The Startup Ecosystem of United Arab Emirates

The UAE is becoming a powerful regional entrepreneurship hub, with its main startup ecosystem in Dubai leading the way. Boasting a high concentration of technological innovation, Dubai is also a hub for innovation in the Arab world, and a popular relocation destination for ambitious Arab entrepreneurs across the MENA region. According to the Dubai Chamber of Digital Economy, the country’s digital economy is estimated to grow to US$ 140 billion by 2031, and a large part of reaching this goal will rely on Dubai based startups. Based on Dubai’s Roadmap to Becoming the Digital Economy Capital of the World, startups based in Dubai have attracted about 96% of all funds raised in the UAE since 2017. This indicates the dominance and strength of Dubai’s startup economy.
Abu Dhabi is lagging behind, but is closing the gap by investing in multiple accelerators and incubators. Other emirates, such as Sharjah and Ras al Khaimah, have the potential to create their own successful ecosystems. The rise in the country’s notable startup ecosystems has also been supported by organizations such as the Digital Dubai Authority, Hub71, and the Sharjah Entrepreneurship Center.
One example of UAE potential, Careem saw a successful exit when it was sold to Uber for over US$ 3 billion, the first unicorn in the Middle East outside of Israel. Other UAE headquartered startups like Kitopi have since joined the unicorn club. Considering the size of the Arab-speaking market, the potential is massive, and the public sector has high hopes for its digital economy. Dubai plans to attract 300+ new digital businesses by 2024 and to produce more than 20 unicorns by 2030.
Continued business reforms by the government are providing much needed legal and financial infrastructure. The update to bankruptcy law was a step in the right direction. The state-issued startup licenses and flexible visa rules also had a positive effect on driving investment into the country. Moreover, the multiple free zones have given the country’s startup ecosystem a boost in attracting foreign investment.
The abundance of investment and funding opportunities available for entrepreneurs is another factor that contributes to the UAE’s success as a startup hub. Following the success of EXPO2020 in Dubai, and with events such as The Annual Investment Meeting, the Global Entrepreneurship Congress, and the Startup Investment Forum, the UAE has established a presence on the global stage and attracted more attention to its vibrant startup ecosystems.
Major challenges facing the UAE include a high cost of living and antiquated business regulations, however, with help from public sector initiatives, the government could develop a supportive legal and financial framework for entrepreneurs throughout the region. After its remarkable startup success, the next step for the UAE should be to increase its reach beyond the MENA region to become a regional and global startup hub.