Over the past two decades, Dubai has cemented its position as a leading global financial hub. More recently, it has seen a surge in venture capitalists seeking the next big thing in tech.

According to Pitchbook, the emirate has the fastest growing VC ecosystem worldwide, overtaking other emerging hubs in the US and Europe. And it is home to 40% of MENA’s scaleups.

This is no accident. Dubai has proactively cultivated an innovation-friendly environment that nurtures inventive entrepreneurs, and the investors that fund them. It’s a unique combination of rare financial stability, agile regulations, and a raft of accelerators, incubators, and scale-friendly initiatives.

Stable foundations

Stable economies make solid ground for growing businesses. In the face of global volatility, such stability is hard to find – except in the UAE. The country has the second most stable economy in the world, posting record non-oil growth even as other developed economies remain sluggish.

And Dubai is the emirates’ funding capital. Startups in Dubai raised 96% of early-stage funding in the UAE between 2017 and 2023.

This impressive record is backed by robust government support for tech startups, providing uncommon certainty for a fast-moving industry.

The Dubai Economic Agenda ‘D33’ aims to scale 400 businesses internationally and produce 30 unicorns by 2033. The strategy deploys a host of initiatives that support this objective, including a target to increase FDI to $177bn by 2033, alongside $11.7bn in direct scaleup funding.

Crucially, Dubai’s support for cutting-edge companies also includes a markedly agile approach to regulations.

Agile regulations

If Dubai is the finance capital of the UAE, the Dubai International Finance Centre (DIFC) is the finance capital of Dubai.

The free zone is home to 686 finance, tech, and FinTech companies, many of which developed their products with a DIFC Innovation Testing Licence (ITL), overseen by the Dubai Financial Services Authority (DFSA).

The ITL is a regulatory sandbox which enables FinTech startups to develop products that may fall outside of existing legislation within a supervised environment. The licence gives room to innovate while collaborating with regulators to achieve compliance upon commercialization – either by tweaking the product to fit the law, or tweaking the law.

The sandbox approach is also applied to other cutting-edge sectors elsewhere in the emirate. RegLab is a partnership between the UAE government and the Dubai Future Foundation, permitting innovative companies to test and develop emerging technology solutions in dedicated experimental spaces like the Dubai Experimental Zone.

The model is set to extend further in the emirate, under another key D33 initiative, Sandbox Dubai.

If initiatives like these provide the legal space to innovate, Dubai’s constellation of incubators and accelerators provide the resources with which to do it.

Accelerating growth

Aside from offering access to the ITL, DIFC also hosts a number of incubators and accelerators within its Innovation Hub.

The FinTech Hive accelerator program introduces FinTech, InsurTech and RegTech startups to financiers, insurers and investors looking for partnerships. During the program, participants get support for developing their product, ensuring it is ready for commercialization when it’s pitched to investors.

The Innovation Hub also hosts a dedicated Metaverse Accelerator program, in line with the UAE’s goal to become a global leader in the technology sector.

This support for cutting-edge tech is reflected in the DFF’s Dubai Centre for Artificial Intelligence (DCAI) accelerator. 615 startups from 55 countries have participated so far, developing AI solutions for use in government and media.

The most recent addition to Dubai’s accelerators is SANDBOX. Operated by Oraseya Capital – the venture capital fund of the Dubai Integrated Economic Zones Authority (DIEZ) – the program is first startup accelerator in the emirate directly backed by a VC fund.

The five-month program combines $150,000 funding with hands-on mentorship and introductions to VC investors.

Infusing innovation

With its potent mix of agile regulations and sector-specific accelerators, Dubai is on a mission to infuse innovation into every area of its economy. And it’s working. The DIFC is growing at five times the rate of the emirate’s wider GDP, suggesting a rapid rise for the free zone’s start- and scaleups.

Investors are paying attention. According to the Financial Times, the emirate was the top global destination for greenfield FDI projects in 2023 – the third successive year it has achieved this feat.

Dubai has cultivated a uniquely innovation-friendly environment, and investors are flocking to it, in a race to discover their next big opportunity. That’s why Dubai has the fastest-growing VC ecosystem in the world.