Dubai to launch $100m VC finance fund to support start-ups

The fund, to be launched in June, aims to support emirate's FinTech ambitions to promote economic growth

Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, approves the launch of the Venture Capital Fund for Startups to bolster and sustain startup projects in the emirate. All photos: Government of Dubai Media Office

The fund was approved at a meeting of The Executive Council held in the Umm Suqeim Council.

The fund aims to drive Dubai’s economic growth and fortify its position as a global hub for FinTech, innovation and venture capital.

It will provide Dh370 million ($100.7m) in capital to finance small to medium startup projects, supporting their development in Dubai and gradual expansion to global markets.

The fund comes into effect in June.

The council also approved the establishment of a centre dedicated to providing institutional care for vulnerable groups.

This will offer shelter services and permanent and temporary institutional care to improve the quality of life of people who need care through the provision of quality programmes and services.

Dubai has announced the launch of a new venture capital finance fund with about Dh370 million ($100.7m) to bolster start-up projects in the emirate and promote its ambition of becoming a global FinTech hub.

The launch of the Venture Capital Fund for Start-ups was approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, on Wednesday after he led a meeting of the Executive Council, Dubai Media Office said on Twitter.

The new fund, set to be launched in June 2022, aims to “promote the economic growth of the emirate and consolidate its position as a global centre for financial technology (FinTech) and innovation in investment capital”, the tweet said.

“We are committed to create a vibrant business environment and provide the opportunities to promote excellence,” Sheikh Hamdan said in a statement issued by the Dubai Media Office.

“With a flexible legislative system, robust financing tools, an effective regulatory environment and most importantly, dynamic public and private sectors, Dubai has established itself as the city of entrepreneurs and risk-tolerant investors.

“Dubai has been able to attract the best talent and investors from around the world to forge partnerships and mutually benefit from the tremendous opportunities offered.”

The fund is expected to contribute about Dh3 billion to Dubai's gross domestic product during the implementation period, which will run for eight years, extendable for two additional years, the statement said.

It will be managed by the Dubai International Financial Centre, in partnership with international organisations.

The move will also help to create “more than 8,000 jobs for emerging talents”, strengthening Dubai’s position as a regional centre for entrepreneurship and FinTech, while attracting investors from around the world, the statement said.

The demand for FinTech services has grown during the coronavirus pandemic as more people use internet banking to transfer money and pay for e-commerce transactions.

Globally, FinTech funding surged 68 per cent annually to $210 billion in 2021, a report by consultancy firm KPMG found.

Investment in FinTech companies in Europe, the Middle East and Africa stood at $77.4bn from 1,859 deals last year. The Middle East, in particular, continued to report strong activity, with $75m raised by Bahrain-based Rain and $50m by UAE-based Tabby in the second half of the year.

Growth in the FinTech deal sizes in the Middle East and Africa will be primarily driven by the payments sector this year, KPMG said.

In the Middle East, more than 800 FinTech companies operating in segments including payments, InsureTech and cyber security will raise more than $2bn in venture capital funding to boost their growth by 2022, Mashreq said in February, citing data from the Middle East Institute.

Dubai is also boosting its VC capabilities and is among the top 35 most attractive cities in the world when it comes to attracting venture capital and the funding of start-ups, according to the first Innovation in Business Index from Finom, a business-to-business financial platform in Europe.

The emirate was ranked 30th in terms of its ability to attract venture capital and 32nd in a category that evaluated how well start-ups are funded, the global index, which assessed more than 100 cities around the world, found.

Dubai also scored favourably in categories such as IT and software, artificial intelligence and machine learning, and FinTech innovation.