Over the past decade, the UAE made a conscious effort to scale up investments in technology, while Israel did enough in this space to be called the "startup nation". Until now, the UAE traditionally preferred to adopt more orthodox - the more familiar - of technologies.
After the Abraham Accords, there is an opportunity for a meaningful collaboration between the countries in tech-focussed endeavours and become a leading global startup investor. In this context, it is important to ask what the UAE expects to gain from any such investments in the long-term.
Accelerate change in focus
One must realize that the UAE's strategy on startup investments is completely different from what is the norm in the West. Most venture capital funds aim to invest as little upfront as possible and gain as much as possible at the time of the exit.
The UAE, however, aims to fully integrate any such new technology into its economic infrastructure, and not to roll it over to the next owner as quickly as possible for a few dollars more. For the UAE, an exit means the added value this technology can bring.
As far as developing innovation and distributing it, the UAE's mindset is certainly meritorious, as it allows entrepreneurs to field-test the feasibility as well as spread it to diverse markets. The strategy is expected to bring significant value in the long-term in areas as divergent as water resources, agriculture, food security, energy, cyber security, etc.
We have all seen the dramatic economic collapse in Greece, Spain and elsewhere, because they did not have any locally sustained productive industries. When a crisis hit, these economies suffered because they had no industrial infrastructure to base an economic model on.
For this reason, the UAE's investment in startups is extremely important for future stability. These will encourage the next generation to take part as well as think up new technological projects that would carry the UAE's economy into the next decade.
There is no doubt that such a strategy will brand the UAE as a global startup hub, and help it attract more ventures as they understand the UAE wishes to invest in their ideas, product and human capital. The collaboration with Israel can thus bring enormous value to all.
The fact that Israel shares its technological knowhow is likely to play an important role in developing completely new technologies, which, for once, would not originate from within its establishment R&D. The UAE's incredible financial capacity would significantly accelerate the development of such initiatives built on original ideas.
This will shorten the implementation timeline and set a precedent for future startup investments.
- Samuel Shay is Chairman of Israel – UAE Business Forum.