UAE seeks to turn oil wealth into technological prowess

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The Middle East has long been considered an oil region, but the United Arab Emirates is looking to change that with a focus on developing technology and start-ups in the country.

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During the first half of 2022, the Middle East region brought $1.73 billion investment across 354 deals compared to more than $1.2 billion in the first half of 2021 – up 64% year on year. UAE raises 46% of all venture capital arrived in the Middle East and Africa in 2021, according to the country’s economy ministry.

His Excellency Omar bin Sultan Al Olama

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His Excellency Omar bin Sultan Al Olama, Minister of Artificial Intelligence of the United Arab Emirates. Image Credits: United Arab Emirates

The UAE began focusing on its technology and start-up goal in 2016 by creating Sharjah Research Technology and Innovation Park for the incubation of companies in various sectors, including water management, renewable energy, transport, manufacturing and agriculture.

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TechCrunch covered some of the recent tech developments in the United Arab Emirates, including that the country $800 million in fund to invest in space initiativesthat the region is now home to “world’s largest vertical farm” as well as global investment in local startup Huspy.

In 2017, the UAE created a position for the Ministry of Artificial Intelligence, which was filled by His Excellency Omar bin Sultan Al Olamapreviously worked in the banking and telecommunications sectors.

Recently, His Excellency Al Olama spoke to me about Emerati’s growing startup and venture capital ecosystem, as well as the country’s approach to attracting US venture capital. Below are the highlights of our conversation, lightly edited for clarity and length.

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

His Excellency Al Olama: If you look at the geography, you will see that the UAE attracts more than 50% of all venture capital investments in this entire region. It’s interesting, but when you actually look at the population it becomes a lot more interesting because you’re talking about a very high concentration of very high quality talent and also an ecosystem that allows startups to thrive and startups that don’t just start but actually go through various stages of scaling.

In terms of venture capital and investment in the region, I saw that last year it amounted to more than a billion dollars. Do you see growth this year or at the level of last year?

In the first half of this year, investments turned out to be much larger than we expected. Of all investments in the first six months, $1.73 billion was invested in the Middle East, of which 37.2% was in the UAE. So it’s actually pretty significant. If we look at the comparison from 2022 to 2021, then January was 2.5 times more than February, March – 1.5 times, April – 1.5 times, May – 1.4 times, June – 1.2 times. times. That is, for the entire region. This shows that global investors are showing interest in the region. And the theory that the UAE is still getting the most of this compared to other countries in the region with a large population or presumably large market size shows that the snowball started rolling a few years ago with the startups we have. it was, and in fact it’s only getting bigger. I think we’re just getting started.

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

The absence of taxes is certainly one of the incentives, but today the UAE is also the financial center of our region and one of the leading financial centers in the world. There is a lot of capital here ready to be used. One of the big benefits is that many investors feel more comfortable investing in a UAE based company due to the transparency of the judiciary. Government legislation is friendly towards the private sector. It is an environment that allows people to thrive because they do not feel marginalized or disadvantaged because they belong to a particular ethnic group, gender, or nationality. It is known that this is a place where anyone from anywhere in the world can succeed. In addition, the infrastructure is also quite developed in terms of road quality and smartphone penetration – we have the highest smartphone penetration in the world.

Over the years, the government has implemented many different incentives, including start-up support policies. If someone moves to the UAE, what does he need to know?

We have looked at all the different sectors that support the startup landscape and have tried to create incentives for people to actually prefer something in the UAE and not elsewhere. In most countries, getting a visa is very, very difficult. If you are talented and work exactly in the digital economy, which we are very focused on, you can get a residence permit immediately or a long-term residence permit. Another thing, you can start a company within a day. Thirdly, there are many different programs, for example, incubators and accelerators, and government orders, which is 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 for the UAE, be it positive or negative, and how can we ensure that AI is effectively deployed across the country in a way that improves the quality of life. Quality of life is actually the main driving force behind AI. This is not an economic benefit, as in many countries. Second, it is difficult to ensure that our policies or legislation actually give us an edge on the negative impacts of deploying AI, whether locally or globally. If AI goes wrong somewhere else, how can we ensure that we’re less likely to be burdened by it? Our motto from day one has been to create a responsible nation of artificial intelligence, useful not only in the present, but also in the future.

Do you expect the UAE to have trouble attracting American talent and investment due to the region’s notoriety for human rights abuses?

The Middle East does have a reputation for being a “tough neighborhood” for a variety of reasons, from conflict to governance failures. We see the Emirates as a differentiated, highly tolerant, multi-ethnic community of people from over 195 nationalities who live, work, study and play together in an atmosphere of peace, stability and security.

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

A few reasons: First, if you look at our history, the UAE has always been a country of merchants and has always been committed to supporting business and unlocking opportunities. Secondly, we have been very adamant and very vocal about our aspirations to diversify away from oil, and this can be seen in investments in renewable energy and other parts of our economy, namely the digital economy, to ensure that we are competitive and comparable. 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 industries with other countries where labor costs are cheaper. But if you look at the digital economy and the sectors that are emerging right now, thanks to the development of technology, you can get an incredible return on talent that – even if they are quite expensive – are able to produce products, and this is what we are really striving for.

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