DIFC already has considerable leverage as a base for fintechs. With Innovation Hub, the free zone is bringing closer the funding sources. Image Credit: Dubai Media office

Dubai: The DIFC is making it easier for UAE and regional startups to tap into venture capital – either to get going with the launch or seek funds to accelerate on the growth.

And the DIFC solution? The ‘Launchpad’.

The Dubai International Financial Centre is creating a cluster within the free zone dedicated exclusively for ‘venture studios’ to provide the kind of funding and support that startups will need.

“The concept of venture studios is a bit new in the GCC and the Middle East, and you have about 25-30 (players,” said Mohammed AlBlooshi, Head of DIFC Innovation Hub and of the FinTech Hive.

But we believe that their numbers will increase significantly – and that’s why we want to position DIFC as a hub for venture builders given its unique legal and regulatory framework.

- Mohammed AlBlooshi of DIFC Innovation Hub and FinTech Hive.

DIFC has in fact brought out dedicated rules for venture studios, the first such regulatory framework anywhere. Under these, there is ease of doing business within the model, and ‘provide certainty for how venture studios, entrepreneurs, and spin-off entities engage with each other’.

A fluid venture marketplace

The DIFC Launchpad comes as the global tech and startup space digests the collapse of Silicon Valley Bank in the US, and until then one of the big names in sector funding opportunities. While here may not be direct ramifications for startup funding in the UAE and Gulf, it does throw up questions on the kind of risks venture firms would be willing to take.

On the plus side, valuations of UAE/GCC startups are starting to come down to more realistic levels. And just recently, Goldman Sachs signed off on a $150 million facility for the Saudi fintech Tamara.

“Regionally, yes, valuations have dropped but I still think there is growth,” said AlBlooshi. “There are a lot of deals happening, a lot of capital flowing in the markets and you have a lot of startups attracting capital.

“From our perspective, we want to attract world’s best venture studios and some are already going to be here. There’s Antler that creates hundreds of ventures every year, and R/GA, one of the top venture builders in New York, have decided to join the DIFC Launchpad. Then there are regional studios like BIM Ventures, plus Future Labs from Singapore.

“Fintech and innovation firms based in our ecosystem are shielded from recent (global) events. DIFC has always recognised the potential contribution of tech and innovation firms to global, regional and local economies. They have the support of our ecosystem to enable growth and innovation.”

Launchpad for jobs

Through the Launchpad and the venture studios that come with it, DIFC expects more than 200 new ventures, with more than 100 of them being ‘scale-ups’ that could create more than 8,000 jobs and pull in $544 million as venture capital.

It is also the latest in a series of DIFC initiatives to create a universe of starups and support unding resources within it. These include the Startup Bootcamp, as well as a fintech focussed fund.

According to Arif Amiri, CEO of DIFC, “ The Launchpad presents a unique opportunity for entrepreneurs, venture studios and corporations from around the world to access the support and resources they need to grow and succeed, powered by DIFC Innovation Hub.”

A combination of new open banking regulation and advancements in technologies such as Web3 and AI are enabling huge growth opportunities. The DIFC’s Launchpad ecosystem enables unmatched collaboration and co-creation opportunities between venture studios, corporations, entrepreneurs, and investors.

- Stephen Plumlee, Founder and Managing Partner of R/GA Ventures