Dubai International Financial Centre launched a venture studio platform exclusively focused on "ubiquitous finance and digital asset technologies" as Dubai seeks to further develop its start-up infrastructure and promote itself as a centre for innovation.
Venture studios build start-ups, starting from idea conceptualisation to launch, while also providing capital and guidance. They also support their growth using internal capabilities and external support.
DIFC's new Studio Launchpad will be supported by an international group of venture building experts, digital asset operators and emerging technology strategists, and it aims to attract a consortium of start-up and corporate venture studios, it said on Thursday.
Over the next five years, more than 20 studios are expected to set up in the DIFC and launch more than 200 new ventures, including more than 100 scale-ups (a company with 10 or more employees that has an average annual growth of 20 per cent over the past three years) and 10 that will be valued at more than $1 billion.
These companies are expected to create more than 8,000 "innovation" jobs in Dubai and attract more than Dh2bn ($544.5 million) in venture capital.
“We see great potential to leverage the venture studio model to accelerate creation of scale-ups and unicorns from Dubai that will contribute over-proportionally to new job creation and economic development," said Essa Kazim, governor of DIFC.
"DIFC is building an ecosystem from the ground up that will support studios and founders with everything they need to be successful and reimagine virtually every aspect of the financial services value chain to help realise Dubai’s ambitions for the digital era.”
Dubai is seeking to become a global centre for start-ups and scale-ups and has introduced regulatory changes such as golden visas, green visas, freelancer and entrepreneur visas to support the ecosystem.
The emirate, which is home to 39 per cent of the Middle East and North Africa’s scale-ups, accounted for almost 57 per cent of the scale-up funding in the region last year, a report developed by Dubai Chamber of Digital Economy with Mind the Bridge and Crunchbase, showed.
Mena scale-ups collectively raised $9.1 billion, representing 0.12 per cent of the region’s total economy, the report found.
Currently, there are more than 730 active venture studios in the world, with 50 per cent of them launched in the past five years, DIFC said.
The financial hub has already broken ground on a new 13,935-square-metre purpose-built facility that will house the Studio Launchpad team who will work alongside corporate sponsors, investors and the new ventures they co-create, the statement said.
Part of the Launchpad offering will be a research living lab that will support thought leadership and research to seek new opportunities and produce data and insights for future business models, laws and regulations.
"DIFC is creating an environment where ... entrepreneurs, leading venture studios and forward-looking corporations come together to imagine a new world where financial services are digitised, decentralised and ubiquitous," it said.
The new platform is being developed by DIFC in partnership with Dubai venture studio Enhance Ventures and US-based advisory group Silicon Foundry.
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How Islam's view of posthumous transplant surgery changed
Transplants from the deceased have been carried out in hospitals across the globe for decades, but in some countries in the Middle East, including the UAE, the practise was banned until relatively recently.
Opinion has been divided as to whether organ donations from a deceased person is permissible in Islam.
The body is viewed as sacred, during and after death, thus prohibiting cremation and tattoos.
One school of thought viewed the removal of organs after death as equally impermissible.
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Favourite films: Casablanca and Lawrence of Arabia
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Inspiration: Sheikh Zayed's visionary leadership taught me to embrace new challenges.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
