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Dubai Future District Fund

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Dubai Future District Fund

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Our Perspectives on VC and
The Sectors Shaping Dubai

DFDF’s Insights on Venture Capital Going Into Q4, 2025

Introduction: Setting The Context Objectively

As we cross the midpoint of 2025, the global venture capital landscape remains defined by geopolitical headwinds and cautious monetary-policy pivots. The industry, globally, saw a bifurcated cycle as dollars under management edged up in H1 but transaction volumes sank to an eight-year low, down roughly 58% from H2 2024.

In parallel, the World Bank downgraded 2025 global GDP growth to 2.3%, its weakest since 2008, reflecting broad deceleration across advanced and emerging economies. Equity and M&A markets also felt the squeeze as global IPOs slipped 9% year-on-year to about $44 billion, while Q2’s U.S. tariff announcements and renewed geopolitical tensions rattled markets.

In spite of these macro headwinds, MENA’s VC activity remained stable. Notable observations include:

  • Mega Rounds drove a 215% surge in large-ticket capital, anchored by Tabby’s $160 million Series F and Ninja’s $250 million Series C.
  • Mid-Stage Momentum saw non-mega funding rise 69%, fuelled by a Series A peak of $323 million (matching 2022) and a tripling of Series B capital to $161 million.
  • Sector Leadership: FinTech startups secured 39% of funding activity, underscoring the region’s digital-finance appeal.
  • M&A transactions: 34 M&A transactions were recorded in MENA in H1, 183% YoY, driven by a record-breaking Q1 with 22 deals, the highest ever single quarter in the region.

Within MENA, the UAE VC ecosystem proved especially resilient, compared to the rest of the region over the past three years. In the first half of the year, UAE-based startups raised $448 million across 114 deals, driven by an uptick in Series A and B rounds.

When it comes to exit opportunities for investors, it’s worth nothing that the UAE drove M&A transactions in the region, with 13 deals recorded in H1, up 86% on H1 2024, and over 60% involving an international buyer.

The funds we’ve deployed into have raised over $1.65 billion to invest into startups, reflecting our continued dedication to empowering visionary fund managers and founders who are shaping the future in line with Dubai’s Economic Agenda D33.

How Do VC Fund Managers Feel About Where We’re At

The following points have been compiled based on our engagement with VC Fund managers, including a closed roundtable and survey shared with our Fund of Funds portfolio.

  1. Tariffs and Deal Behavior
    Investors anticipate at least mild to moderate disruption from the U.S. “Liberation Day” tariffs, including higher supply-chain costs and slower growth in vulnerable segments such as manufacturing and semiconductors/hardware. Yet, rather than freeze underwriting, a majority remain active with heightened due-diligence filters and await clarity on policy trajectories. 

It’s also worth noting that since the majority of venture capital investment is tech-focused, it remains relatively well-insulated from the immediate impact of trade-related headwinds.

  1. LP Sentiment and Risk Aversion
    As LPs’ risk aversion increases, fund managers are being prompted to articulate clearer exit roadmaps and stronger downside protections. This may manifest in larger equity ownership stakes as GPs leverage their negotiating power in a more conservative capital environment.

Surveyed DFDF fund managers echoed this trend, with an average sentiment of 3.33 (out of 5) regarding their confidence in raising capital from LPs and GPs in the current environment, highlighting cautious optimism amidst macro headwinds.

  1. Fundraising & Exit Expectations
    Sentiment around fundraising has become noticeably more guarded as falling interest rates and tariff stability emerge as the principal drivers of exit windows, underscoring once more how macro and trade policies underpin liquidity.

Notably, exit sentiment remains the weakest among surveyed GPs, with an average score of just 2.75, suggesting liquidity concerns persist despite a rebound in early-stage activity.

Conversely, confidence in startup growth (3.75) and deal pipeline (3.67) remains strong. This reinforces the UAE’s positive early-stage ventures sentiment, in line with the H1 activity datapoints we presented earlier in the article, even if exit pathways remain a perceived work in progress.

  1. Extended Fund Cycles & Secondary Markets
    Despite a cautious outlook, the majority of GPs still plan to raise another fund within two years, yet a growing cohort is pushing out timelines to three to five years. Secondary markets are concurrently rising in prominence as alternative liquidity corridors, giving LPs optionality.

Outlook For The Rest Of 2025 For Fund Managers

Looking ahead, we anticipate the second half of 2025 present the following challenges and catalysts, which may impact VC Fund Managers in the UAE:

  • Monetary Policy Inflection: If the Fed delivers rate cuts in the second half of 2025, growth-stage financings could accelerate, narrowing the funding gap between the first and second half of 2025.
  • IPO & Secondary-Market Windows: Reforms on Nasdaq Dubai, ADX, and Tadawul dual-listing frameworks may unlock exit value for growth-stage companies.
  • Sector Diversification: With the rise of AI, we expect to see other sectors begin to grow in popularity alongside FinTech amongst investors in the region.
  • Evolving Capital Structure: Debt and credit facilities will be utilised more to fuel growth.
  • Tilt toward scale-stage opportunities: Indicated by a surge in $5–20 million and $20+ million rounds, even as sovereign grants and accelerators continue to underpin early-stage innovation.
  • Corporate and Enterprise Participation: Increasing appetite from corporates and enterprises to engage with VC portfolios to ensure they stay future-focused. Corporates are improving their start-up adoption readiness, assigning KPIs and dedicated teams with the right key decision-makers to oversee start-up evaluation and adoption for partnerships or purchasing. In addition, roadshows and upcoming events (such as North Star) are proving to be strong enablers in showcasing early-stage innovators to the market globally, encouraging greater corporate-startup collaboration.

What This Means for DFDF

As we chart into the second half of 2025, here are the learnings we are taking on to sharpen our investment playbook, fortify downside protections, and capitalize on the UAE’s most promising growth opportunities:

  1. Doing more with less using an integrated Tech infrastructure
    We are building an integrated tech stack to ensure best in class governance, process optimization and data driven decision making as we look to engage more deeply with the GPs and startups in our direct and indirect portfolio.
  2. Tracking Emerging Sector Momentum in The D33 Economic Agenda
    FinTech remains the region’s magnet for capital, but through DFDF’s Fund of Funds lens, we see early signs of rotation into D33-aligned sectors such as AI-native PropTech, ClimateTech, LogisticsTech and HealthTech. By backing both pan-regional and hyper-specialist fund managers, DFDF is well positioned to capture these waves.
  3. Fund Lifecycle Management
    Anticipating extended fund cycles, we will pace follow-on commitments judiciously, retaining dry powder for the startups that demonstrate proven resilience and path-to-exit clarity.
  4. Value Creation
    We will continue to work with our portfolio companies to add value through key introductions both locally and internationally as we look to grow UAE companies globally.

Conclusion

While global economic headwinds and policy shifts continue to shape capital flows, the UAE’s ecosystem has shown that clear regulatory vision and proactive partnerships can sustain momentum even amid uncertainty.

Regional VC fund managers reflect optimism, as GPs remain active despite tariff-related pressures. As exit pathways remain complex, evolving capital structures are gaining importance.

Looking ahead, DFDF is sharpening its investment strategy by embracing integrated tech infrastructure, monitoring emerging D33-aligned sectors, pacing fund lifecycle commitments, and deepening its value creation efforts across the ecosystem.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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    Sources
    1. SVB Commercial Bank — State of the Markets H2 2025
    2. World Bank Group — Globally Monthly June 2025
    3. Nasdaq — Global IPO Market Hits Nine-Year Low Amid Market Volatility, June 2025
    4. MAGNiTT — MENA Venture Capital H1 2025, July 2025

    Insights

    Unlocking Dubai Inc.: The Role of Government in Enabling Innovation

    At our 2025 AGM, we had the privilege of hosting a sector-deep dive on two domains that sit at the heart of Dubai’s strategic priorities: Healthcare and Real Estate. In this session, we explored how innovation across these sectors can unlock transformative economic and social outcomes, and what it takes to build the infrastructure to get there.

