UAE's commitment to start-ups pays dividends

Fintech companies among the key beneficiaries of rising funding in the region

The DIFC's FinTech Hive broadens accelerator program to include insurance, Islamic finance and regtech. Jeffrey Biteng / The National

The UAE’s start-up ecosystem is in a very healthy place, something highlighted by the latest data from the startup community platform Magnitt.

In the three months to the end of September, 62 new deals and over US$76 million of investment in Mena startups was recorded. This takes the total deal tally for the year's first nine months to 169 – a higher figure than the164 recorded last year.

It is yet another positive sign of the growing interest in regional startups, with two significant funding announcements in the last week alone.

First came $5m for the Dubai-based peer-to-peer lending platform Beehive following closely by a $10m injection into Souqalmal.com.

While Saudi-based Riyad Taqnia Fund led the Beehive deal, it was also involved in the Souqalmal.com funding round. But there was another piece of interesting news tied to the comparison site’s Series B announcement - its investors also included UK financial comparison site GoCompare.

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This made Souqalmal.com the third company in the region – after Souq and Careem -  to bring in a strategic international player, something its founder Ambareen Musa felt illustrated two very important shifts for the region:  firstly, that UAE startups are now attracting international players to start operations here, and secondly, that these players are choosing investment acquisition to get into the market.

Another related trend of interest is the heavy focus on the fintech sector. According to Magnitt’s study, fintech remains the hottest industry for the region for venture capital activity, with the sector making up three of the five largest investments in the third quarter of this year.

The sector has certainly been a priority in the region of late with a number of initiatives, particularly in the UAE to develop fintech ecosystems as a means of attracting start-ups.

In August the Dubai International Financial Centre started its inaugural accelerator programme with 11 fintech start-ups from around the world, including two from the UAE.

And Abu Dhabi Global Market set up its RegLab programme late last year. It offers fintech startups a “sandbox” environment giving them the space to develop business ideas under a light regulatory touch.

This UAE commitment to fintech is certainly paying off if the recent regional and international interest in startups based in the Emirates is anything to go by.