A different way of doing business… not VC-centric
We recently visited Dubai to deepen ties with our partner, Quintica, and to get “as close to the metal” in Dubai as possible. We wanted to better understand this region first-hand.
Quintica is a leading Global System Integrator and Elite ServiceNow partnership with a long track record of transforming corporates in the region. Their team warmly welcomed us to the launch of their new office. And we spent a week with the Q-team at their SKO. More about our partnership in a later post… but for now, back to Dubai and building business there.
SKO
Meet Sneha
Quintica ME Office Launch – Healthcare City
A short synopsis of Dubai and the UAE
Dubai represents a movement. e/acc1 manifestations are abundant all over the city with ambitious projects coming to life. Bigger is better and Dubai has the biggest. Move over Las Vegas. Dubai represents the merger of Eastern and Western business culture.
Did you know that the Dubai Mall has 105m visitors annually? Yeah… That’s 270 000 visitors PER DAY! We learnt that one should not just aim to ‘visit’ the Dubai Mall unless one intends to spend a whole day there. We found this out the hard way when we entered to find a Five Guys burger and it took us 90 min to get an Uber to escape the mall!
But is this focus on tech, industry, property and tourism simply window-dressing for the real money-maker in the region, which is oil? Well…
Historically, oil contributed around 30% of the UAE’s GDP, figures for 2021 show it contributing around 15%. Data shows (Source) this this is dropping each year as UAE has been diversifying its revenue sustainably. Growth in Financial Services, Infrastructure, Tourism as well as Knowledge-work has driven this diversification.
There are swathes of people coming in from Europe, Asia and Africa to live there or at least set up for a couple of years to make more money than they could back home, pay no tax and go back home wealthier. Remittance to family at home is a huge part of life for expats.
How to build it in Dubai
UAE is especially eager to be seen as the next start-up tech capital of the world – rivalled only by Saudi Arabia in the region which has equal ambition. But out of the 1361 unicorns minted globally in 2023, UAE only contributed 4 (Careem, Swvl, Dubizzle Group (formerly Emerging Markets Property Group), and Kitopi). So what is going on in the tech (enterprise and startup) space in the UAE?
Business is relationship driven. This is not unique to the Middle East, but there is certainly a level of courtship expected between companies before the work begins. Big corporates take their time – but once they are on your side, they view tech providers and third part vendors as partners not cost centres. This is key for anyone looking to build long term value for their clients.
Many startups set routes here, and build for the global market. That is where we see the true opportunity for startups. Conversely, as a startup building for the locals, you can expect a tech-savvy, digitally mature audience. In-Country Value program is a consideration too. So why is this challenging for *traditional VC-style startups*?
Our answer is broken down as in two pillars:
- Focus on long term partnership, not growth at all costs mindset: There is no shortage of funding in the UAE. $1.4 billion was raised across 286 transactions in the first nine months of 2023 in MENA (led by UAE and Saudi). Among the MENA nations, Saudi Arabia and the UAE stand out as the frontrunners in terms of capital raised through venture capital funding. Nevertheless, thoughtful and slower buying practices breaks the VC model of growth acquisition at all costs.
- Small local market:
- Only ±9.97 million people in the UAE. Note we say people as anyone who is not a born Emirati cannot attain local citizenship. And there are only about 1.15 million native Emirati people in the country, and to grow effectively one must consider ICV. We understand this and have a similar policy in South Africa – BEE. These policies aim at ensuring the native/local people are not left behind in a burgeoning cosmopolitan state, where top foreign talent is enticed to immigrate and build.
- Startups benefit from large populations, and so the UAE is incomparable to the US, China, India or even Nigeria.
Optimism and growth in the country is stable and high. Many people ask the question, “so the UAE has been growing significantly year-on-year for the last 20-30 years. When does this stop?” It seems like it’s not going to stop as the growth is sustainably driven by a multitude of factors – not just oil.
So if you are a startup and you are aiming to build for a local market, perhaps there are better places to build than the UAE. However, if your product or service is globally relevant and you are looking to build business the slower, more traditional way, in a sustainable market – then Yalla!
1 e/acc: techno-optimism, the movement that tech is contributing positively to humanity. Founded by @BasedBeffJezos
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