    Moderated by DFDF’s Director of Investment and Ecosystem Development, Mahmoud Ward, the panel featured two ecosystem leaders:

    Here’s what we learned from the conversation.

    Dubai Health: An Integrated Innovation Engine

    Dubai Health is more than a healthcare provider. As an academic health system, it integrates care delivery, education, research, patient data and philanthropy under one governance structure. With 11,000+ employees and over 4 million annual patient interactions, its reach is significant. But what sets it apart is its ability to act seamlessly across these functions, creating a unified platform for innovation.

    Scott shared how Dubai Health is working to build the scientific and institutional infrastructure necessary for world-class research and development. From genomics and biobanking to protein engineering and clinical trial capabilities, Dubai Health is laying the groundwork for a full bench-to-bedside innovation pipeline.

    Crucially, the organization is building this ecosystem not in isolation, but in partnership with startups, corporates, and investors. A new innovation center is launching soon, with over 20 private-sector collaborations already in the pipeline.

    Health Innovation with a Purpose

    The innovation strategy at Dubai Health centers around four pillars: care delivery, education, research, and giving. Through this model, the institution aims to:

    • Engage clinicians directly in research, ensuring real-world problems guide innovation.
    • Attract and co-develop ventures with private sector partners.
    • Provide validation and data access through clinical trials and trusted research environments.
    • Streamline ethics and approvals, recognizing that time is one of the biggest barriers to innovation in healthcare.

    By removing fragmentation, speeding up approvals, and aggregating patient data (anonymized and consented) into a single platform, Dubai Health is building a system that founders and researchers can plug into from day one.

    DLD: Building for Quality of Life

    The panel discussed how health and real estate are deeply intertwined. As the body that oversees all real estate policies and innovation in Dubai, DLD is anchoring its strategy in the D33 agenda, the 2040 Urban Master Plan, and the city’s ambition to become the best place in the world to live, work, and thrive.

    With hundreds of billions of dirhams in real estate transactions last year and over 10,000 new investors entering the market monthly, DLD is playing a critical role in shaping the city’s built environment. But its ambitions go well beyond transactions. DLD is:

    • Redesigning the investor journey, especially for non-residents who make up 40% of buyers.
    • Embedding innovation across the sector, from policy and regulation to data and proptech.
    • Championing sustainable, healthy buildings that enhance well-being, not just aesthetics.

    Innovation at DLD: A System, Not a Slogan

    In May 2024, DLD launched the Real Estate Evolution Space (REES), its formal innovation strategy. With REES, Dubai aims to become a global leader in proptech. But the vision is holistic: innovation isn’t limited to transactions or platforms. It spans everything from construction tech and energy efficiency to data transparency and tokenization.

    Dr. Mahmoud emphasized DLD’s willingness to reimagine regulation in service of innovation. Key initiatives include:

    • Real estate tokenization to democratize access to Dubai property markets.
    • Energy efficiency tech pilots to reduce service charges (up to 50% of which go to utilities).
    • A forthcoming Proptech Hub, backed by policy flexibility, public-private partnerships, and a mandate to support startups with data, regulatory support, and funding.

    The Role of DFDF: Aligning Infrastructure with Investment

    For us at DFDF, this panel reinforced a core belief: the future we’re building is not one we’re waiting for. It’s one we’re enabling.

    Both Dubai Health and DLD are focused on designing the underlying infrastructure that enables scalable innovation scale from Dubai to the world. As the government of Dubai’s Fund of Fund, our role is to:

    • Identify and fund the best fund managers across the capital stack within these sectors.
    • Build a unified value proposition across funding, regulatory Infrastructure,  
    • Support the policy infrastructure that makes regulated sectors investable.
    • Anchor new platforms (like the Proptech Hub or health innovation centers) that will serve as magnets for talent, capital, and ideas.
    • Bridge gaps between research and commercialization — from bench to bedside, or blueprint to skyline.

    We’re already working with both sectors to explore dedicated funding vehicles, support accelerator programs, and connect global and regional venture capital with the opportunities these systems are unlocking.

    The Takeaway: Build the Garden

    One of the most memorable metaphors from the session came from Dr. Mahmoud, who said: “We don’t chase butterflies. We build the garden.”

    That philosophy mirrors our approach at DFDF. We don’t just back founders. We help build the conditions where the right founders, ideas, and capital can find each other.

    As Dubai builds its future across health and real estate, we’re here to ensure the garden grows — intentionally, sustainably, and with the long game in mind.

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      Insights

      Powering The Next Chapter: DFDF’s Strategic Role In Building Dubai’s Venture Future

      At our 2025 AGM, we held a panel conversation to discuss DFDF’s strategic role in building Dubai’s venture future.

      Joining us in this conversation moderated by our Managing Director Nader Albastaki were the following leading voices across institutional investing and venture capital:

      The conversation focused on how aligned capital, when combined with policy, infrastructure, and shared vision, can unlock a generational shift in Dubai’s venture landscape.

      Government Capital as Strategic Infrastructure

      Too often, government-backed funds are viewed as financial instruments alone. The panel held the view that they must be seen as infrastructure. Just like roads or digital networks, aligned capital lays the groundwork for the industries of the future. It builds trust, signals belief, and anchors the long-term development of venture ecosystems.

      Our panelists emphasized that sovereign capital’s impact extends far beyond funding rounds. It catalyzes private sector involvement by de-risking early-stage environments and showing that national stakeholders are committed for the long haul. From Singapore to South Korea, and now Dubai, the model is proven: when sovereign capital shows up first, private capital follows with conviction.

      The Role of Patient Capital in a Maturing Ecosystem

      One of the most resonant points made was the value of time. As the panel opined, while relatively simple to launch a fund and stay active for a few years, true maturity in venture comes from fund managers who weather multiple cycles, return DPI, and reinvest learnings from past failures. That takes time — and patient LPs.

      We’ve long understood that meaningful innovation doesn’t happen on quarterly timelines. As such, we intentionally structure our approach to give emerging managers and founders the room to grow thoughtfully. We don’t just back businesses; we back builders, knowing that returns include economic transformation, job creation, and new knowledge economies.

      Fragmentation vs. Coordination: Building Together

      With a growing number of actors in the regional investment landscape, questions around fragmentation naturally arise. Is plurality a strength? Or does it risk inefficiency?

      Our take: plurality is powerful when it’s coordinated.

      As the panel articulated, the real risk isn’t diversity of players, but lack of aggregation. In nascent ecosystems, collective action problems can delay progress. What’s needed is a convening force—one that can unify stakeholders around shared problems and opportunities, prevent siloed efforts, and amplify collective impact.

      That’s where we come in. We see ourselves not only as a capital allocator, but as an orchestrator. One that listens to the ecosystem, identifies systemic gaps, and fosters the connective tissue between public and private, local and global, emerging and established.

      Fund of Funds: Enabling the Enablers

      A recurring theme was the importance of strengthening venture capital at the source. Rather than going direct only, our panelists encouraged further investment in fund-of-fund structures that empower the region’s most experienced VCs — many of whom have spent the past decade patiently building the local ecosystem.

      These managers have been through multiple fundraising cycles. They’ve made and learned from mistakes, and now they’re positioned to lead the next wave of innovation. By backing them, we reinforce the foundation that new funds and new founders can build on.

      Where Strategic Meets Investable: Sector Focus in the D33 Agenda

      Dubai’s D33 economic agenda outlines five strategic sectors: AI, healthtech, proptech, mobility, and circular economy. But not all are at the same stage of venture readiness. The discussion emphasized the importance of going wide early — allowing deal flow to reveal which sectors have traction, and doubling down as that traction grows.

      AI, in particular, was called out as both promising and in need of deeper enablement. From talent migration to IP development and commercialization pathways, we were reminded that building a category-leading AI ecosystem requires more than capital. It requires research alignment, industry partnerships, and a regulatory sandbox that encourages experimentation.

