The Global Silicon Valley What It Takes to Win Outside the US

[music] Hi everyone and welcome to this panel on the global Silicon Valley. There's been a lot of panels over the past last few days, but I'm most excited about this because startups are essentially the future of Abu Dhabi. So, we're joined by an amazing panel of interesting folks. Um, no, I want to start with you if I can and can you talk to me about the the landscape of startups in the UAE, the types of companies and how kind of exciting the industry is.

Thank you and thank you all for being here. Um, you know, when we think about the UAE as an investment destination, not just a capital formation destination, and we take a look at the startups that we see here, we take a look at two types of startups generally in our firm. The first are really building for the region. So they've identified white spaces in the region building from here and some great examples include TABI which is now a five billion dollar BNPL based out of here really becoming a first port of call for credit. So companies based here but that are really addressing large problems for the region in a with a slightly different flavor than an international might.

is thinking back to tabby first port of credit in a region that is massively underbanked with low credit card penetration. The other half of the portfolio that we look at building are companies based here that are building for the world. And so why bother doing that from here? Why does a startup have the right to win when they're based here? And again, we take a look at the portfolio now.

We have about a dozen companies that have more US European revenues than regional revenues, but they first started here and we invested when they were only here. And the reason that they're able to do that and really leaprog is the lack of incumbents. So you ask me what it's like building here. When you're building here and you're building in an industry that you know, you're not trying to change the industry, you're creating an industry. So if you're thinking about supply chain, technology, logistics, you're creating that industry with a regulator that wants that to work.

If you're thinking about fintech or financial inclusion, eight years ago as a region, we were 85% unbanked. Now we're 51% unbanked. Nobody built banks. So as a fintech you're coming in to create industries as a health tech you're coming to create an industry and you take a look systematically across all these even agriculture right now you know we still import 85% of our food you know five or 10 years from now that is unlikely to be the case. So when you think about agriculture and food, how do you create a food industry?

So founders based here really have that ability to take a look at an industry and say this is a white space manufacturing you name it or there's a lot to be done here and the regulators take a look and say we want this to work how can we enable and support within the guardrails and as an investor you come in and say wait there are no incumbents how can we enable your scale very very quickly and those solutions often it's not that the founder is thinking outside the box there is no box so once the founder actually cracks that generates revenue starts to scale really the world is their oyster and they manage to go global. So when we think about investing here, those are the two frameworks. Is it regional white space with a great TAM um but limited a little bit, risk is limited or is it a global company building from somewhere where there's lack of incumbents, friendly regulators and incredible talent?

And and you're based on the ground in the UAE. So I'm curious to get your perspective on Hub 71. I mean, we're in Abu Dhabi. Is that really helping to incubate startups here locally? And and what what is the role that that plays?

Hub 71 specifically you asked about I think it's a fantastic platform. It's been around since 2019. Uh we as global ventures were regulated in ADGM since 2018. So one of the first VC funds to be regulated out here investing across the region. We're now managing $400 million.

70 companies. A bunch of those came from Hub71. We're very active in building this ecosystem. And we are actually hosting an event at Hub71 tomorrow 11 a.m.

if everybody wants to join with a few of our founders. Some of them have come out of that incubator. Some of them have come from other incubators around the region.

And I'm going to go to Simon now at the end there. Can you talk about any startups that really excite you in the UAE at the moment? I mean, every time I I order food on Talibat, I I'm coming across startups. Uh but can you tell me some of the names that that excite you locally here in the UAE?

Oh, yeah. So uh let me start with my first uh impression to the Abu Dhabi. So uh it was early 2020 uh the uh the time just before COVID crazy started. So I invited by Mirun conference uh there was only one session for the blockchain and crypto at Milon Abu Dhabi. So that was my first visit to Abu Dhabi.

Uh and you might already uh have seen the galleria filled with the crowded but at the days galler was a pretty empty. So uh not only for the gallerium uh I visited the hub 71 in 2020 January it was also pretty empty. So uh I so I got some vision and uh the uh the mission of the government and the leadership of the here but it could not uh believe that uh within few years uh Abu Dhabi and UAE can be a uh populated startup ecosystem like this. By the way, uh uh as a one of the contributor of the hub hub 71 ecosystem, our company Hashet is a partnering to the their digital asset uh special program as a advisor and judge as well. So the reason why so yeah so my uh my venture capital Hashid uh started from South Korea.

So we are specialized venture capital for the web3 and crypto and uh blockchain related stuff but you know that uh the most important thing for the blockchain related stata is a regulatory friendly environment. So uh the Singapore was a was a great environment for the uh crypto startup for the past few years but these days uh absolutely uh Abu Dhabi and Dubai offer the most regulatory friendly uh environment for the web startup in the world. So that's the reason why we uh expanded our our office in uh ADGM uh and we we are in progress about getting the license here. So uh along with our journey uh we are very excited about seeing the lots of uh blockchain and web street related companies and talent moving here. So uh lots of uh uh we so far we have invested more than 150 uh portfolios uh in the web three uh ecosystem all over the world and many of them are migrating their office to uh Abu Dhabi and Dubai these days.

