Granting access to venture capital funding will help Abu Dhabi attract entrepreneurs from across the world and put “innovation on steroids” in the region, according to a senior US technology executive.
“This region has incredible financial resources which can be used as capital. You will attract the best and the brightest entrepreneurs with capital,” Genevieve Bos, co-founder and chief revenue officer of US-based Poplar, a yield-as-a-service company, told the Access Abu Dhabi event on Thursday.
Ms Bos is part of the Women of Web3 delegation, a team of female US tech entrepreneurs who shared their business insights at the event and are exploring Abu Dhabi as a gateway for the global expansion of their companies. The initiative is being carried out by the Abu Dhabi Investment Office and Maven Global Access.
Small and medium enterprises are the backbone of the UAE economy, comprising 98 per cent of the total companies operating in the country.
Abu Dhabi has been taking several steps to enhance the economic climate and boost entrepreneurship since the pandemic. These include reducing the number of requirements to start a business by 71 per cent and slashing business set-up fees by more than 90 per cent.
The number of new economic licences issued in Abu Dhabi rose about 22 per cent in 2021 to 25,427, on the back of the new government initiatives.
“Compared with jurisdictions such as Singapore and Bahamas, the UAE has a strategic location and is geographically well-positioned with good connections to the East and West. Doing cross-border business here is easy for a businessperson,” Ms Bos said.
The emirate is also developing its technology sector as part of efforts to diversify its economy away from oil, with several public sector initiatives driving this forward.
Supporting female technology entrepreneurs will further help the UAE capital increase its global appeal as a hub, Ms Bos said.
“In the US, only 3 per cent to 5 per cent of venture money goes to women-led businesses. If Abu Dhabi really wants to make a statement, create a fund for female tech founders. There are world-class organisations that Abu Dhabi could partner with,” she said.
Education and inspiration are important to attract women to Web3, Ms Bos said.
“There are so many entrepreneurs in the UAE who could be dynamic home-grown leaders. They have an opportunity to partner with world-leading organisations. There is no need to reinvent the wheel, they just need to put their own spin to it,” she added.
Venture capital companies usually invest in late-stage companies. However, investing in early-stage companies is very important, said Lisa Mayer, founder and chief executive of Boss Beauties, a global Web3 brand and NFT collection focused on women’s empowerment.
“Focus on building a community that sparks such innovative companies. Abu Dhabi can create an ecosystem to compete in the global innovation economy,” she said.
Jebel Ali Dragons 26 Bahrain 23
Dragons
Tries: Hayes, Richards, Cooper
Cons: Love
Pens: Love 3
Bahrain
Tries: Kenny, Crombie, Tantoh
Cons: Phillips
Pens: Phillips 2
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.”