      We see it happening. We’re already backing founders with deep-tech credentials, including former researchers from Google and Stanford who’ve chosen Dubai as home. Our role now is to ensure they stay, scale, and inspire the next generation.

      The Investability-Impact Intersection

      We often get asked: how do we balance strategic impact with financial return? The answer is nuance.

      As the panel noted, not every impactful opportunity is investable, but many are. The sweet spot lies at the intersection of clear market need, regulatory readiness, infrastructure compatibility, and scalable delivery. That’s where sovereign-backed capital can shine—derisking early experiments, anchoring demand, and signaling long-term policy commitment.

      We’re proud to serve as that anchor. We know that when we step in early, we don’t just validate an opportunity — we help shape the environment that makes it viable.

      Beyond Capital: Enabling Ecosystem Scale

      The conversation closed on a point that’s central to our mission: capital is only part of what startups need. They also need access to markets, regulatory clarity, mentorship, and a collective voice.

      As Fadi shared, having a unified front when engaging with regulators is essential — especially in emerging sectors like fintech or AI, where frameworks are still evolving. DFDF is uniquely positioned to represent the ecosystem, help surface shared challenges, and advocate for thoughtful, inclusive policymaking.

      And as Jeff highlighted, Dubai is already a “spike” on the global innovation map. We’re not trying to become a hub. We are one. What matters now is ensuring our startups don’t just test their ideas here — they scale from here. That means creating outbound pathways, passporting mechanisms, and trade corridors that enable local champions to become regional leaders.

      We know this work takes collaboration, and we’re here to lead it.

      Looking Ahead: Stewarding the Innovation Economy

      The AGM panel reinforced that our value lies not just in where we deploy capital, but in how we deploy trust, enable growth, and construct the scaffolding of a future-facing innovation economy.

      In 2025, we’re doubling down on our role as an ecosystem catalyst. That means working with founders, fund managers, policymakers, and global investors to shape a venture environment grounded in purpose, discipline, and community.

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        Insights

        Global Forces, Regional Response: How Global Trends Are Shaping DFDF’s Investment Outlook

        At our 2025 AGM, we held a panel conversation to explore how global forces are shaping DFDF’s investment outlook — and how we, as a government-backed platform, are preparing to navigate and lead through the shifts ahead.

        The panel was moderated by Alexandra Topalian and featured:

        Together, the panelists explored the AI revolution, the rise of secondaries, and the emergence of systematic, data-driven investing.

        Riding the AI Wave Without Losing Ground

        There’s no denying that artificial intelligence is dominating headlines, funding rounds, and global VC attention. But it’s not just about hype — the performance metrics speak for themselves. AI-native companies are reaching hundreds of millions of dollars in revenue within months, a milestone that traditionally took seven years for top SaaS players. Comparatively, their revenue per employee is 15-25x that of traditional peers.

        As the panel put it, we’re witnessing a transformation so sweeping that if you’re not integrating AI as a fund, you’re not going to survive.

        A Regional Response Rooted in Realism

        While the AI frenzy is global, the MENA region is experiencing it on its own terms. We see AI embedded into nearly every new startup registering in DIFC. However, true deep-tech investment opportunities in the region remain limited. Local GPs aren’t yet structured or resourced to underwrite advanced AI plays at scale — and that’s not unique to MENA. Even in the U.S., investors are struggling to keep pace with AI’s velocity.

        That’s where DFDF sees an opportunity to act as a bridge. By investing globally into GPs with demonstrated AI expertise, we gain access to innovation pipelines. We then mine their portfolios for relevant use cases and, together with them, bring those companies into the region—where the companies can grow with government support, receive investment opportunities, and leverage local partnerships connections. It’s a bottom-up approach, rooted in strategic relevance.

        Beyond capital, we recognize our role in shaping the enabling environment. That includes facilitating access to data pools, pushing for clearer regulatory frameworks, and complimenting the set up of sandboxes where startups can build, iterate, and scale responsibly.

        Private Markets Are the New Public Markets

        The second major trend shaping our thinking is the transformation of private markets. The number of unicorns in the U.S. has grown from a couple of hundred to over 800+ in the past decade. These companies are staying private longer, raising larger rounds, and reaching valuations north of $300 billion before ever touching a public listing.

        This shift has made liquidity a central concern, especially with IPO windows mostly closed since 2022. The rise of direct secondaries is addressing this gap, offering earlier exits for investors and injecting much-needed transparency into a traditionally opaque asset class.

        We see secondaries not just as a liquidity tool, but as an on-ramp for broader democratization of private equity. Institutional capital is already shifting. Major U.S. endowments like Harvard and Stanford now allocate the majority of their portfolios to alternatives. Regulatory changes are opening up access to 401(k)-type investors.

        For us, this raises an exciting question: can Dubai become a regional (or global) secondary market hub?

        Building for Liquidity at Home

        In the middle east region, we’re still early in the private markets cycle. Most activity has historically focused on early-stage, pre-seed, and seed investments. Later-stage capital has been scarce, and that’s a gap we’re now aiming to close.

        At DFDF, we see it as our role to plug the capital holes that arise when companies mature beyond the seed stage but still lack access to structured growth or secondary funding. We’re looking closely at late-stage investments and secondary participation as pathways to provide founders and early investors with liquidity options.

        But we also acknowledge that structural evolution is needed. The region lacks the regulatory readiness and market infrastructure to support true secondaries at scale. That’s why we’re working with government stakeholders to help define and enable these pathways. Whether it’s policy reform, investor education, or co-creating new secondary platforms, we know this is a long game—and we’re committed to being a part of it.

        Entering the Era of Systematic Venture

        The convergence of data availability, compute power, and AI isn’t just transforming startups. It’s also changing how investment firms themselves operate.

        Just as the 1980s saw public markets transformed by the rise of systematic, data-driven funds (think Bridgewater, AQR, or DE Shaw), we are now entering a new era of “systematic VC.”

        Today, every private transaction generates data exhaust: valuations, investor profiles, round sizes, timing, and more. For DFDF, this matters in three ways:

        1. Elevating the ecosystem: By partnering with global data-driven VCs, we can bring their frameworks into our region and equip local GPs with tools to make more disciplined, data-backed decisions.
        2. Improving governance and reporting: We’re committed to introducing stricter reporting standards across our portfolio, pushing for consistent financial disclosures and performance tracking.
        3. Shaping policy: We’re exploring how Dubai can require more transparent reporting from private companies, much like India or the UK already does.

        Transparency isn’t just good governance. It’s a precondition for data-rich, scalable capital markets.

        What’s Next for DFDF

        This panel discussion made clear that DFDF isn’t simply reacting to global headwinds. We’re leaning in with intention.

        Our next phase includes:

        • Deepening our fund-of-funds strategy to gain exposure to advanced sectors and bring proven global models to MENA.
        • Working with GP portfolios to identify startups with strategic relevance to Dubai’s economic agenda.
        • Creating onramps for later-stage investment and secondaries.
        • Advocating for regulatory change and enabling infrastructure around data access, liquidity, and digital market platforms.
        • Serving as a connector between government priorities and global capital trends.

        Whether it’s AI enablement, liquidity innovation, or systematic investing, we know the pace of change is only accelerating. Our job is to ensure the MENA region isn’t just keeping up, it’s helping to lead.

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          Insights

          The Role of Corporates in Accelerating Start-up Ecosystem Development

          At our 2025 AGM, one of the most energizing discussions came from a panel that cut across one of DFDF’s core beliefs: that venture capital, corporates, and founders must work together if we are to unlock real, scalable innovation.

          Moderated by DFDF’s Principal, Tiffany Bain, the session brought together two leaders shaping how global enterprises engage with startups:

          Here’s what we took away from the session.

          Nestlé: Redefining Corporate Innovation in MENA

          Nestlé is one of the world’s largest F&B companies, but its approach to innovation in MENA is anything but top-down. Rachid opened with a clear mandate: Nestlé MENA is on a mission to double its business while ensuring sustainable consumption and meaningful community impact. That mission demands new ways of thinking — and  new types of partners.

