Dubai start-ups' funding doubled in 2022 to $2 billion

Report shows emirate's progress in attracting digital entrepreneurs

The Museum of The Future in Dubai. The Dubai Chamber of Digital Economy has attracted 30 digital start-ups during the first quarter of 2023. Bloomberg

Start-ups in Dubai raised more than $2 billion collectively last year, double the financing secured in 2021, as the emirate sets its sights on becoming the global destination of choice for digital entrepreneurs.

More than 30 per cent of funding rounds in the Middle East and North Africa region are attributed to start-ups headquartered in Dubai, according to a new report by Dubai Chamber of Digital Economy on the emirate's venture capital landscape.

It said 87 per cent of all funding rounds for UAE-based companies are for start-ups based in the emirate.

“The country’s proactive vision in developing legislation and initiatives in the digital field creates a favourable environment for start-ups and fast-growing companies, which has attracted unicorn companies and investors from around the world and consolidated the UAE's position as a global hub for the digital economy,” said Omar Al Olama, Minister of State for Digital Economy, AI and Remote Working System and chairman of Dubai Chamber of Digital Economy.

Last year, the UAE announced its Digital Economy Strategy with the goal of increasing the contribution of the sector to gross domestic product by 20 per cent over the next 10 years, up from 9.7 per cent in 2022, as it seeks to leverage cutting-edge technologies and attract high-skilled talent.

The new initiative is also a step towards Dubai's target of attracting 300 digital start-ups to the emirate by 2024 to help it boost its non-oil GDP.

The Dubai Chamber of Digital Economy has attracted 30 digital start-ups during the first quarter of 2023, it said last week.

Dubai is home to more than 40 per cent of all scale-ups in the Mena region and 90 per cent of all scale-ups in the UAE, the report said. It defines scale-ups as start-ups that have raised $1 million or more in capital.

The 306 scale-ups based in Dubai have collectively raised more than $11.7 billion in funding from 2010 to 2022, which represents 60 per cent of the total cumulative fundraising in the Mena region, the study said.

The report reflects Dubai's “long-term commitment to developing smart digital solutions and deploying these to build a new and future-facing model for the economic sector in the UAE, and Dubai in particular, and underline the emirate’s position as a global capital for the future economy”, Mr Al Olama said.

The number of scale-ups in Dubai has increased 26 per cent year-on-year from 242 in 2021 to 306 in 2022, underscoring the emirate's ability to attract entrepreneurs, the report said.

Dubai has also grown to become the only city in the Mena region to be home to start-ups that raise late-stage funding in the so-called Series E and Series F rounds, highlighting the growth of venture capital in the emirate from a time of mainly seed stage and earlier rounds of financing.

Regionally, 749 scale-ups across Mena (excluding Israel), have raised a total of more than $19.5 billion cumulatively over the past decade.

Of this, scale-ups in the UAE accounted for 65 per cent of the total capital raised across the region, the report said.

In 2022, scale-ups across Mena raised $6.5 billion, or one third of the region’s lifetime total. Six mega-rounds valued at over $300 million were completed in 2022, signalling the level of maturity of these companies. Mega rounds contributed to over 35 per cent of all scale-up funding in 2022.

While Dubai and the UAE have been ahead of the curve in the Mena region for establishing start-ups, building scale-ups and attracting venture capital, Saudi Arabia and Egypt follow and round out the top three countries, the report said.