Julie Meyer examines the Emirate’s emerging startup scene
I’ve been an infrequent visitor to Dubai — always sort of skeptical about whether they’ll get a girl like me — blonde, American, independent, unmarried. Was it worth my while to build relationships with investors there? I never really thought so. And I’ve never gone to Dubai just to visit a resort. The last time I passed through was after an INSEAD board meeting at the Abu Dhabi campus. I drove the hour to Dubai and met with some entrepreneurs. And here’s the thing: Dubai is changing.
As everyone knows, it’s a city that was invented out of the desert. Beginning in the mid-1990s, Sheikh Mohammed bin Rashid Al Maktoum decided to transform a city of low-slung concrete buildings into a global capital and poured the emirate’s oil wealth into the infrastructure required. These days, what draws investment are three main factors: low taxes, a crossroads location and free trade policies.
The emirate was quick to embrace new technology. As far back as 2000, Dubai Internet City opened its doors, and today even Google has got into the game, supporting both Startup Weekend and Startup Grind. Rocket Internet, the Berlin-based e-commerce conglomerate, is expanding here. Its Namshi, a subsidiary that sells clothes online, has a Dubai warehouse processing 30,000 units a day. Dubai is also in the midst of preparations for World Expo 2020, which is expected to draw 25 million visitors.
The emirate’s population has exploded from less than a million a decade ago to more than 3.3 million today, with about 80 per cent of those being expats. Tax — or lack thereof — is a significant part of the reason so many foreigners live here. Very little is taxed in Dubai, and new startups from Europe and the UK are increasingly thinking to base themselves here to avoid capital gains tax.
Homegrown heroes include Michael Lahyani, founder and CEO of property portal propertyfinder.ae, who has taken the company from strength to strength since establishing it in 2007. The site now has a million visitors and 150,000 enquiries per month. It has a presence in the UAE, Qatar, Egypt, Lebanon, Bahrain, Morocco and Saudi Arabia, with plans to expand to a total of nine countries in the coming months. Lahyani was also the first UAE entrepreneur to be taken on by non-profit accelerator Endeavor.
Dubai is an entry point to the fast-developing markets of Iran, Asia, the Middle East and Africa. And, as Mustafa Abdel-Wadood of the Abraaj Group, a private equity firm with $9bn under management, points out, these markets are growing at double the rates of those in the developed world, “and the hub for accessing these markets is Dubai.”
But Dubai is not only geographically central to some of the hottest developing markets, it also has a huge transportation and trading infrastructure, including a vast deepwater port, Jebel Ali Port, which funnels trade to the Gulf, Africa and the Indian subcontinent, and the world’s third busiest airport.
But while low taxes make Dubai a natural choice for entrepreneurs, and Dubai is seen as a tech hub in the Middle East, home to companies including Souq.com, the largest ecommerce company in the Arab world, with a reported valuation of more than $1bn, the Middle East region suffers from a dearth of capital for high-tech businesses despite all of the vast oil wealth. There are some VC firms focused on the UAE, including Dubai Silicon Oasis Fund, CDG Capital Private Equity and Womena, but the habit of backing entrepreneurs seems not to have taken root as yet.
So what does that mean for the up-and-coming entrepreneurs such as Nadim Jarudi and Moussa Beidas, co-founders of Bridg, which enables any smartphone to be used for payments with or without a bank card or even a network connection? Or Miikka Mäkiö and Jouni Mustalahti, two Finns who are currently expanding Foodiac in the UAE? Their service allows consumers and businesses to find private chefs and catering services online for any occasion, including dinner at home.
Dubai’s future will be dictated by how the young companies fare. Everywhere I go I see that the world is being redefined by its entrepreneurs. Dubai will be no different. The future is not one of oil and energy but of the broader region being a market that big companies will want to sell into, and that entrepreneurs will call home base as they scale globally.