“Welcome to the financial powerhouse of the region. Welcome to the capital of capital.” This is how Ahmed Jasim Al Zaabi, the chairman of financial centre Abu Dhabi Global Markets (ADGM) began his speech at the opening ceremony of Abu Dhabi Finance Week (ADFW) in November 2022.
Everything about the ceremony was designed to shock and impress its audience. Acrobats, bombastic music, CNN hosts, a drone light show so intricately choreographed it must have been eye-wateringly expensive. There were no half measures on show. Attendees were left in no doubt how seriously Abu Dhabi takes its ambitions to become a global financial and business hub.
Having previously run as a conference dedicated to fintech, ADFW was expanded in 2022 to incorporate days focused on cryptocurrencies and sustainability. The event perfectly showcased where Abu Dhabi wants to position itself in the future.
Abu Dhabi is far richer but less glamourous than its neighbouring emirate Dubai. Abu Dhabi is home to most of the United Arab Emirates’ (UAE) natural gas reserves and the seat of its political power, but historically, foreign companies, investors and tourists have been more drawn to Dubai. Now Abu Dhabi is seeking to emerge from Dubai’s business shadow to become a global hub for innovative companies.
ADFW was a statement of intent. A big, shiny, loud and perfectly choreographed set piece showcasing many of the businesses Abu Dhabi hopes will be foundation stones of a new diversified economy.
The wow factor
A side event during ADFW saw the Abu Dhabi Investment Office (ADIO), the emirate’s investment promotion agency, platform some of the high-profile investors that have recently set up businesses in the city. These included former French international footballer Patrick Evra, former NBA basketball player Metta Sandiford-Artest, and Canadian businessman and regular participant on the Shark Tank TV show Kevin O’Leary.
All of these celebrities have established digital businesses in Abu Dhabi, and the acting chairman of ADIO, Abdulla Abdul Aziz Al Shamsi, says the emirate’s digital infrastructure gives it a competitive advantage as an investment destination.
“We have unparalleled infrastructure available for companies”, says Al Shamsi. “Not just the built environment but also infrastructure in the virtual space that leverages advanced technology. We are the first to roll out 5G technology. This is a major benefit for innovators.”
ADIO runs a programme, Access Abu Dhabi, which specifically helps female and minority entrepreneurs set up businesses in the city. Key to ADIO’s messaging is the idea of inclusivity and safety. Many of the participants of the ADIO event talked about how safe the city is and the diversity of attendees shows that Abu Dhabi is more inclusive than is typically recognised internationally.
Al Shamsi insists that he is not particularly interested in changing perceptions or comparing Abu Dhabi with other markets around the world, but he says those entrepreneurs who are interested in learning about the emirate will find plenty of opportunities.
“[Abu Dhabi Finance Week] is further affirmation of the fact that when you are here, when you see it, it changes your mindset…” Al Shamsi says. “Whatever you may hear about elsewhere, it is different when you are physically here. When you make that effort, that is when you realise the potential of Abu Dhabi’s innovation ecosystem.”
Access to capital
“The question becomes, what is the next disruptive technology?” says Al Shamsi. “What is the next innovation within the financial services space, and is it going to be born in this region? Our view is, yes it will.”
One of the strongest pull factors for companies to enter the Abu Dhabi market is the significant volumes of capital potentially available. The UAE is home to several sovereign wealth funds with huge pools of capital to invest, and they are increasingly willing to invest in innovative organisations.
Mubadala, Abu Dhabi’s second-biggest sovereign wealth fund with $284bn assets under management at the end of 2021, for example, announced at ADFW that it was taking a strategic stake in AirCarbon Exchange, which is establishing the first regulated carbon trading exchange and clearing house in ADGM.
O’Leary is a major investor in cryptocurrencies and his presence at the event highlighted how Abu Dhabi’s interest in crypto has increased and become more controversial recently. Just before ADFW was held, the major crypto exchange FTX collapsed, prompting fears of contagion across the market. O’Leary had been a paid spokesperson for FTX.
