Abu Dhabi's Techstars Hub71 Accelerator programme aims to raise $15m with 2021 cohort

Unfazed by the Covid-19 disruptions, Techstars is also aiming to launch a similar programme in Saudi Arabia

DUBAI, UNITED ARAB EMIRATES , March 8, 2021 – Vijay Tirathrai, managing director of Abu Dhabi based start up accelerator Techstars at the Element hotel in Al Jadaf in Dubai. (Pawan Singh / The National) For Business/Online. Story by Alkesh Sharma
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Abu Dhabi's Techstars Hub71 Accelerator programme is confident of raising $15 million from investors for this year's cohort of 10 start-ups despite the market disruptions caused by Covid-19.

"Our first batch of start-ups raised $15m last year … we are aiming to raise in the same range this year," Vijay Tirathrai, managing director of Techstars, told The National.

“Our community has adapted well to the new normal in the post-Covid world … investors and VCs [venture capitalists] are very confident and now more than eager to invest in new innovative ideas and potential teams.”

The accelerator progamme is part of the Colorado, US-headquartered global investment and innovation platform Techstars, which runs 50 similar programmes in nearly 22 countries. It has supported over 2,500 start-ups with a total market capitalisation of $33 billion since 2006 across various industries, according to the company. Techstars operates as a venture capital firm and invests in technology start-ups in the cloud infrastructure, healthcare, cyber security and communication sectors. It has teamed up with the emirate’s sovereign wealth fund Mubadala Investment Company and global tech ecosystem Hub71 to run an annual three-month acceleration programme that brings 10 potential pre-seed stage start-ups to the capital.

“Typically, a pre-seed company raises in the range of $500,000 to $3m in a year. We don’t expect this average to change,” Mr Tirathrai said.

The start-up incubator started its first programme in Abu Dhabi in January last year but its operations were hit by the Covid-19 pandemic, forcing it to send the founders of the selected start-ups home and pivot from a physical to an online set-up.

There was also a “momentary pause” in funding in the second quarter of last year but it picked up in the second half of the year, said Mr Tirathrai, who is also a serial entrepreneur with angel investments in more than 30 start-ups.

“Investors were in shock, trying to assess the situation and helping their existing portfolio of companies that may also have been damaged by the pandemic,” Mr Tirathrai said.

“But we saw a huge surge in investment flow in the last quarter. Investors and VCs were showing more interest as they saw future ideas becoming reality to minimise the impact of the pandemic ... despite Covid-19, we did not see money drying up but on the contrary, it expanded … we predict the same trend to continue in 2021.”

Out of the 10 companies in the accelerator’s first cohort, six have made Abu Dhabi their permanent home, including Aumet, Bonflite, DesignHubz, Educhain, Sensgreen, Workathlon.

Techstars also plans to expand its footprint to Saudi Arabia, the Arab world’s biggest economy, with a similar programme.

“[The] Middle East is a great marketplace, very vibrant, ready for disruptions and there is also no dearth of talent … we are in discussion with several parties in different countries around the region,” Mr Tirathrai said.

“Most likely, the next programme will be rolled out in Saudi Arabia. Opportunity is huge in the kingdom given its large population,” he added, without giving a timeline.

Techstars' partnership with Hub71 is a strong proposition for the accelerator as it facilitates in attracting global start-ups.

“Our programme is largely sector agnostic and we attract companies from all over the world to Hub71. We identify founders who have potential to be local champions with global ambitions,” Mr Tirathrai said.

“Backed by the weight of sovereign institutions such as Mubadala Investment Company, Hub71’s extensive reach in various sectors of the economy makes it a strong partner.

“Initially, I was a bit sceptical why they [start-ups] will pick Abu Dhabi over cities like Singapore, London or Los Angeles. But our numbers speak … response is very strong and we are happy to be where we are today … past one year, response has been tremendously positive.”

Mr Tirathrai said the accelerator had no plans to raise the number of start-ups in its programme.

“We have 200 people, including partners, mentors and investors, servicing 10 companies … the ratio is 20:1 that is an extraordinary amount of resources for a three-month programme.”

“Moreover, it is a proven model that has worked for us in the past. Our growth model is not about increasing the number of companies but increasing the number of programmes,” he added.

Hub71, created with Dh520m ($141.5m) from Abu Dhabi’s Ghadan 21 economic stimulus programme, is home to 102 start-ups and is continuing to attract successful companies from around the world. It has also helped position Abu Dhabi as an innovation hub and attracted start-ups in sectors that are crucial to its growth, such as agricultural technology, health care and renewable energy.

DUBAI, UNITED ARAB EMIRATES , March 8, 2021 – Vijay Tirathrai, managing director of Abu Dhabi based start up accelerator Techstars at the Element hotel in Al Jadaf in Dubai. (Pawan Singh / The National) For Business/Online. Story by Alkesh Sharma
Mr Tirathrai considers Techstars partnership with Hub71 as a strong proposition to attract global companies to the UAE’s capital. Pawan Singh / The National

So far, the Abu Dhabi programme has focused on technologies such as artificial intelligence, blockchain, Internet of Things, and augmented and virtual reality that disrupt key sectors in supply chain, logistics, health care, financial services, real estate, petroleum, petrochemical, renewable energy and utilities.

Aside from connecting start-ups to its global network of mentors, investors and VCs, the accelerator and its corporate partners, including Hub71, also invest in potential ideas. In return, they earn collective equity in the companies, Mr Tirathrai said.