Startup accelerators and incubators are increasingly springing up in the UAE. But the start-up ecosystem remains disjointed. Is it possible to make the UAE the start-up hub of the Middle East? What can be done to make the ecosystem more unified?
Typically accelerators and incubators seek to mentor, train and support promising start-ups over a defined period of time.
Incubators tend to be government-funded and look to graduate a business after certain agreed benchmarks are met.
Accelerators, however, take an equity stake in exchange for their specialised support services.
In California’s Silicon Valley thousands of start-ups are nurtured by these methods every year, making the area a dynamic cluster for innovation that attracts talent, research and venture capital. A stable legal environment ensures that start-ups can develop, grow and succeed while protecting their intellectual capital.
Jorge Reis Martins, a Portuguese-American entrepreneur at the helm of an incubated start-up in Dubai, describes Dubai as the “perfect place to be an entrepreneur” if your product is suitable for the regional market. After a rigorous application process, Mr Martins secured a space in the IN5 incubator in Dubai’s Knowledge Village free zone. IN5 has eight offices, 24 desks, common and closed meeting rooms, and communal recreational areas that can accommodate more than 100 information and communications technology (ICT) entrepreneurs for up to a year at heavily subsidised costs.
Mr Martins hopes to have tested and launched a digital device with proprietary software, aimed at the burgeoning food and beverage sector, in the next few months. However, the legal framework presents complex choices. If Mr Martins continues to operate in a free zone, he can own his start-up 100 per cent. But to operate in a free zone, he can sell only services such as training and software support. If he decided to sell the device he has designed, then he would have to trade outside the free zone and take on a local partner. Mr Martins developed his business plan so he could rent the devices and operate within a free zone.
Dubai has a number of accelerators such as Afkar.me, which concentrates on digital ideas, and Turn8, which focuses on the logistics and supply chain sector. Supported by DP World, Turn8 has a unique inroad into DP World’s international ports and logistics infrastructure. Dubai Silicon Oasis is another free zone that encourages technology-based start-ups; it can provide funding of up to $80,000 in exchange for equity along with mentorship and legal support. In Abu Dhabi, twofour54 runs an accelerator called Ibtikar Creative Labs that provides financing and support to young Arabs in the media and entertainment industry.
Across Abu Dhabi and Dubai there are pools of activity within the start-up space. For these pools to become a sea of activity that generates waves beyond the start-up core, there needs to be a concentrated push to attract entrepreneurial talent from all over the world. In fact one of the biggest challenges start-ups in the UAE face is the difficulty in acquiring local talent. In Silicon Valley there are over a quarter of a million information technology workers who provide a ready pool of dynamic skills. Stanford University has also been a driving force in supporting research, education and development in Silicon Valley. Among the thousands of start-ups failure is commonplace. With failure comes learning and the next, perhaps successful, venture.
Mr Martins acknowledges the dearth of skilled labour in the UAE as well as the lack of appetite for business failure given the existing legal framework.
Creating an organic supply of skills is also a challenge for higher education. Encouraging young people to think outside of the box drives original ideas, content creation and fires up the ecosystem.
The UAE has made confident strides towards becoming the start-up hub of the Middle East. To create a dynamic cluster of talent that becomes a driver for innovation and technological development, the UAE needs to do much more to attract thousands of entrepreneurs like Jorge Reis Martins.
Yunib Siddiqui started his first business in London at the age of 22. He is the chief executive and owner of Jones the Grocer in the UAE. He can be contacted at SMEbizCorner@gmail.com