Of all the programmed sessions during ADFW, the one to attract the most attention was an interview with Changpeng Zhao (known as CZ), the CEO of Binance, another major crypto exchange. Although the main auditorium was packed, with standing room only at the back of the room, those hoping for juicy details from CZ about the demise of FTX and his role in it would have been disappointed, however. The softball questions he was served up purposely avoided controversy.
Binance was granted financial service permission by Abu Dhabi during ADFW, meaning it can act as a broker-dealer for cryptocurrencies and digital assets in the jurisdiction. This decision and CZ’s attendance provoked harsh criticism from economist Nouriel Roubini, speaking on another panel. Roubini called the crypto ecosystem “totally corrupt” and labelled CZ a “walking time bomb”.
Abu Dhabi’s embrace of crypto shows its willingness to open up to new markets, but the uncertain future of that market also reveals the riskiness of this strategy.
Away from the main stage, attendees of ADFW could learn about the lower-profile work being done in Abu Dhabi to establish the emirate as an innovation hub.
Hub71 was established in 2019 as a technology ecosystem to support start-ups. Today it consists of more than 200 start-ups, which have created more than 800 jobs directly, raised around $1bn, and generated more than $700m in revenue, according to Ahmad Ali Alwan, deputy chief executive officer of Hub71.
Hub71 helps start-ups at the ideation phase, has an incentive programme to help them through to series A funding, and then also offers tailored support to later-stage start-ups seeking to scale up. It has a network of more than 30 venture capital fund partners that engage with its community, and partnerships with more than 20 corporates that support start-ups.
Alwan explains that initially its “incentive programme involved providing access to subsidised housing, health insurance and office space. That has evolved to become a flexible suite of incentives that a company can choose from and decide how to leverage, including advisory services, legal support, talent support among other services.”
Hub71 began in partnership with Techstars, a US-based company that runs similar accelerator programmes around the world. Techstars has run programmes in both Abu Dhabi and Dubai, with the former focused on femtech, healthtech and adtech.
Maelle Gavet, CEO of Techstars, says that its work with Abu Dhabi was particularly focused on “helping to create a more robust ecosystem locally, working with local entrepreneurs that were born and raised in the UAE”.
This hints at a difference between the Dubai and Abu Dhabi approach to building a business hub. While Dubai’s success has been built on importing talent, with a heavy reliance on expat workers, Abu Dhabi is hoping to build something more organic with deeper roots.
Dubai has been extremely successful at attracting expats historically, and this was only enhanced during the Covid-19 pandemic when Dubai remained open for business, even at the height of lockdowns around the world. The UAE has the highest dependence on expats of any country in the world, who make up 88% of the total workforce.
While Gavet says Abu Dhabi is a “different environment”, it can “benefit from the work Dubai has done to put the UAE on the map of tech companies and expats”. Dubai has a denser ecosystem of entrepreneurs, venture capital and late-stage capital, but the Abu Dhabi government has been very proactive in encouraging and financing innovative tech sectors, according to Gavet.
“We are all about impact”, says Alwan. “We want to ensure that the companies we attract and support are Abu Dhabi success stories.”
Abu Dhabi is hoping that putting the full force of the state behind its plans will help it steal a march on other financial centres around the world and become a hub of future technologies and industries. Whether it is through accelerator programmes like Hub71, support for corporate expansion through ADIO, funding from Mubadala or other sovereign investors, and regulatory protection from ADGM, the state has a role in every part of the ecosystem.
Al Shamsi of ADIO calls Abu Dhabi “a land of opportunity” and has huge ambitions for what it can achieve.
“We want to be the centre of finance, the centre of gaming, the centre of industry”, Al Shamsi says. “We want to be the economy of the future when it comes to these advanced technologies being applied to solve important global challenges.”