So uh that's the reason why we are seeing the uh uh innovation happening uh of the sector based in uh UAE.

Interesting. And and Samantha I want to bring you in here. We often talk about what Abu Dhabi can do similar to Silicon Valley. I'm wondering what can Abu Dhabi do differently to Silicon Valley to get ahead.

Yeah. So uh you might be familiar that many of the uh startups based in Silicon Valley is a most of them are deep tech startup. So uh these days lots of consumer focus or entertainment uh kinds of content startups are moving to uh New York from Silicon Valley. So Silicon Valley is a kinds of uh uh home of the kicks uh and deep techs but uh but here in UAE they are very mixed. So it's a young country uh and all it's a one of the best spot for the uh mixturing of the all the culture and technology from the world.

So more than 90% of the uh population here is foreigners. So there are lots of opportunity for the uh contents and uh retail uh retail uh industry as well and also uh the the mission of the leadership here from the government they want to positioning uh UA not just as a capital of capital but also the technology hub for the whole GC. So uh with with their vision there are lots of opportunity for the deep tech as well to position here in Abu Dhabi uh in Dubai. uh but uh what I singing the missing part uh is uh relatively the uh the the builders right so there are lots of investor there are plenty of the funds around around the city and there are lots of founders to uh around here to getting for the fundraising or make a new headquarter for the GCC uh blah blah but there are not that many uh leer builder the developer or talented operator uh from the world. So one of the mission from aid is nurturing the talent and ecosystem.

So one of the uh developer nurturing program we have operated more than three years is named protocol camp. It's a web three developer boot camp for the uh southeast from the south Korea and entire Asia for the last three years. uh and along with the Abu Dhabi government, we plan to launch our protocol camp in Abu Dhabi from next year to nurturing the developer ecosystem.

And I I I just want to bring in Samantha here. I mean, you're based in London and kind of the same question really. I mean, everyone talks about trying to imitate the success of Silicon Valley. What can Abu Dhabi do differently? Um really interested to get a sort of global perspective on that question.

Yeah. Um, so I think a lot's been

moved the mic a little bit closer.

Yeah, I was gonna say I I think I think a lot's been covered um really well there. So probably took a lot of the words out of my mouth. Um, but I think like there are things that Silicon Valley has that are unique attributes, right? So obviously the culture creating culture is is is challenging, right? certainly with a stroke of a pen, but I think the spirit of founders backing other founders of like celebrating taking a risk, right?

So people feeling that there won't be significant reputational or career damage if they go off the corporate ladder and try something. Um that's hard to replicate, but also I think Silicon Valley benefited from a very unique historical moment, right? And and multiple times over. So R&D that was part of a national imperative and then um universities coming into force and then software and you know that of a young founder working in their garage can churn something out pretty effectively. I I think though other places like here can seize their own historical moment.

Um and it feels like that's what is happening and I think what was described right of saying there are industries that you can create ecosystems around create national champions um I'm also in the digital asset field so we see that quite clearly here right where we see some ingredients so whether it's kind of liquidity pools and bringing on banks and and leveraging the capital that's here the regulatory environment so giving clear frameworks connecting startups to to enterprise. I know nor that backstage you were saying that you do a lot of that here, right? So with your startups um not just sort of mentoring founders but actually helping them get their first customer and being able to scale. Um so yeah, I think it's where what it can do that Silicon Valley did is just honing kind of the unique moment historical and focusing on one sector.

Got you. Okay. and and can you share a specific example of a company that is non US doiciled and has kind of gone on to global leadership and has one great success and what what can founders in the room take from that specific example?

Yeah, I mean the the most obvious to me is Spotify I think because we all so many of us probably use it every day. Um and it does feel like a parallel with what I was referencing with digital assets, right? My understanding is they did take advantage of a pretty permissive digital IP framework um and then go global early. So I think it's easy as a startup to say we want to really own this local market and we're going to dominate it and we're going to build so narrowly for it. I think you always have to tailor your product.

You always have to have a GM who understands what local users want and how that's different maybe from the origin. Um but you do need to have sites to to grow fast. And so I think they certainly did that. that the product's always been geared to people everywhere. Um, and then in crypto, I'll just drop one, but I, you know, I think Binance, I think it's some crazy like within 18 months was the dominant exchange in the world.

You go to, you know, um, the product feels like it was built for kind of global person everywhere accessing global liquidity. So, yeah.

Yeah. And no, you focus a lot on the local market in the Middle East. Do you think that venture capital companies should be looking at more deals in the Middle East? because it seems like a lot of VCs focus on the US. So curious to get your perspective on that.