          Nestlé is actively seeking startups that bring not only product solutions but also fresh thinking. Exposure to external innovation, even when it doesn’t result in a transaction, is seen as success in itself. Rachid expressed that for a company of Nestlé’s size, being externally centric is a meaningful cultural shift.

          With DFDF, Nestlé is co-developing a curated engagement program. In the near term, that includes targeted pitch days with C-suite stakeholders across the business, matchmaking ventures with the relevant key decision-makers in the Nestle business. But the real goal is longer-term: to embed startup collaboration into the very fabric of how the company innovates.

          What does success look like in six months? A handful of startups evolving into true thought partners — solving real business challenges, and shaping Nestlé’s innovation roadmap for the next three to five years.

          AWS: Scaling Startups with More Than Credits

          As Head of Startups and VC at AWS EMEA, Abhijat Chalal brought a global lens to the panel.

          The VC landscape, he noted, is splitting into three tribes: early-stage purists, post-COVID pragmatists, and global players building hybrid VC/PE models. In this evolving context, AWS is doubling down on collaboration. Not just by providing infrastructure, but by helping startups access real customers.

          AWS’s approach is simple: start early, align deeply, and scale globally. The best outcomes happen when founders, VCs, and AWS work together before an investment is even made. That can look like:

          • Benchmarking growth (and identifying trends) using anonymized AWS data.
          • Co-developing go-to-market strategies that leverage AWS’s global customer base.

          Placing startup solutions in front of corporate buyers who already trust AWS.

          From Pitch to Partnership: How Startups Can Win

          For founders pitching corporates like Nestlé, Rachid had three words: clarity, motion, and flexibility.

          Clarity in articulating the problem you solve — not just flashy tech. Motion in showing that your solution is already gaining traction. And flexibility to pivot based on what the corporate actually needs — not just what you’ve built.

          Rachid was clear: Nestlé doesn’t expect founders to show up with all the answers. What they do expect is active listening, a willingness to co-create, and the humility to treat the pitch as a partnership — not a sale.

          For founders, that means moving away from polished, static decks and toward dynamic problem-solving conversations. “Don’t try to impress. Try to engage,” he said.

          What Makes a Great VC Partner?

          According to Abhijat, the majority of VCs still struggle to drive meaningful value beyond capital. He believes that the best ones should take the following approach:

          • Build networks that give startups real customer access.
          • Hire operators and business development professionals to open doors.
          • Partner with players like AWS early — even before term sheets are signed.

          The goal isn’t to sell on behalf of founders, but to equip them with what they need to sell themselves — with insight, context, and credibility.

          Global from MENA: The Nestlé and AWS Opportunity

          The panel ended on an important note: startups in MENA must think global from day one.

          Nestlé MENA is already a key market for innovation within the global group — and solutions born here can (and should) scale across its global footprint. But to do that, Rachid emphasized, founders must go beyond importing proven models. Instead, they should build on the region’s intrinsic strengths — from foodtech rooted in local agriculture to AI applications born from real, unmet needs.

          AWS echoed the sentiment: global customers reward early engagement and validated solutions, not slide decks. For MENA startups, that means skipping the friction of slow local procurement cycles and finding early customers abroad — then selling back into the region with global credibility.

          The Role of DFDF: Creating Corridors, Not Just Connections

          As DFDF, our role is to bridge the gap — not only between capital and startups, but also between corporates and venture, between local ideas and global markets.

          From curated pitch days to bespoke engagement programs, we’re co-creating playbooks with players like Nestlé and AWS to help startups scale with purpose and partners.

          We’re also investing in the infrastructure to help regional startups break out globally; because the truth is, when the right ideas meet the right capital, networks, and customers — innovation accelerates.

          The Takeaway: Think Partnership, Not Procurement

          The most powerful message from this panel? Innovation isn’t bought. It’s built — together.

          Whether you’re a founder, a VC, or a corporate decision-maker, the path to transformative outcomes lies in deep collaboration. Not one-off transactions. Not vanity metrics. But shared motion toward a common goal.

          At DFDF, we’re proud to be building the mechanisms that make these partnerships real — and to be shaping the future of finance and future economies, one ecosystem at a time.

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            Insights

            Decoding the AI Opportunity: Highlights from DFDF’s Panel at AWS GenAI Loft Dubai

            On April 7th, the AWS GenAI Loft Dubai kicked off at the DIFC Atrium, hosted by the Dubai AI Campus and supported by NVIDIA. The event ran through till April 11th, offering early-stage startups access to hands-on workshops, deep-dive sessions, and one-on-one mentorships with AWS Solutions Architects.

            DFDF joined a panel discussion during the kick-off, alongside other prominent regional investors, to discuss where the AI opportunity lies, how the landscape is shifting, and what founders and fund managers need to keep in mind as they build in and for the MENA region. The session was moderated by Tunc Ozgul, Head of Startup and VC Ecosystem at Amazon Web Services, and featured:

            Here are the key takeaways from the discussion.

            Turning Inward: A More Localised Investment Strategy

            The panel opened by reflecting on how investment approaches have shifted alongside the evolution of the regional startup ecosystem. Where once the focus was on identifying global opportunities — particularly in mature markets like the US, India, or LATAM — today there’s a growing confidence in what’s unfolding at home.

            Capital is increasingly being deployed into the GCC, especially the UAE, where policy, infrastructure, and entrepreneurial momentum are converging. Investors are no longer looking to broadly diversify across verticals or geographies. Instead, they are zeroing in on specific sectors where they can build deep conviction—such as fintech, climate tech, and AI-driven software—and apply more targeted expertise.

            This thematic and regional concentration reflects both the maturity of the ecosystem and a strategic effort to unlock local impact with global relevance.

            AI and the Need for Depth Over Demos

            Unsurprisingly, Generative AI dominated the discussion. While excitement around AI continues to grow, the panel was quick to call out the dangers of over-indexing on the buzz.

            Investors are seeing an influx of startups incorporating GenAI into their decks — often as a catch-all enhancement to drive up valuation rather than a critical part of the solution. But deploying AI for the sake of it doesn’t stand up to scrutiny. What matters is whether the technology meaningfully advances a company’s ability to solve a real problem.

            As a result, some firms are now taking steps to stress-test the AI claims in pitch decks — bringing on technical advisors to help evaluate model performance, architecture, and differentiation. AI is also being embedded within investment firms themselves, automating internal operations and enhancing research capabilities, ensuring firms walk the talk.

            Ultimately, depth and technical maturity are becoming non-negotiables. Investors want to know whether a startup is using AI to unlock something new — or simply dressing up the same offer with a buzzword.

            Solving the Right Problems with the Right Tools

            The most compelling companies, the panel agreed, are those built around clearly defined pain points — not those built around a technology trend. Startups that begin with a well-articulated problem and thoughtfully layer in GenAI as part of the solution are more likely to earn long-term backing.

            What’s encouraging is that many of the AI applications emerging from the region are industry-specific. Rather than attempting to build broad foundation models, founders are adapting existing technologies to address use cases in legal, healthcare, financial services, and logistics. These targeted implementations allow for faster validation, lower model training costs, and quicker go-to-market.

            This vertical approach is particularly relevant in MENA, where high-impact, niche problems abound and where even incremental improvements in automation or insight can deliver outsized value.

            Valuations, Runway, and Capital Discipline

            The panel also tackled the pricing pressure created by the AI boom. Startups operating in AI-adjacent spaces are raising rounds at aggressive valuations, driven in part by investor fear of missing out. But high valuations without corresponding fundamentals can create downstream challenges—not only for investors but for the startups themselves.

            There was a shared emphasis on the importance of capital efficiency, particularly at the early stage. Founders are increasingly seeking larger cheques out of the gate, hoping to avoid multiple fundraising cycles. But this comes with trade-offs. More capital means more expectation, more dilution, and more pressure to hit aggressive growth targets.

