With a growing talent network, more venture capital interest, a higher global profile and new legislation, the UAE has all the key ingredients to emerge as a centre for technology startups.
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The technology startup sector in Dubai and the UAE is on the brink of becoming a hotbed for artificial intelligence (AI), virtual reality (VR) and 3D innovation, as government continues to position the country as the technology hub for the Middle East.
The UAE is becoming a hub for any technology innovation in the Middle East as it continues to show signs of changing laws to make innovation and investment in IT easier and more reliable, according author of Startup Rising, Chris Schroeder.
“There is a real network effect of talent in the UAE. The best from the region come to the country, attracting more of the best to come from the Middle East,” he said.
Schroeder said Dubai in particular is a hub of startups creating data sets solving unique and large problems.
Next up will be artificial intelligence, he said. But unlike startups in Silicon Valley and China, there are challenges for in AI due to a lack of skills.
Schroeder believes some will partner with existing AI enterprises as they do with Amazon, Google or Microsoft for cloud capabilities. “Many startups will simply partner with US companies, which can be fine,” he said. “Others may build companies globally leveraging the best talent they can find. But I hope young people are focusing a great deal on the basic skills for this inevitable future. MENA is no further behind than most emerging growth markets, but it will take commitment.”
Given that Middle East business culture doesn’t really accept failure and many businesses don’t really assess where things go wrong, it’s critical that startups that want to build successful businesses in areas like AI, VR or 3D avoid the common mistakes that any newly established company can make.
Schroeder said the definition of startup is to make mistakes, but the key is to learn from them. “Any company which believes the next five years is going to be like the last five for them, and builds the same incentives, rewards and cultures as business as usual is on the wrong side of history,” he said. “I find the issue mostly, but not just in the Middle East, is generational.”
He said because every industry in the region is facing new opportunities, as well as threats, they must focus as much on the former being aware of the ramifications of the latter. “From a startup perspective, I still love businesses in emerging growth markets that are solving complicated challenges in the physical world and scaling rapidly,” he explained. “I see some intriguing ones in technology, logistics, healthcare and more.”
Schroeder said if he were starting his career now, he would shore up his maths and statistics skills. “I would expose myself to as much data science as I could and think big about what is being unleashed by AI, VR, robotics and innovations in health, such as genomics, and absolutely blockchain,” he said. “But I would still study history, push myself to write and think critically.”
Amazon’s effect on startups
With Amazon’s recent acquisition of local online retailer Souq.com being heralded as the start of consolidation in the UAE e-commerce market, the industry is interested to see what effect this will have on startups.
Schroeder said small e-commerce startups have a chance of success after the arrival of the e-commerce global heavyweight, but should concentrate on really tight niches.
“I think there are going to be some really interesting businesses in tight verticals in e-commerce, such as Mumsworld, for instance. However, Amazon, Ali Baba, eBay and other major regional players will be having one hell of a time together.”
Pundits warn that given many of the established business and trading families in Dubai and the UAE have been slow to embrace e-commerce, those organisations that have yet to shift their focus online will find business tough going forward. “I might be reserved about investing in too many more malls,” he said.
Global players moving in
Schroeder said any market of 350 to 400 million people with rising middle classes and near-universal access to technology will see a lot of global players moving in.
He explained that with the country having introduced limited bankruptcy legislation, it won’t be long before such legislation starts to fuel the growth of the technology startup environment in the Middle East. “It is very significant, because it tells investors the UAE is serious about opening their rule of law to the realities of innovation and venture investing,” he said.
He added that many companies will fail, but now they can fail more easily and get started on the next one. “So it’s a great signal also culturally and to the investment communities,” he said. “I will add that I’ve never met a MENA startup entrepreneur who said, ‘I can’t start my business because there aren’t enough bankruptcy laws’.”
Chris Schroeder will be moderating several panels between 8 to 12th October 2017 at GITEX Future Stars at GITEX Technology Week in Dubai.