Dubai Emerging as ‘Global Destination’ for Entrepreneurs in MENA, Says Report

Dubai is home to over 40% of the Middle East and North Africa (MENA) region’s scale-ups, with 306 among them calling the Emirate home. Dubai still accounts for over 90% of all scale-ups in the country, which is home to 338 scale-ups in all.

These were the findings of the third report entitled “Dubai’s Venture Capital Ecosystem” which was released on Sunday, Dubai Chamber of Digital Economy, one of the three chambers operating under Dubai Chambers. The report provided an overview of the investor landscape backing the start-ups and scale-ups that are transforming Dubai and the MENA region.

The report, which was produced in collaboration with Entrepreneur Middle East, revealed that more than 30% of the funding rounds are attributed to start-ups headquartered in Dubai, implying 87% of all funding rounds for the UAE-based companies are for firms headquartered in the Emirate.

By 2031, the UAE’s digital economy is expected to be conservatively valued at well over $140 billion (from the present $38 billion). Together with Dubai Chamber of Digital Economy, it is the collaboration between stakeholders and ecosystem players that will ensure that Dubai becomes the next digital economy capital of the world.

According to the report, the 306 scale-ups in Dubai have raised over $11.7 billion in funding over the course of the past decade, which represents an impressive 60% of the MENA region’s total cumulative fundraising total. In addition, in 2022, Dubai-based startups doubled-down on their prior year results, fundraising over $2 billion.

Funding Grows to $4 Billion

In addition, the growth of funding in the MENA region has exceeded $4 billion in 2021 and 2022 and the number of mega-rounds of $300 million or more has seen an increasing trend with three seen in 2021 and six in 2022, including two scale-ups listing on stock exchanges.

In 2022, there was a significant shift in the number of funding rounds, where scale-ups raised funding, and a trend towards larger cheque sizes and funding bracket gained momentum. In the $100 million to $1 billion range, funding rounds increased by more than 100% between 2021 and 2022. Other funding ranges also saw increases between 20% to 87%, the report noted.

Considering the source of capital raise, venture capital and corporate rounds accounted for over three quarters of the capital raised, while IPOs and ICOs accounted for nearly equal share.

Even the number of scale-ups have increased considerably in Dubai, growing 26% between 2021 and 2022. In terms of absolute numbers, Dubai saw an increase of 64 scale-ups between 2021 and 2022 growing from 242 to 306 scale-ups.

Venture funding in Dubai has seen tremendous growth in the past decade. From a time of only seed stage and earlier rounds, Dubai has grown to become the only city in the MENA region to be home to startups to raise funds in Series E and Series F rounds.

In his comments, Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, and Chairman of Dubai Chamber of Digital Economy, said that the UAE’s advanced digital ecosystem has accelerated the development of the entrepreneurship sector and contributed to significant growth in its activity.

The country’s proactive vision in developing legislation and initiatives in the digital field creates a favorable environment for startups and fast-growing companies, which has attracted unicorn companies and investors from around the world and consolidated the UAE’s position as a global hub for the digital economy, he explained.

“The report reflects our long-term commitment to developing smart digital solutions and deploying these to build a new and future-facing model for the economic sector in the UAE, and Dubai in particular, and underline the emirate’s position as a global capital for the future economy,” the Minister added.

As Dubai sets its sights on becoming the global destination of choice for digital entrepreneurs, Dubai Chamber of Digital Economy is tasked with attracting leading tech companies, start-ups and scale-ups that can support Dubai’s digital ambitions.

With a series of visionary initiatives and investments in cutting-edge technology, Dubai is well on its way to achieving its ambitions. From its world-class fibreoptic network and cloud-based systems to its innovative approaches to smart city development, Dubai has set the standard for how cities can leverage technology to enhance the lives of its citizens and attract global businesses.

According to the report, a total of 749 scale-ups across the MENA region (excluding Israel), have raised a total of over $19.5 billion cumulatively over the past decade (2012-2022), with UAE scaleups accounting for 65% of total cumulative capital raised across the region, the report concluded.