In an effort to bolster startups in the emirate, HH Sheikh Hamadan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, has approved the launch of a USD101 million venture capital fund for startups.
The fund, with capital of approximately AED370 million, will come into effect from June 2022. The fund aims to enhance Dubai’s position as a global hub for fintech, venture capital and innovation.
The VC fund was approved in a meeting of the Executive Council chaired by HH Sheikh Hamadan bin Mohammed, where he stated that the Venture Capital Fund for Startups was approved under the directives of HH Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, to ignite sustainable economic growth. HH also said that they are committed to providing a vibrant business environment and opportunities to promote excellence.
HH also said that Dubai has established itself as the city for entrepreneurs and risk-tolerant investors. He added that Dubai has attracted the best talent from around the world to mutually benefit from the massive opportunities on offer.
The Venture Capital Fund for Startups will be governed by the Dubai International Finance Centre, which is a 15 percent contributor to the fund. The Startup Fund aims to create an integrated funding system for small and medium enterprises, with a range of suitable options to cater to the needs of these enterprises. The Fund aims to support the development of small and medium enterprises in Dubai, and gradually scale up on an international level.
Dubai to be positioned as Fintech hub
During the implementation period, which will run for eight years, the Fund aims to contribute AED3 billion to Dubai’s GDP, while providing more than 8000 jobs for emerging talent. These efforts are aimed at strengthening Dubai’s position as a regional hub for entrepreneurship and Fintech, Innovation and Venture Capital – thereby ensuring that it attracts investors and entrepreneurs from all around the world.
As more and more people turned to Internet Banking and e-commerce during the pandemic, the demand for Fintech services has shot up.
A report by consultancy firm KPMG established that global Fintech funding in 2021 had surged to USD210 billion.
Investment in FinTech companies in Europe, the Middle East and Africa stood at USD77.4bn from 1,859 deals last year. The Middle East in particular, continued to report strong growth, with USD75 million raised by Bahrain-based Rain and USD50 million by UAE-based Tabby in the second half of 2021.
The report further stated that growth in the sector will be dominated by the payments sector.
Dubai among world’s most attractive cities for investment
Dubai is also boosting its VC capabilities and is among the top 35 most attractive cities in the world when it comes to attracting venture capital and the funding of start-ups, according to the first Innovation in Business Index from Finom, a business-to-business financial platform in Europe.
The emirate was ranked 30th in terms of its ability to attract venture capital and 32nd in a category that evaluated how well start-ups are funded, the global index, which assessed more than 100 cities around the world, reported.