UAE and Its Startup Ecosystem
Exploring Dubai, the Desert, and the Land of Mansour
Where is the Middle East?
The term Middle East is one rooted in a Eurocentric perspective, widely adopted in modern times. Depending on interpretation, it generally refers to the vast region encompassing the Arabian Peninsula, the Persian Gulf, the Eastern Mediterranean, and even parts of North Africa. This area includes a diverse range of countries such as Saudi Arabia, Iran, Iraq, and Egypt, each with unique cultural and economic landscapes.
Due to its geographical distance from South Korea, the Middle East is often perceived through the lens of media portrayals—images of vast deserts, oil wealth, the Gulf War, and Islamic culture come to mind. The region is known for its scorching climate and expansive sand dunes, yet beneath these arid landscapes lies an abundance of natural resources, particularly oil and natural gas, which have propelled several Middle Eastern nations to immense wealth.
South Korea has long maintained economic ties with the Middle East, engaging in infrastructure and construction projects since the 1970s and 80s. Additionally, over 60% of South Korea's crude oil imports originate from the region, with Saudi Arabian oil alone accounting for more than 30% of that total.
What Kind of Country is the United Arab Emirates (UAE)?
The UAE, located on the Arabian Peninsula, shares borders with Saudi Arabia, Qatar, and Oman, while its northern shores face Iran across the Persian Gulf. It was formed in 1971 as a federation of seven emirates, including Abu Dhabi, the capital, and Dubai, its economic powerhouse, following independence from British protection.
Abu Dhabi, the largest emirate, covers 85% of the UAE’s landmass and dominates the country’s oil production. Before the discovery of oil in the 1950s and 60s, the UAE was an impoverished desert region, its economy relying heavily on pearl diving and date palm farming.
Today, the UAE has a population exceeding 10 million, with Abu Dhabi and Dubai each housing around 3 million residents. Notably, over 80% of the population consists of expatriates, a third of whom hail from India and Pakistan. The UAE is an Arab nation where Islam is the predominant religion, with the majority adhering to Sunni Islam, much like neighboring Saudi Arabia.
What is Dubai?
Dubai is the UAE’s leading economic hub, characterized by a striking skyline dominated by towering skyscrapers. The city is home to the Burj Khalifa, the world’s tallest building at 828 meters, which opened in 2010. Emirates Airline, the largest airline in the Middle East, is headquartered in Dubai, while Dubai International Airport (DXB) ranks among the world’s top three airports alongside those in Atlanta and Beijing. In 2019, before the COVID-19 pandemic, DXB handled over 80 million passengers.
Dubai's economy is built on tourism, finance, and real estate. However, it wasn’t always the futuristic metropolis we see today. Searching for Dubai 1980 on Google reveals images of an undeveloped desert landscape with only a few roads and buildings.
Unlike Abu Dhabi, which enjoys vast oil reserves, Dubai had to forge a different path. Through real estate development, massive infrastructure investments, and open government policies, it successfully attracted human and financial capital from around the world. Today, oil accounts for less than 5% of Dubai’s GDP.
Strategically positioned in the Persian Gulf, Dubai is a gateway between Europe, India, and Africa, making it a vital crossroads for global trade. Starting with port development, the city embarked on ambitious projects in the 2000s, such as the Palm Jumeirah and Burj Khalifa, transforming itself into a major tourism, real estate, and financial hub.
Dubai’s economic journey has not been without setbacks. The 2008 financial crisis, the 2015 MERS outbreak, and the 2020 COVID-19 pandemic presented significant challenges. During the 2008 crisis, Abu Dhabi had to step in with financial support, acquiring stakes in key assets like Burj Khalifa. More recently, cities like Abu Dhabi, Doha (Qatar), and Riyadh (Saudi Arabia) have intensified efforts to establish themselves as regional business hubs.
Why is the UAE Investing in Startups?
Historically, the UAE's economy has revolved around Abu Dhabi’s oil wealth and Dubai’s real estate and tourism industries. With a GDP ranking fourth in the Middle East—behind Saudi Arabia, Turkey, and Israel—the UAE boasts a per capita GDP of approximately $47,000. However, nearly half of its exports still come from oil.
Despite its vast oil reserves, the UAE recognizes that the future of energy is shifting. Climate change concerns, the global push for ESG (Environmental, Social, and Governance) principles, and the transition to renewable energy are reshaping global industries. The UAE, therefore, aims to diversify its economy by investing in innovation and technology.
The country faces a paradox: while it has successfully launched a Mars probe (Al-Amal) in 2021, it still relies heavily on imports for basic necessities like food and household goods. Aware of its limitations, the UAE’s Ministry of Economy has adopted a business-friendly approach, prioritizing economic diversification, technological advancement, and the retention of its status as the Middle East’s business hub.
As part of this strategy, the UAE has launched The Entrepreneurial Nation initiative, aiming to create 10 unicorn startups by 2031.
The UAE also wields immense financial power through its sovereign wealth funds.
- Abu Dhabi Investment Authority (ADIA): $850 billion (3rd largest in the world)
- Dubai Investment Corporation: $395 billion (10th largest)
- Mubadala Investment Company: $320 billion (13th largest)
These funds are actively investing in global markets. Following the South Korean President’s state visit in January 2023, the UAE pledged a $30 billion investment in Korean businesses. In May 2023, representatives from UAE sovereign wealth funds visited South Korea to explore opportunities in agriculture, energy, and finance.
Currently, there are 558,000 SMEs and startups in the UAE, and the government aims to increase this number to 1 million by 2030. Notably, as of 2020, 63.5% of these businesses were unrelated to oil, highlighting the country’s gradual shift toward economic diversification.
With a corporate tax rate of just 9%—lower than Qatar (10%), Kuwait and Oman (15%), and Saudi Arabia (20%)—Dubai has also simplified corporate registration processes to attract foreign entrepreneurs.
Hub71: UAE’s Startup Accelerator
Hub71, located on the 15th floor of Abu Dhabi’s ADGM (Abu Dhabi Global Market), is one of the UAE’s flagship startup accelerators. Founded by the Ministry of Economy, Mubadala, and ADGM, Hub71 focuses on supporting deep-tech startups.
Functioning similarly to a business incubator, Hub71 provides office space through WeWork, alongside investment opportunities and mentorship programs. The accelerator primarily supports startups from Seed to Series B funding stages.
As of January 2023, Hub71 had supported over 210 startups from 45 different countries, primarily in fintech, health tech, edtech, and mobility.
🔗 Hub71
Final Thoughts: What Can We Learn from the UAE?
South Korea has a well-structured startup ecosystem, particularly for Pre-Seed to Series A-B funding stages, whereas the UAE excels in venture capital through its massive sovereign wealth funds.
With the UAE serving as a gateway to MENA (Middle East and North Africa) markets, Korean startups looking to expand into Saudi Arabia, Egypt, and beyond could consider establishing local offices in the UAE.
While the UAE is exploring autonomous logistics solutions—such as self-driving container trucks at Jebel Ali Port—there are no large-scale projects yet. However, EV adoption is expected to grow significantly, presenting potential opportunities for South Korean EV infrastructure and technology companies.
For South Korean startups with cutting-edge innovations, the UAE represents a promising gateway to international expansion. 🚀
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