Partners In Progress: The Private Sector Needs To Back Government Startup Schemes To Initiate The UAE's Golden Age of Entrepreneurship The private enterprise must continue to play a pivotal role if the UAE is to transform itself into the global startup hub that we know it is destined to become

The United Arab Emirates (UAE) has an enviable record of entrepreneurship.

According to a 2022 MAGNiTT report, the country saw a record-high level of capital influx for startups in 2021, growing 93% on the previous year. In a 12-month-period that shattered records for the entire Middle East and North Africa region, the UAE saw greater investor participation than ever, with 54% more funding deals than in 2020. The fintech industry led on the share of deals at 23%, and F&B topped the capital-volume chart at 40%, driven largely by the US$415 million funding agreement for managed cloud kitchen platform Kitopi. E-commerce entities such as MumzWorld, Noon, and Namshi have also been famed for their recent successes.

Behind the scenes of these tales of triumph are many players, including the UAE government, which has invested heavily in nurturing entrepreneurial ventures and maintaining the nation's innovation momentum. But private enterprise has also played a pivotal role, and it must continue to do so if the UAE is to transform itself into the global startup hub that we know it is destined to become. There are three main ways the private and public sectors can come together to achieve this goal- these include:

1. Regulation The UAE government has already put in place some revolutionary initiatives, such as golden visas for entrepreneurs. The Ministry of Economy also initiated its Entrepreneurial Nation program that gives startups the opportunity to participate in the Flat6Labs Ignite program and obtain initial financing of between $150,000 and $250,000.

Through such programs, private sector enterprises become critical partners and advisors that help governments create regulation that embraces international best practices. Through regular roundtable discussions between government leaders, venture capital (VC) actors, the startup community, and other private businesses, ideas emerge, as well as regulations that empower entrepreneurs.

Private enterprises are also ideally placed to help raise awareness around government programs through joint education events and messaging campaigns. To maximize the effectiveness of provisions such as golden visas for example, private firms can serve as assessors for government bodies, vetting program applicants for efficacy and potential.

2. Funding Cash flow can make or break a fledgling business, and the ability to secure funding is the only way open to most entrepreneurs of guaranteeing a predictable stream of capital over a given period. Government support for cash-seeking businesses varies, from direct funding to introductions to angels and VCs to initiatives such as Dubai Future District Fund, which provides premises for new firms as well as a $270 million fund to support their cash flow needs.

We can also see regional sovereign wealth funds such as Abu Dhabi Developmental Holding (ADQ) being deployed to help entrepreneurs. ADQ's DisruptAD is a collaboration with Flat6Labs Ignite on a seed program that will support startups in Abu Dhabi, giving them seed funding ranging from $150,000 to $250,000, and follow-on funding of the top performers of up to $500,000, as well as other forms of support including mentorship, coaching, training, networks, and other invaluable resources.

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Taking a note out of this playbook, private enterprises can follow suit and actively guide promising startups through the tricky early stages by launching their own incubator programs. In the UAE, Aldar, HSBC, and Majid Al Futtaim have all paved the way with the launch of dedicated accelerator programs that set fledgling firms up for success by aiding them not only with financial but also more active forms of support and mentorship.

By giving such support at the seed stage, governments and their private sector partners can ensure entrepreneurs install best practices in the foundations of their businesses, and give them the best possible chance of success. Among these best practices are the skills of communication and strategy needed to engage the right investor at the right time, as not all funders will be attracted to all industries and all stages of maturity. Accelerators and incubators that take these factors into account and run programs that impart this knowledge effectively will see great returns.

3. Culture creation While some entrepreneurs will be naturally disposed towards starting their own business, others need to be inspired. Governments and private enterprises can work together to be the source of inspiration for potential business founders who may otherwise take different paths. By holding joint training sessions, funding initiatives, and public awareness campaigns, they can point people with ideas towards the resources they need to get started. A culture of entrepreneurship begets entrepreneurship.

The UAE has, once again, been a leader on such initiatives. Programs such as the Mohammed Bin Rashid Innovation Fund, Sandooq Al Watan, Ma'an Social Investment Fund, and the Khalifa Fund For Enterprise Development combine public and private enterprise resources to create communities of innovation that act as catalysts for startups. Through training and mentorship, these schemes show potential founders what they are capable of, and where they can go to get help.

Private sector firms can get involved by not only becoming funders and mentors of startups, but by becoming their customers. Having worked through the initial phases of development of a new business, a private firm could become an early adopter of the very offering in which they have already seen potential. In this way, they help startups build a customer base.

Rather than stick with an incumbent global brand, the mentor-customer becomes an advocate for the local startup. And in today's digital economy, oftentimes the nimble local startup can meet precise needs more readily than lumbering global giants that often offer more generic products. This approach can have wide-reaching implications for an economy, making the local business community more competitive. The potential is also there to improve margins, as the prices charged by local businesses tend to be less than those of multinationals.

According to the Ministry of Economy, SMEs make up 94% of companies operating in the UAE, and employ 86% of the private sector workforce. If the government can build a culture of innovation and entrepreneurship, then its reputation as a global startup hub will be sealed. But despite the commitment the UAE has shown in its many incubator and accelerator programs, it cannot achieve this goal alone. It needs partners. Private enterprises are uniquely placed to fulfill these roles, and the future they can build together is one of growth and sustainable prosperity.

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