            Startups that show thoughtful resource allocation, a clear understanding of their burn, and flexibility in adapting to new market realities are more likely to earn sustained support. Investors aren’t just looking for great ideas — they’re looking for founders who know how to pace the journey.

            Beyond Capital: Enabling the Ecosystem

            More than once, the conversation circled back to the role investors play as enablers — not just funders. There’s growing recognition that capital is only part of what startups need to thrive. Strong ecosystems are built on infrastructure, mentorship, regulatory clarity, and access to talent.

            Many funds in the region are now acting as feedback loops — listening to what their portfolio companies need, identifying systemic gaps, and collaborating with public and private partners to address them. This includes everything from advocating for AI-friendly policies to helping build local talent pipelines.

            This ethos of enablement is core to DFDF’s mission. As an anchor fund and long-term ecosystem builder, DFDF operates with the belief that startups succeed not in isolation, but when the environment around them is conducive to growth. That means investing not just in companies, but in capacity.

            Dubai’s AI Moment: Opportunity Meets Intentionality

            The week-long AWS GenAI Loft Dubai event is one of several recent signals that Dubai is doubling down on AI — not as a trend, but as a transformative economic pillar. With initiatives from both the government (such as setting AI as a priority sector within its D33 agenda) and the private sector, and a proactive approach to infrastructure, the city is positioning itself as an ideal launchpad for AI-native ventures.

            But the moment requires more than optimism. It demands intentionality. For founders, that means solving real problems with real technology. For investors, it means backing substance over spin and staying responsive to what the ecosystem truly needs.

            The panel concluded with a shared sense of responsibility. This is a formative chapter for both startups and venture capital in the region. And while the excitement around AI is justified, the companies that will endure are those that lead with clarity of purpose, sound execution, and technical depth — supported by capital that believes in the long game.

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              Insights

              Unlocking the UAE’s New Economy: Insights from Our Panel at Future 100 Forum

              The UAE’s ambition to become a global hub for the future economy was on full display at the Future 100 Forum, a gathering of policymakers, investors, and entrepreneurs committed to shaping the nation’s economic future. Hosted as part of Investopia 2025, the event provided a platform for thought leadership, collaboration, and investment into the next generation of high-impact ventures.

              At Dubai Future District Fund (DFDF), we recognize that unlocking the UAE’s economic potential starts with investing in visionary founders and transformative industries. That’s why we took part in a high-impact panel discussion titled “Investing in Tomorrow: Unlocking the UAE’s New Economy Potential.”

              Our Principal, Tiffany Bain, was joined by Walid Mansour, CEO at MEVP, and Julien Plouzeau, Senior Partner at Oraseya Capital, with Aalia Mehreen Ahmed, Features Editor at Entrepreneur Middle East, moderating the discussion.

              Together, we explored how investors identify high-potential startups, the role of capital in scaling innovation, and the sectors driving the UAE’s new economy.

              Sizing the Opportunity: The Key to Smart Investing

              When we assess a potential investment, one of the biggest determinants of success is the size of the opportunity. The larger the market and the greater its growth, the greater the potential for a startup to scale and achieve meaningful returns. However, accurately sizing the opportunity—especially in industries where disruptive technologies are being introduced for the first time—can be challenging.

              Beyond market size, execution capability is key. A compelling idea alone isn’t enough; founders must demonstrate that they can build and scale effectively. This is why we get particularly excited about startups that have already launched a product and secured some form of early traction. A working product with good usability, grounded in customer insight signals a strong product-strategy and validates that the team is capable of delivering.

              Valuation discipline is another critical factor. The entry valuation of an investment is one of the few aspects that investors can control. Overpaying at the outset can limit upside potential and introduce risks down the line. Finding the right balance between market opportunity, founder capability, and valuation is what leads to successful long-term outcomes.

              How We Evaluate Founders: Hunger, Market Knowledge, and Unique Insights

              At DFDF, we believe that founders are the single most important factor in an early-stage investment. We don’t just look for good ideas—we look for exceptional teams.

              The best founders exhibit a relentless hunger to build and scale, regardless of market conditions. They have deep industry knowledge and a clear vision of what they want to disrupt. Importantly, they have an edge—a unique insight or ability that gives them an advantage over competitors.

              We also place a strong emphasis on team diversity. Startups with diverse teams benefit from broader perspectives, better problem-solving, and a stronger ability to navigate complex challenges.

              At the early stage, revenue isn’t always required, but we do look for signs of strong demand. Pre-sales, customer sign-ups, strong conversion rates, and waiting lists can all signal that a company is solving a real problem. Founders who have data-driven approaches and a clear understanding of key business metrics stand out.

              Emerging Sectors with High Growth Potential

              During the panel, we explored which industries are poised for significant growth in the UAE.

              At DFDF, our investment focus is aligned with Dubai’s D33 Agenda, and we see substantial opportunities in:

              • PropTech, particularly in areas like digital mortgage solutions and AI-driven energy efficiency. As the real estate market continues to evolve, technology will play an increasing role in optimizing design, financing, and management.
              • LogiTech, building on Dubai’s established role as a global logistics hub. The UAE’s position as a key trade and distribution center creates opportunities for AI-driven supply chain optimization and next-generation logistics platforms.
              • HealthTech, where the UAE is emerging as a regional leader in healthcare innovation. The country is actively investing in cutting-edge solutions, from AI-assisted diagnostics to telemedicine and personalized healthcare platforms.
              • AI as a cross-sector enabler, driving advancements in finance, logistics, healthcare, and beyond.

              Other panelists pointed to AI infrastructure, which requires significant capital investment but offers immense potential. Fintech continues to be an attractive space, with digital payments, embedded finance, and decentralized solutions reshaping financial services.

              Despite these opportunities, early-stage capital remains a constraint. Many promising startups have global potential but are limited by funding availability in the region, particularly for series B+. Supporting these companies with the right capital at the right time will be crucial in helping them scale beyond the UAE and compete on the world stage.

              How Founders Can Stand Out to Investors

              For founders looking to secure investment, the panelists shared several key insights:

              • Think Bigger – One common challenge we see is founders thinking too locally. Many entrepreneurs focus on proving product-market fit in the UAE and then expanding to Saudi Arabia, but global ambition is critical. Investors are looking for data-driven founders who understand the right metrics and have a clear vision for scaling internationally.
              • Show Early Traction – Execution matters. Investors want to see evidence of demand, whether through customer growth, strong partnerships, or product engagement.
              • Leverage the Ecosystem – First-time founders often struggle because they lack exposure to best practices. Spending time in accelerators and incubators can provide the insights and mentorship needed to navigate early-stage challenges.

              The UAE’s startup ecosystem is maturing, and we are starting to see second- and third-time founders who have built companies before. This growing pool of experienced entrepreneurs is a positive indicator for the region.

              What’s Next for the UAE’s Innovation Ecosystem?

              As the discussion wrapped up, the panelists explored how the UAE can maintain its global competitiveness in entrepreneurship and innovation.

              • More Capital Investment – Increasing funding availability, particularly for growth-stage startups, will be essential in scaling promising companies beyond the region.
              • Structured Liquidity – Creating more exit opportunities and secondary markets will allow capital to be recycled back into the ecosystem, ensuring continuous reinvestment.
              • Government and Institutional Support – Strengthening collaboration between the public and private sectors will help accelerate the sustainable growth of future economy sectors.

              As the UAE continues to position itself as a leader in entrepreneurship, venture capital, and technology-driven innovation, it is clear that visionary founders, backed by strategic capital, will be the driving force behind the country’s future economy.

              At DFDF, we are committed to backing these founders alongside our funds, and ensuring that the UAE remains a powerhouse of innovation. If you’re building the future of the UAE, we want to hear from you.



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                Insights

                AI, Family Business, and the Next Era of Wealth: Insights from Dubai’s World Governments Summit

                Dubai Chambers sponsored an exclusive roundtable at the World Governments Summit in Dubai on 11 February 2025, bringing together leaders of multigenerational family businesses to discuss two defining forces shaping the future: artificial intelligence (AI) and succession planning.

