Silicon Valley has maintained its position as the world's best start-up ecosystem but cities in the Mena region are on the rise even amid a global market correction that has scaled back funding, according to a report from Startup Genome.
“For more than a decade, near-zero per cent interest rates proved a safe haven for start-ups with ample VC [venture capital] funding sources,” the San Francisco-based research company said.
“This led to the overvaluation of start-ups, generating record funding and exit valuations, and a high number of unicorns [start-ups with a valuation of more than $1 billion].”
That all changed in the first quarter of 2022 when Russia's invasion of Ukraine, an energy crunch and supply-chain disruptions, as well as rising inflation and interest rates, combined to create widespread uncertainty.
Overall, 2022 registered an annual decline of 35 per cent in VC funding.
Startup Genome looked at more than 3.5 million start-ups across 290 locations and found that the top three ecosystems from 2020 weathered the storm and maintained their positions into 2023, based on metrics such as start-ups' business performance, funding, market reach and talent.
Silicon Valley remained at the top, followed by New York and London in second place despite a shrinking market share as emerging ecosystems gained traction.
The Mena region held steady in the correction from 2021 to 2022, with only a very slight decrease in the amount of early stage funding (minus 5 per cent), a decline of 19 per cent in fund-raising totals for series B rounds and beyond, and a 14 per cent decline in total VC funding.
Even during the downturn, the region remained above 2020 funding amounts.
Tel Aviv remained the region’s leading ecosystem. It moved from seventh in the rankings to fifth, buoyed by several exits valued at more than $1 billion.
FinTech Pagaya reported the highest exit at $8.5 billion. The number of unicorns also rose with 33 new entrants bringing the total to 57, including Blockchain company Fireblocks, valued at $8 billion.
Meanwhile, the UAE also ranked favourably in the region.
“The United Arab Emirates has made significant strides in diversifying its market from oil and gas, establishing itself as an innovation hub and hot spot for entrepreneurs,” Start-up Genome said.
“The nation prides itself on having a strong talent pool, ample funding opportunities and both legislation and infrastructure that nurtures the growth and success of start-ups. Abu Dhabi and Dubai are both global hubs for entrepreneurship.”
Dubai moved up three places and is the highest ranked Mena entry in “emerging ecosystems”, in 12th place.
The number of exits valued at more than $50 million has grown by 50 per cent while the number of exits exceeding $1 billion doubled, with Swvl at $1.5 billion.
The number of unicorns increased from two to four, with Astra Tech and Fenix Games joining the club in 2022. Early stage funding deal numbers also increased in 2022 by 45 per cent.
Abu Dhabi returned to the ranking in 2022 after dropping off in 2021.
The emirate landed in the 81 to 90 range amid emerging ecosystems. The city has experienced a 134 per cent increase in ecosystem value to $3.9 billion, partly attributed to the growing number of exits valued at more than $50 million, with Agtech Pure Harvest Smart Farms at $1.3 billion.
“I call it the North Star of data and insights into start-up ecosystems all around the world,” Amer Aidi, head of marketing and operations at Hub71 in Abu Dhabi, told The National, in reference to the ranking.
“We're in a prime position today to attract start-ups that are looking for new geographies to expand to because there might be a correction in their respective countries where they operate,” Mr Aidi said.
The government-backed start-up centre has more than doubled the number of applications it has received from founders seeking to join the community, attracting more than 1,400 applicants in the last cohort.
Cairo shot up from the 71-80 range to the 51-60 range in the emerging ecosystems ranking. Its ecosystem value grew by 97 per cent to $8 billion.
Riyadh also jumped from the 91-100 range to the 61-70 range in emerging ecosystems. Food delivery platform Jahez is valued at $2.4 billion while the number of unicorns doubled to two, with Foodics valued at $1.2 billion, increasing the ecosystem value by more than 100 per cent.
Artificial intelligence and big data accounted for a little more than a third of series A deals in the region between 2018 and 2022.
Startup Genome emphasised that 2023 was a year of opportunity.
“A recession is a good time to invest in start-ups,” it said, pointing out that start-ups that fundraised during the global financial crisis had slightly higher exit multiples than those funded during economic expansions.
“Tangible examples of successes born in a recession include Spotify raising a series A in 2008, Twitter doing the same in 2007 and Flipkart in 2009.”
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Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
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Uefa Champions League semi-final, second leg result:
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The specs: 2018 Chevrolet Trailblazer
Price, base / as tested Dh99,000 / Dh132,000
Engine 3.6L V6
Transmission: Six-speed automatic
Power 275hp @ 6,000rpm
Torque 350Nm @ 3,700rpm
Fuel economy combined 12.2L / 100km
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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Hydrogen: Market potential
Hydrogen has an estimated $11 trillion market potential, according to Bank of America Securities and is expected to generate $2.5tn in direct revenues and $11tn of indirect infrastructure by 2050 as its production increases six-fold.
"We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically,” the bank said in a recent report.
Falling costs of renewable energy and electrolysers used in green hydrogen production is one of the main catalysts for the increasingly bullish sentiment over the element.
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Avengers 3: Infinity War: an American superhero film released in 2018 and based on the Marvel Comics story.
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APPLE IPAD MINI (A17 PRO)
Display: 21cm Liquid Retina Display, 2266 x 1488, 326ppi, 500 nits
Chip: Apple A17 Pro, 6-core CPU, 5-core GPU, 16-core Neural Engine
Storage: 128/256/512GB
Main camera: 12MP wide, f/1.8, digital zoom up to 5x, Smart HDR 4
Front camera: 12MP ultra-wide, f/2.4, Smart HDR 4, full-HD @ 25/30/60fps
Biometrics: Touch ID, Face ID
Colours: Blue, purple, space grey, starlight
In the box: iPad mini, USB-C cable, 20W USB-C power adapter
Price: From Dh2,099
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On sale: now
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Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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- 600-seat auditorium
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- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
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How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
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About Krews
Founder: Ahmed Al Qubaisi
Based: Abu Dhabi
Founded: January 2019
Number of employees: 10
Sector: Technology/Social media
Funding to date: Estimated $300,000 from Hub71 in-kind support
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COMPANY PROFILE
Name: N2 Technology
Founded: 2018
Based: Dubai, UAE
Sector: Startups
Size: 14
Funding: $1.7m from HNIs
Neil Thomson – THE BIO
Family: I am happily married to my wife Liz and we have two children together.
Favourite music: Rock music. I started at a young age due to my father’s influence. He played in an Indian rock band The Flintstones who were once asked by Apple Records to fly over to England to perform there.
Favourite book: I constantly find myself reading The Bible.
Favourite film: The Greatest Showman.
Favourite holiday destination: I love visiting Melbourne as I have family there and it’s a wonderful place. New York at Christmas is also magical.
Favourite food: I went to boarding school so I like any cuisine really.
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Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
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Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Hussein Ibish: Trump's order on solid constitutional ground
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Killing of Qassem Suleimani
National Editorial: Suleimani has been killed, now we must de-escalate
Mina Al Oraibi: Air strike casts a long shadow over the decade ahead
Jack Moore: Why the assassination is such a monumental gamble
Matthew Levitt: Iran retains its ability to launch terror attacks
Damien McElroy: A CEO tasked with spreading Iran's influence
Simon Waldman: Cautious Israel keeping a low profile
