The United Arab Emirates has emerged as one of the world’s most attractive locations for starting a business. According to a Global Entrepreneurship Monitor survey, the UAE is ranked No. 1 in attractiveness to entrepreneurs, a dramatic rise from its fifth-place position in 2019-20. This transformation reflects a larger shift in the UAE’s economic landscape, where traditional sectors like real estate and wholesale trade are giving way to technology-intensive industries that could reshape the region’s future.
For example, in the agricultural technology sector alone, investment across the Middle East and North Africa surged from $97 million in 2021 to $250 million in 2022. The UAE government recently committed up to $54 billion over seven years to triple its renewable energy supply, targeting 70% of power generation from renewable sources by 2050.
Against this backdrop, alternative financing solutions, such as the equities-based options offered by EquitiesFirst, could be attractive to investors looking to secure positions in booming UAE sectors.
A New Generation of Startups
The UAE’s startup ecosystem is witnessing an influx of entrepreneurs from around the globe, particularly from Western nations, seeking capital in an increasingly tight global venture funding environment.
“We are seeing more of those entrepreneurs becoming footloose as they look to the deeper capital pool of the Arabian Gulf for their initial funding requirements,” noted Pankaj Gupta, co-founder and co-CEO of Gulf Islamic Investments, in a recent interview with Arabian Business.
Traditional sectors are undergoing significant transformation. The financial technology landscape, for instance, has expanded beyond conventional banking services. Nontraditional players, including telecommunications companies, are now securing licenses for micro-payment solutions in areas previously dominated by banks.
The health care technology sector is similarly experiencing rapid development, driven by artificial intelligence and genetics-based solutions that promise personalized treatment plans at reduced costs. And environmental technology startups are gaining traction, focusing on innovative recycling schemes and solutions for water conservation — a critical concern in one of the world’s most water-stressed regions.
“Startups specializing in reducing water use or making more economic means of energy storage — for instance, through new battery formulation, molten salt, or ‘gravity return’ schemes — are likely to remain popular homes for venture capital in the coming few years,” said Gupta.
The Capital Challenge
Despite the UAE’s growing appeal, the venture capital ecosystem remains in its early stages. This gap in traditional startup funding creates an opportunity for alternative financing solutions, particularly for companies that have successfully reached public markets or shareholders looking to invest in new ventures.
EquitiesFirst, a global investment firm with a presence in the UAE, offers one such alternative through its equity-based financing model. The firm’s approach allows shareholders to access capital financed against their shares while maintaining long-term exposure to equity positions.
EquitiesFirst’s model, developed by founder Alexander Christy Jr., originated from a 1997 experience helping a family-owned apple farm secure financing against their publicly traded stock holdings. Today, the firm has provided over $4.5 billion in financing globally, operating across 12 offices in eight countries.
An equities-based financing structure could prove particularly valuable in the UAE’s current context. The recent public listing of Space42, an AI-powered satellite data analytics provider, on the Abu Dhabi Securities Exchange demonstrates the potential for successful exits in the UAE’s technology sector. Such listings could create opportunities for early investors and shareholders to access capital through equity-based financing while maintaining their positions in promising companies.
Government Support and Regional Impact
The UAE government’s strategic initiatives align with this financing approach. The nation is actively incentivizing investment in future-facing sectors including fintech, e-commerce, agricultural technology, health care technology, educational technology, space technology, renewable energy, smart city technology, media and entertainment, gaming, and creative industries.
“This demonstrates astonishing progress, and a shining example of how political determination and sufficient resources can transform an entrepreneurial environment,” noted the authors of the Global Entrepreneurship Monitor survey report.
The UAE’s rise has been paralleled by similar developments in Saudi Arabia and Qatar, both of which ranked in the top five globally for entrepreneurial conditions.
The UAE’s position as a regional hub amplifies the importance of its startup ecosystem. Many sectors remain underpenetrated in the Middle East and North Africa region, presenting significant growth opportunities. Technologies developed and proven in the UAE could address critical challenges across the region, from food security to education access.
For instance, educational technology startups in the UAE are developing solutions that could help address human capital development needs throughout the Middle East and Africa. The government’s commitment to integrating technology into education systems supports this expansion.
The growth potential extends beyond immediate regional boundaries. The UAE’s strategic position and business-friendly environment make it an ideal launchpad for startups targeting markets across the Middle East, Africa, and South Asia.
The combination of government support, market opportunity, and alternative financing options presents a unique moment for the UAE’s startup ecosystem. While traditional venture capital remains important, the availability of equity-based financing through firms like EquitiesFirst could provide crucial flexibility for both investors and entrepreneurs.
Growing sectors like agricultural technology and health care innovation suggest that the UAE’s startup landscape will continue to diversify. And with the government’s commitment to renewable energy and space technology, new opportunities are likely to emerge in these capital-intensive sectors.
The success of this ecosystem will ultimately depend on the continued alignment of policy support, capital availability, and market demand. The UAE’s track record of improving entrepreneurial conditions, combined with innovative financing solutions, suggests that the foundation for sustained growth is already in place.