                Family businesses are integral to global economies, particularly in the Middle East and Asia, where they collectively hold trillions of dollars in assets and drive local economic activity. However, they are now facing a critical inflection point: how can they leverage AI to remain competitive while preserving their legacy across generations?

                This roundtable discussion explored the role of AI in investment strategy, supply chain management, and workforce transformation, as well as the challenges of succession in an era of rapid technological change.

                AI: A Game-Changer for Family Business Investment and Operations

                Where to Invest in AI?

                A central theme of the discussion was how family offices should approach AI investment. AI is not a sudden revolution—it is the result of years of investment in data infrastructure, computing power, and energy efficiency. It is now inevitable, and businesses that fail to adapt risk falling behind.

                There are two primary ways AI will impact family businesses:

                1. How family offices use AI to optimize their operations and decision-making.
                2. How family offices invest in AI-driven companies and technologies.

                One of the key insights shared during the discussion was that while some businesses are not at the forefront of AI development, they are deeply focused on applying AI to enhance efficiency, reduce lead times, and improve sustainability standards. This is especially relevant in sectors such as supply chain management, where AI is being used to revolutionize forecasting, production planning, and customer insights—compressing lead times from years to mere weeks.

                One pressing question was whether AI will create or eliminate jobs. The consensus? AI will generate more jobs than it replaces—but not necessarily where displaced workers are currently located. This raises a significant challenge for supply chains: how do we retrain and redeploy talent in an AI-driven world?

                A participant from the audience, working in supply chain management, remained skeptical, arguing that AI cannot replace the “boots on the ground” approach needed in logistics. In response, panelists pointed out that while certain physical tasks remain irreplaceable, AI is already transforming product development and consumer analytics.

                Turning Data into a Liquid Asset

                Another major theme was data valuation. Some businesses are working to transform data into a tradeable asset class. This has profound implications for family businesses:

                • If data can be monetized, businesses will become more valuable.
                • AI models require vast datasets—meaning that family businesses with strong proprietary data assets hold a competitive advantage.
                • Transparent data valuation could revolutionize balance sheets and investment strategies.

                Additionally, regulatory developments in certain markets are setting the stage for data to become a formalized asset, further enhancing its role in wealth management.

                AI and Venture Capital: A New Frontier

                A venture capital (VC) professional in the audience raised an interesting point: how can family offices use AI to become better investors?

                Rather than simply investing in AI startups, family offices can leverage AI internally to:

                • Analyze investment patterns and predict high-potential startups.
                • Harness proprietary data from their portfolio companies.
                • Develop AI-powered investment thesis agents to refine decision-making.

                The key takeaway was that AI is not about having more data—it’s about having the right data. Family offices that integrate AI with deep domain expertise will gain a significant edge.

                Succession Planning in the Age of AI

                While AI and digital transformation dominated the conversation, succession planning remained a core concern. Family businesses, by nature, span generations, and ensuring smooth transitions is essential for longevity.

                Does Wealth Last Beyond Three Generations?

                A well-known saying echoed throughout the discussion: “Wealth does not last beyond three generations.” This highlights a universal challenge—by the third generation, businesses often fragment due to inheritance disputes, lack of interest, or mismanagement.

                Several succession strategies were debated:

                • Selective inheritance: Some families limit wealth transfer to a few key members to preserve continuity, though this approach is not universally accepted.
                • Separation of business and ownership: Many family enterprises opt to keep professional management in place while family members retain financial stakes.
                • Going public: If family businesses struggle with governance, an IPO can provide stability while preserving wealth.

                Some participants argued that next-generation members should not feel entitled to leadership roles in the business. Instead, they should earn their place or step aside for professional managers.

                A Global Succession Framework?

                A unique idea was proposed: an international secondment program for next-generation family business leaders.

                Rather than assuming leadership in their own family’s enterprise immediately, young successors could gain experience working in other family businesses worldwide. This would expose them to different governance models, reduce entitlement mentalities, and enhance their leadership skills before taking the reins at home.

                The Emotional Factor

                Ultimately, the biggest challenge in succession planning is not financial—it’s emotional. Family conflicts, differing visions, and generational gaps often complicate the transition process. Some participants suggested that family offices should be fully professionalized, removing family members from management entirely. However, others argued that emotional connections are what make family businesses unique.

                Dubai’s Role in Shaping the Future of Family Business

                As family businesses navigate these challenges, the cities and ecosystems that support them will play an increasingly critical role.

                Dubai has emerged as a leading global hub for family businesses, offering a world-class ecosystem that fosters growth, innovation, and longevity. Recognizing the critical role these enterprises play in economic development, Dubai Chambers has established the Dubai Centre for Family Businesses—a dedicated initiative designed to support family enterprises and ensure their long-term success. This center provides guidance on governance, market expansion, and financial structuring, reinforcing Dubai’s position as an ideal base for multigenerational businesses.

                Additionally, the Dubai International Financial Centre (DIFC) Family Wealth Centre plays a vital role in helping family enterprises build and sustain prosperity over generations. By providing access to financial services, investment opportunities, and regulatory frameworks tailored for family offices, Dubai has set a precedent for how governments can create environments where family businesses can thrive.

                With its strategic position as a global trade, finance, and real estate hub, Dubai continues to shape policies that provide businesses with access to new markets, capital, and governance frameworks that balance tradition with innovation.

                Key Takeaways: The Future of AI and Family Business

                1. AI is not a trend—it is an inevitable transformation. Family businesses must embrace AI in their operations and investment strategies to stay competitive.
                2. Data is becoming an asset class. Businesses that understand how to quantify and monetize their data will gain a significant advantage.
                3. AI will create more jobs than it destroys—but reskilling is critical. The workforce must be trained to collaborate with AI, not compete against it.
                4. Succession planning needs a modern approach. Businesses should consider selective inheritance, professional management, or IPOs to ensure longevity.
                5. Cities that put innovation at the forefront, like Dubai, are leading the way. With robust regulatory frameworks, dedicated support through Dubai Chambers, and world-class infrastructure, Dubai is positioning itself as the global capital for family businesses navigating the future.

                As DFDF continues to champion venture capital as an investment asset class, these discussions highlight the pressing need for innovation, adaptability, and strategic governance in family enterprises. The future of wealth is being shaped today—and AI will be at the center of it.

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                  Insights

                  Government Fund of Funds: Learnings from the Last Five Years

                  The Middle East’s venture capital ecosystem has undergone a shift over the past five years. Once characterized by capital outflows to global markets, today, the region has become a magnet for investment, talent, and innovation. Government-backed fund of funds have played a crucial role in shaping this transformation, deploying capital into both funds and startups to foster long-term economic growth.

                  This evolution was the focus of a panel discussion at the Middle East Venture Capital Association (MEVCA) Investors Summit, held on 30 January 2025 at Abu Dhabi Global Market (ADGM), UAE. The discussion brought together industry leaders: Nader Albastaki (Managing Director, DFDF), Osama Alamri (Chief Business Development Officer, SVC), and Faris Al Mazrui (Head of Ventures & Growth, Mubadala), with Noor Sweid (Founder & Managing Partner, Global Ventures) moderating the conversation.

                  The Shift to Investing Locally

                  Seven years ago, Middle Eastern sovereign wealth funds primarily looked outward, deploying capital into global markets rather than fostering innovation at home. Today, the narrative has flipped.

                  Faris Al Mazrui highlighted that in 2010, Mubadala faced the challenge of attracting partners and investors to the region. Now, the opposite is true—global investors and funds are setting up offices in the UAE, drawn by the region’s long-term, strategic economic planning, favorable policies, and a thriving startup ecosystem.

                  This shift is evident in funding patterns:

                  • A significant portion of capital deployed into MENA startups now comes from international investors, reversing historical trends where local capital largely flowed outward.
                  • Dubai and Saudi Arabia have become talent magnets, driven by progressive regulatory environments, a growing tech ecosystem, and increased exits that validate investor confidence.

