Abu Dhabi's state holding company ADQ is partnering with the Abu Dhabi Investment Office (Adio) to develop the emirate's start-up ecosystem and attract further investments into its digital economy.
ADQ will now be responsible for driving equity investments in early-stage companies and venture capital funds, while Adio will oversee the management of incentives and other forms of support, the two companies said in a statement on Tuesday.
“The combination of what ADQ and Adio can offer to early-stage start-ups is powerful and strategic,” Mohamed Hassan Alsuwaidi, chief executive of ADQ, said. “We are both committed to nurturing the development of cutting-edge technologies and solutions to advance Abu Dhabi’s innovation ecosystem and augment Abu Dhabi’s position as a highly developed and progressive economy.”
The Dh535 million Ventures Fund, which invests in start-ups and VC funds, will also be transferred to ADQ to support the emirate’s evolving technology ecosystem.
The Ventures Fund has committed approximately Dh200m since its inception in May 2019 to more than 15 companies and funds in its portfolio. The fund was launched as part of the Dh50 billion Ghadan 21 initiative to stimulate the emirate's economy.
"With Adio and ADQ working together, innovative early-stage companies will now have new opportunities as well as access to the capital and networks they need to realise their ambitions in the emirate and internationally," Tariq Bin Hendi, director-general of Adio, said.
Abu Dhabi is investing in start-ups to grow the innovation ecosystem in the capital as part of a broader economic diversification strategy. Apart from the Ventures Fund, the government also set up Hub71, an international technology hub in cooperation with Mubadala Investment Company, Abu Dhabi Global Market, Microsoft and SoftBank last year.
Mubadala, the emirate's strategic investment fund, also set up a $250m (Dh918m) technology fund targeting investments in the Mena region last year. Its commitment comprises $100m that will be invested directly into early-stage technology ventures, targeting up to 15 companies, and a $150m "fund of funds" to invest into venture capital funds run by other managers.
ADQ also launched a Dh1.1bn venture fund in May to invest in early-stage Indian and Southeast Asian start-ups and help them set up a base in Abu Dhabi’s Masdar City.
The Alpha Wave Incubation (AWI) Fund, run by Falcon Edge Capital, will help budding Asian businesses gain market access to the UAE and the broader Middle East region. The new fund will be based at Abu Dhabi Global Market.
Set up in 2018, ADQ's portfolio of assets includes several large industrial and manufacturing companies in non-oil sectors such as transportation, metals and power, including Abu Dhabi Ports, Etihad Rail, Emirates Steel and Taqa. It also holds stakes in media businesses Abu Dhabi Media and TwoFour 54, insurer Daman, health services provider Seha and the Abu Dhabi National Exhibitions Company.
“We welcome the Ventures Fund joining ADQ’s broader venture capital portfolio and will continue to drive new investments in exciting early-stage businesses pursuing new ideas and business models with the potential to make an impact in the UAE and beyond," Mr Alsuwaidi said.
The Abu Dhabi Investment Office, which oversees the foreign direct investment and private sector development in the emirate, has also invested $5m in a fund operated by Shorooq Partners, it said in June.
The Bedaya fund targets early-stage tech companies in the Middle East and North Africa region. The total size of the fund is $40m.