enhance the country’s ability to become a major start-up hub. All of this attracts talent and investment. 3 talent A unique blend of domestic and expat populations in UAE provides diverse skill sets to the start-ups. The UAE’s education sector is one of the fastest growing in the region. The total numbers of students in the UAE is well above 1.1 million, and is currently growing at the rate of 4.1 per cent annually. According to industry reports, the country also has the highest number of international schools globally. However, the UAE also has resources above-and-beyond the home-grown talent. The nation is blessed with a large expat population from across the globe who have made UAE their home. A key advantage of acquiring expatriate talent is the access to in-depth knowledge transfer, best practices, well-developed skills and great ideas. 4 regulation Strong regulations are enforced by governments across the world to safeguard the interests of all the stakeholders involved. The UAE has the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). Speaking about The DIFC, Michael Hwang, Chief Justice of the DIFC Courts, said recently: “Dubai’s reputation as an international centre of excellence for dispute resolution grew in 2014 alongside the increasing size and complexity of cases handled by the DIFC Courts.” Cases totalling Dh1.76 billion in value were filed with the DIFC Courts in 2014, while the caseloads of the Court of First Instance (CFI) and Small Claims Tribunal (SCT) rose by 29 per cent and 69 per cent, respectively. The financial free zone, Abu Dhabi Global Market or ADGM, which is opening its doors to FinTech, a $12 billion growing industry, has published a public consultation paper setting out its proposal for a “Regulatory Laboratory” (RegLab), a tailored framework that allows firms deploying innovative technology in the financial services sector to conduct their activities in a controlled and cost-effective environment. access 5 Large air and sea logistics hubs create access to hinterlands. These are the preferred locations for start-ups. For example, London, Hong Kong and Singapore are staging points for massive air and shipping flows in to the US, Europe, China and India. These locations host disproportionate numbers of start-ups compared to their own population. The UAE is remarkably well-placed in this regard. The country has made tremendous strides in building a strategic advantage in the region vis-à-vis access to Africa, South Asia, Central Asia and Eastern Europe. According to the latest Travel and Tourism Competitiveness Report from the World Economic Forum, “While the UAE does not have rich natural resources (95th), it has built a unique environment to attract both business and leisure travelers. From Expo 2020 Dubai to the construction of the Louvre and Guggenheim, the UAE is investing in and giving significant importance to the development of the T&T industry…This is supported by its world-renowned air transport infrastructure (3rd) and positioning as a gateway for Europeans to Africa, the Middle East and Asia.” 6 capital Start-ups look for access to capital in the form of financing from banks or nonbank participants, venture capitalists, angel investors or crowdfunding . The UAE provides this access via a number of institutions and private investor groups. “We are very positive for the exciting times ahead. With the country’s vision and several government initiatives on innovation, the UAE is amongst the leaders in accepting innovative ideas and support entrepreneurship,” said Khuloud Al Omian, editor-in-chief of Forbes Middle East.