                  Saudi Arabia: A Five-Year Transformation

                  Reflecting on Saudi Arabia’s journey, Osama Alamri noted that just five years ago, the country’s venture ecosystem was in its infancy. Fast forward to today, and Saudi VC activity accounts for the majority share of all MENA venture investments.

                  What triggered this rapid growth?

                  • Vision 2030’s initiatives provided strong government backing for startups, fostering entrepreneurship and incentivizing private sector investment.
                  • Regulatory reforms played a critical role in streamlining business operations, making it easier for startups to thrive.
                  • Perhaps the most surprising development: the speed of exits. Successful IPOs (e.g., Jahez) and unicorns (e.g., Tamara) created a FOMO effect, drawing in previously hesitant investors, particularly family offices that traditionally favored real estate.

                  This growing trust in startups as a viable asset class is critical, but education remains key—fund managers are working to help investors understand risk, advising them to allocate 10-15% of their portfolio to venture capital while ensuring government co-investment provides a de-risking mechanism.

                  Dubai’s Competitive Edge & The Role of Government

                  Dubai has long been a hub for innovation and investment, but what continues to make it an attractive destination for founders and capital?

                  Nader Albastaki, representing DFDF, emphasized that while Dubai’s ecosystem is largely privately led, the government plays a crucial complementary role by:

                  • Providing strategic fiscal support to drive innovation, in alignment with federal economic strategies like D33.
                  • Creating an environment conducive to collaboration, as seen in major exits like Talabat’s listing and the continued influx of top-tier founders and funds.
                  • Supporting community building initiatives, such as the UAE President’s recent declaration of 2024 as the “Year of the Community”, further solidifying Dubai’s efforts for collective building and supporting innovation.

                  For DFDF, success is not just about capital deployment but also about measuring the broader economic impact of its investments—how they attract further capital, generate jobs, and contribute to ecosystem maturity.

                  Lessons from Global Investment Trends

                  The conversation also touched on international investment strategies and what MENA-based fund managers can learn from global markets.

                  Faris Al Mazrui shared insights from Mubadala’s experience investing abroad:

                  • The most successful fund managers have lean, highly focused teams and avoid the inefficiencies of over-hiring.
                  • Deployment strategy matters—the best managers make two or three excellent investment decisions per year rather than chasing volume.
                  • A deep understanding of public markets is crucial, even for private investors, to better gauge valuations and market shifts.

                  Meanwhile, Osama Alamri emphasized that fund managers in MENA must go beyond simply deploying capital. The next frontier? Adding real value to founders through:

                  • Venture building, acceleration, and ecosystem support.
                  • Helping startups scale beyond their home markets—particularly crucial for Saudi startups looking to expand regionally.

                  The Missing Middle: Series B Funding & Ecosystem Gaps

                  A recurring theme in the discussion was the Series B funding gap in MENA. Startups struggle to secure $20M+ growth-stage tickets, creating a bottleneck for scaling companies.

                  Noor Sweid pointed out a striking $950M gap in Series B funding across the region. Bridging this requires more conviction from institutional investors in local fund managers, ensuring capital flows efficiently across the entire venture stack.

                  According to Nader Albastaki, DFDF sees itself as part of this capital stack strategy—not just as a funder, but as a cohesive force ensuring capital layers complement one another, whether through venture funds, direct investments, or government-supported initiatives.

                  The Next Five Years: A Maturing Ecosystem

                  Looking ahead, what does success look like?

                  Faris Al Mazrui envisions a future where the region doesn’t just attract capital but becomes a global innovation magnet—a place where top founders don’t have to be in Silicon Valley to build world-class companies.

                  Osama Alamri expects to see:

                  • More sector-focused funds emerging, targeting deeptech, AI, biotech, and other strategic industries.
                  • A stronger emphasis on early-stage capital, addressing persistent gaps in pre-seed and seed funding.

                  The underlying message was clear: while MENA’s venture ecosystem has made significant strides, there’s still work to be done—particularly in ensuring continuity of capital, fostering deep sector expertise, and creating a self-sustaining cycle of innovation and investment.

                  Conclusion: The Future of Government Fund of Funds in MENA

                  The past five years have set the stage for a more mature, globally connected, and resilient VC ecosystem in MENA. Government-backed funds like DFDF, SVC, and Mubadala have played a pivotal role in this transformation, catalyzing capital flows, supporting founders, and shaping regulatory environments that empower innovation.

                  As the region looks forward, the focus will be on filling capital gaps, driving sector specialization, and reinforcing MENA’s position as a hub for the next wave of global technology leaders.

                  With strong public-private collaboration and a long-term investment mindset, MENA is no longer just a capital exporter—it is a region where world-class startups can thrive, scale, and succeed.

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                    Insights

                    Defining and Delivering Value Creation at DFDF

                    What Does Value Creation in Venture Capital Mean to Us?

                    At Dubai Future District Fund (DFDF), we go beyond the traditional scope of venture capital with our dedicated approach to value creation. For us, value creation means actively collaborating with our direct investment portfolio companies to accelerate their top-line revenue growth and optimize their bottom-line costs, ensuring sustainable and efficient business operations. 

                    In this blog, we take you through what value creation means at DFDF, why it is an innovative approach to venture capital in the Middle East region, and how it helps our direct investment portfolio companies ensure that they are getting value from us as investors beyond capital.

                    Leading by Example & How Our Dedicated Value Creation Team Sets Us Apart

                    In most venture capital firms, the investment team multitasks to provide portfolio support. Whilst there are merits to a team that built a bond with founders and derived conviction in their solution and business model to support the founders’ growth stories, we, at DFDF, created a dedicated value creation team that focuses solely on enhancing the operational and strategic capabilities of our portfolio companies.

                    This dedicated focus allows us not only to contribute to but also to help drive the development of best practices within the wider MEASA VC industry.

                    Comprehensive Areas of Support

                    Our value creation extends across various critical domains, tailored to the specific needs of each startup:

                    • Strategy Development: We help refine and enhance business strategies, ensuring they are robust and adaptable to changing market conditions.
                    • Expanding Professional Networks: Access to our extensive network of industry contacts and potential partners is crucial for business expansion and collaboration.
                    • Talent Access: We facilitate connections to top talent, helping startups build their teams with skilled professionals essential for growth.
                    • Business Development: Our support extends to identifying and securing new business opportunities, enhancing sales strategies, and improving market reach.
                    • Working Capital Financing: We assist in securing favorable financing options to improve cash flow management and fund day-to-day operations.
                    • Go-to-market Positioning: We guide startups in developing strong brand identities and marketing strategies that resonate with their target audiences.

                    Leveraging a Robust Ecosystem of Expertise

                    Our extensive network of seasoned advisors and mentors includes accomplished entrepreneurs and industry experts who provide not just strategic insights but also practical operational tactics. This network supports our mentoring program, pairing founders with mentors like Yi-Wei Ang, Chief Product Officer at Talabat, and Nadeem Baig, former Chief People Officer at Dyson. These relationships not only address specific challenges but also contribute to the broader professional development of the founders.

                    “Creating value with rising stars and entrepreneurs, building their startup businesses is a unique opportunity and energizes me immensely. DFDF’s mentoring program provides an outstanding platform through which professionals share their experiences, mentoring startup founders and their teams in scaling and accelerating growth journey's sustainably. Hugely satisfying and highly inclusive, DFDF’s approach has blazed a new path in nurturing founders and leaders in the innovation ecosystem. Sought after, results oriented and well regarded!”

                    Nadeem Baig, Executive Coach, Ex-CPO Dyson, Ex-CHRO Aramex

                    "The mentoring program has been invaluable in refining how we approach product development at Zest Equity. Insights on product strategy, planning, and optimizing our development cadence have already begun to drive significant improvements. Yi-Wei's ability to make concepts stick in our minds, backed by his diverse and extensive experience, has been a game-changer for us. We're excited to continue applying their expert advice as we work towards our goals."