Um but they are Alex. I think you know last year we had 2.4 billion dollars of funding in the region of which 52% came from outside the region. So there's a lot of venture capital dollars globally looking at the region as a percentage of the region. But when we think of the broader MINA region with the UAE being one of the centers of innovation here um$2.

4 4 billion last year in a world where you had 288 billion deployed is less than 1% of global venture funding. So the short answer is yes there is so much space to grow from here where it's still less than 1% of global venture funding as a broader region. Um but it is half from outside. I think what people take a look at when they look at the region is really how how much of this is copycat plays, how much is emulation versus innovation and I think there needs to be a little bit more faith in the regional innovation scaleups coming out of here.

Got you. And in terms of if you're a startup looking to attract talent to kind of grow and scale your company, is it difficult to get the top talent to the Middle East and to the UAE or is that quite an easy thing to do? What we've seen is that it's become increasingly easier, especially over the last five years. And many founders, especially that we've invested in in the last, I'd say 18 or 24 months, are second and third time founders that are moving to the region to set up their next company here in the UAE. And part of the argument they make is they say, you know, I've had a great first or second exit abroad.

I want to set up my next company here. It's not just the taxes or the wonderful weather. It's also the fact that I can attract talent and I can hire whoever I want and bring them in to help me build. Um, that's very different to what other economies are experiencing around the world, which is that it's harder to get your talent to come in into the country and build with you. So, I think the war on talent or the, you know, the attraction for talent in this market um is definite.

It's not, oh, is it happening? Isn't it happening? It's by far happening. And I think on on the stage before as you had someone say between 400,000 and 1 million families are moving here next year. Um I've been here 30 years and I've seen this country go up and down.

I've seen the population evolve but even for for me that's a really high number.

Yes. And and Samantha I if you want to grow a company and be really successful what are two or three maybe unglamorous things that founders can do to really grow and develop their business?

Yeah. Yeah. So I think one is you know we keep getting back to talent. So whether it's encouraging people to leave top jobs to start a company or to move here for their second act, right? So repeat founders.

The other is just we do know incentive systems work. It's really hard to get the best people if you can't have them um you know be part of the success of the company they're going to build. So I think like labor law right and then also tax law around issuing like whether you tax options right as salary and all of this and how you can incentivize that. So that's one. Um and then I think the second maybe the kind of bare bones unglamorous is you know there's one thing to say regulatory isn't going to get in your way or be predictable and I think for for crypto that was something they lusted after for the last years is like just don't come after me or enforce me.

I think you can go even further now and have it be a little more like specific rules that advance companies. So for example, just make licensing fast, right? Have one point of contact that is your regulatory contact in the government who roots things effectively. Um yeah and and for for government or banks, right, make it so that it's really clear expedited with them how they can interact with startups, how they can document, how they can log changes.

Yeah. And and Simon, I want to finish with you. We have 3 minutes left. What advice would you give to startups looking to establish and grow in the UAE and what are some of the common pitfalls that they often make?

Uh yeah, so uh there there will be a lot of misconception or prejudice uh for many of the uh foreign uh founders to visit here. uh uh they they have some dream about getting the easy money or king money or just uh

there are uh lots of uh easy opportunities uh to be here but

uh the uh but uh what I found for the last few years is uh it's a very uh unique and comp complex ecosystem. So uh so we have to uh uh we have to respect the original culture and and and the rules of the ecosystem and also some the part of the culture and the ecosystem is made by the foreign uh contributors. So be the be the long-term contributor and part of the ecosystem is the most important to understand the ecosystem. Um and also uh many of the uh key kinds of key leaders or opinion leaders uh are expecting the uh what kinds of lead uh startup founders or or challenggers to contribute to the ecosystem. So that's the uh the most important thing.

I see. And we have one minute left. So I I I want to pick the brains of no on this around financing. And if you're a small business in the UAE, how easy is it to access financing? Because my understanding is that if you're a local bank, they often lend to the big corporates and then the sort of the small and medium-sized companies struggle to get access to capital.

Is that a correct assessment or would you take a different view?

Are are you suggesting financing capital debt not equity?

Yes.

So I do think there's a huge amount of venture debt compared in the region right now compared to three years ago. So I think it's accelerating very very quickly. To take a 10,000 foot view, this country had the second highest GDP growth rate in the world this year. So this is a very very fast growing economy. And with that comes everything in terms of financial instruments.

So venture debt, private credit, bank financing all look very different today than they did three years ago and they will look different again in three years. So to ask me today, how difficult is it? For our strong companies, venture debt and private credits available, right? For those companies that might not be able to handle it, it's not. The risk tolerance is lower than it is in other markets, but it's changing very quickly.

But it comes back to this is a very high growth economy. Um, a lot of innovation, a lot of disruption, friendly regulators, incredible talent, and when you pull those together, the financial instruments that enable that talent will continue to grow.

Thank you. It's certainly an interesting time for startups in the UAE. So, thank you guys and thanks everyone for listening.

Thank you very much.