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Abu Dhabi is serious about startups. Here’s why.

Challenging times require new thinking, investment in new solutions, and new ways of doing things. This is why, despite unprecedented global health challenges, Abu Dhabi has upped investment for companies that can spark the next phase of innovation-led productivity and help accelerate the shift to a knowledge economy based in stronger and cleaner economic growth.

Although it seems counterintuitive, an economic downturn can also be an opportune time to invest in innovation. Tech giants Google and Samsung both heavily increased R&D expenditure as the dotcom boom turned to dotcom dust; and Uber, Slack, Groupon, Instagram, WhatsApp and Pinterest all rose prominence during the GFC. Without question, the world’s startup sector has been hard hit by Covid-19, but in Abu Dhabi several government agencies and associated institutions are taking important steps to bolster the health, diversity and depth of the sector, while safeguarding the investments already made.

Backing knowledge for future success

Today, Abu Dhabi’s knowledge economy investment already far exceeds its geographical borders, with startups from all around the world benefitting from a future-focused and well-regulated approach to business development. Geoffery Alphonso, CEO of the successful edtech startup Alef Education says: “In Abu Dhabi, you have access to resources, infrastructure, and talent from all over the world – not a lot of people can say they work in a company with 40 different nationalities. It’s also a very stable place and there’s an appetite to do something different. Those are key ingredients for any startup.”

That global diversity is set to expand further with the announcement by ADQ – a public joint stock-holding company formed that manages a portfolio of 90 companies spanning healthcare, tourism, manufacturing, utilities, media, agri-business and more – of an AED1.1b venture-fund targeting Indian and South East Asian startups. ADQ’s head of venture capital and technology, Mayank Singhal, described the fund as a vehicle to help the company invest in startups that will generate sustainable, long-term financial returns and bring young entrepreneurs to Abu Dhabi.

“We will aim to support them in ways that accelerate their development to create a new wave of winners in the tech landscape. These startups will also benefit from access to ADQ’s leading companies in sectors such as healthcare, food and agri-business, utilities and FinTech.”

The ADQ-funded startups will be located at Masdar City, an economic free zone where business creation and development are streamlined. And they will keep good company here, as the sustainable city is already home to more than 600 science, technology and renewable energy companies, including multi-sector leader Honeywell, which has recently pivoted to the production (and potential export) of coronavirus-suitable N95 facemasks in Al Ain, and the Mubadala company Masdar, one of the world’s foremost renewable energy investors.

Inspiring an agtech revolution

Abu Dhabi Investment Office (ADIO) is also continuing to support startups that are innovating in high-productivity sectors such as agtech, healthtech and edtech through investment and venture capital expansion.

In April, ADIO announced four new agtech investments, funded through the US$272m AgTech Incentive Programme. Vertical farming groups Madar Farms and Aerofarms, fertiliser startup RNZ, and Responsive Drip Irrigation, which uses disruptive irrigation technology to allow plants to self-regulate water and nutrient delivery, will accelerate the growth of an agricultural ecosystem that is locally relevant, globally exportable, and has the potential to solve regional challenges such as food security, while creating highly skilled jobs.

Support in uncertain times

Hub71, Abu Dhabi’s global tech ecosystem and VC, has also recently announced support measures for the 57 startups in its community, including covering all employees’ housing and office-space rental for two months, with further support to be re-evaluated on a monthly basis depending on the latest developments.

In its latest intake, Hub 71 also prioritised global healthtech and edtech startups with the potential to support the private and public sectors as they adapt to the challenges of Covid-19; startups such as Aumet, which connects around 50,000 global medical manufacturers with distributors for essential items such as Personal Protective Equipment (PPE).

Aumet founder Yahya Aqel described Hub 71 as an immensely supportive community. “Coming from California, we see Abu Dhabi as a safe, well-connected and supportive place to do business – a springboard to scale our business operations globally...we couldn’t have picked a better place to step up our game, than at Hub71.”

Under the steerage of Crown Prince Mohammed bin Zayed, Abu Dhabi Executive Council also recently announced 16 new initiatives to support businesses through these tough times. They include AED 5bn of electricity and water subsidies for private, commercial and industrial sectors, an AED 3bn SME credit guarantee programme, and further measures for SMEs to navigate the current market environment, such as tax and insurance exemptions, waivers and fee reductions that aim to support businesses while reducing the cost of living.

It’s clear that startups have an important role to play in the economy of the future, and that support and investment are key to their success. In good times and bad, backing the startup sector goes beyond financial returns. Successful early-stage startup support is also an investment in diminishing the effects of climate change, developing much-needed health solutions, bringing people together, new job creation, and delivering sustainable value to both people and the planet.

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