                    Raya Hudhud, Zest Equity

                    A Bridge To Access Wider Dubai

                    Anchored by the Dubai Future Foundation (DFF) and the Dubai International Financial Centre (DIFC) means that our deep integration within the Dubai government-backed ecosystem provides unmatched advantages.

                    Our value creation team is complemented by our Ecosystem initiatives. Our Ecosystem team brings together all the key stakeholders within Dubai Inc. to help create an environment where entrepreneurs can flourish, be it through smoother regulation, enhanced access to strategic public partnerships or private sector engagement.

                    Tailoring Support to Fit Unique Needs

                    Recognizing that each startup has its own set of challenges and opportunities, we take the time to deeply understand the specific circumstances and objectives of each company. Following, we craft support plans that are as effective as they are unique — whether it’s through strategic advisory services, targeted operational improvements, or facilitating in-depth strategy sessions on sales approaches and product data tracking, our support is comprehensive and customized to address the specific pain points of each startup.

                    Collaborative and Strategic Growth Approach

                    Our interaction with startups is based on collaboration. We work alongside our founders, providing support that enhances their capabilities without supplanting their strategic vision. This partnership approach ensures that our involvement truly augments value, empowering founders to make informed, confident decisions.

                    With that in mind, trust forms the cornerstone of our direct investment relationships at DFDF. Often, founders approach us having extensively pitched their businesses as flawless and fully optimized. Transitioning from this stage to openly discussing real challenges and needs can be daunting. 

                    Establishing a strong trust foundation is critical — it encourages founders to be honest and transparent, allowing us to tailor our support effectively and meaningfully. Once we’ve invested in them, we’re very much on the same team.

                    Examples of Value Creation in the Last Year

                    1. Invited portfolio companies to London Tech Week to promote our founders and their products/services to the European ecosystem, opening up new partnerships and customer opportunities. This retreat gathered key AI movers and shakers from across the globe. We opened this high-profile event with a video from our Camb.ai founders announcing the open-sourcing of their MARS5 platform, enabling free access to the English TTS aspect of their platform—a major development for audio AI.
                    2. Secured speaker slots for founders at most major MENA events. We aim to promote the visibility of our founders at all MENA events, ensuring they have opportunities to speak on relevant topics.
                    3. Created a bench of DFDF mentors, all of whom have C-suite or founder scale-up experience. Engagements are oriented around key founder challenges (e.g., go-to-market, org design, product strategy) and usually last 6-12 weeks.
                    4. Secured over $1.5M worth of discounts for portfolio ventures. Our perks hub is continually updated and provides value for founders with credits and discounts from a long list of relevant platforms and service providers.
                    5. Facilitated numerous customer and investor introductions. We leverage our collective DFDF network to support our founders both with go-to-market strategies and with fundraising when the time is right.

                    Conclusion

                    At the Dubai Future District Fund, we are more than just investors; we are committed partners in the success and growth of each startup we engage with. Our approach, underpinned by trust, comprehensive support, and a collaborative spirit, and spearheaded by our dedicated value creation team, establishes us as value-added venture capital firm in the UAE, practically equipped to support today’s visionary entrepreneurs.

                    If you are a founder passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                      Insights

                      Navigating the Road to Series A: Key Insights From Our Workshop in Partnership with AWS

                      Introduction

                      Raising capital for a startup is a journey fraught with challenges and opportunities. For many startups, securing a Series A funding round is a critical milestone that can set the trajectory for future growth and success.

                      The “Road to Series A” workshop, which we hosted in collaboration with AWS for Startups, provided a wealth of insights for startups preparing for this crucial phase. As part of DFDF’s goals is to support and grow the startup ecosystem in the MEASA region, the Road to Series A is a key initiative towards this goal.

                      In this blog post, we’ll delve into the key lessons from the keynote presentations, offering a comprehensive guide for startup founders on the path to a successful Series A funding round.

                      1. The Current State of Raising Capital

                      The landscape of raising capital in 2024 has seen significant shifts. Global trends indicate a downturn in round volumes and valuations, with exit markets effectively shut. The time taken to close rounds has doubled, and the dynamics have tilted towards investors. Despite these challenges, sectors like AI, climate, and energy continue to attract attention, with $317 billion of dry powder across venture capital firms globally waiting to be deployed as of Q1 2024 (according to EisnerAmper).

                      The Importance of Performance

                      Gone are the days when potential alone could secure funding. Investors are now looking for tangible performance. In most cases, startups are now measured on revenue, revenue growth, unit economics and path to profitability, a new world for many founders.

                      2. Understanding the Founder's Journey

                      The keynote presentation by Chris Rangen, a global advisor to funds, CEOs, and founders, offered a comprehensive overview of the current investment landscape. Rangen highlighted the importance of understanding the big picture, emphasizing that 

                      "You are always raising three rounds at the same time, just at different dates."

                      Chris Rangen

                       

                      This perspective underscores the need for a long-term funding strategy that goes beyond the immediate round.

                      The founder’s journey from pre-seed to IPO is marked by various milestones, each requiring a different focus:

                      • Pre-Seed: Prove the market need and raise initial funds from friends, family, and angels.
                      • Seed: Establish problem-solution fit and secure accelerator investment.
                      • Seed+: Demonstrate vision-founders fit and the team’s capability to execute the plan.
                      • Series A: Achieve product-market fit, prove customers are willing to buy.
                      • Series B: Establish business model fit, demonstrate unit economics.
                      • Series C and beyond: Focus on customer creation, scaling, and expanding to new markets and segments.
                       

                      Each stage requires a different strategy and a different set of investors, making it crucial for founders to understand where they stand and what they need to focus on next.

                      3. Tools for a Successful Series A Round

                      The transition from Seed to Series A is a significant step up — it involves more scrutiny and due diligence. Founders need to be prepared for more challenging requirements in terms of performance and governance in order to appeal to local and international investors. To help with this preparation, the workshop introduced various tools and frameworks to help the founders on their journey.

                      During the workshop, the attendees filled out printouts of these tools, following with the instructions, to help contextualize where their startups were at with respect to being ready for raising a Series A. We recommend founders who are reading this to download the tools and utilize them.

                      The Funding Journey Canvas

                      The workshop introduced the Funding Journey Canvas, a tool designed to guide founders through the 42 steps across 5 phases of raising a funding round. This canvas serves as both a guide and a playbook, helping founders to plan, execute, and track their progress.

                      Series A Self-Assessment Canvas

                      Another valuable tool that helps founders assess their readiness for a Series A round by evaluating key aspects such as growth, team readiness, financial planning, investor relations, and more.

                        4. The Funding Journey

                        The journey to securing a Series A funding round is complex, involving multiple phases and steps. We outlined a comprehensive roadmap for success, broken down into the following five phases. This roadmap serves as a guide and playbook for startups, helping them navigate the intricacies of fundraising.

                        Phase 1: Preparation

                        The first phase involves preparing for the fundraising journey. Startups need to understand their investor universe, exit options, and the landscape of potential investors who are a perfect match for their business. A thorough analysis of the startup’s current position and potential exit strategies is crucial at this stage.

                        Phase 2: Strategy Development

                        In the second phase, startups must develop a clear fundraising strategy. This involves creating a detailed investor list, clarifying the fundraising strategy, building a robust financial model, and starting to engage with potential investors. The goal is to have a well-defined plan that aligns with the startup’s growth objectives and the expectations of potential investors.

                        Phase 3: Execution

                        The execution phase is where the rubber meets the road. Startups need to develop compelling pitch decks, set up a data room, and actively engage with investors. This phase requires a meticulous approach, ensuring that all materials and communications are polished and professional.

                        Phase 4: Closing

                        Closing the funding round is the culmination of the fundraising journey. This phase involves finalizing terms, conducting due diligence, and securing the investment. It’s a critical period that demands attention to detail and a focus on ensuring a smooth and successful closing process.

                        Phase 5: Post-Raising

                        After securing the funding, the journey doesn’t end. The post-raising phase involves leveraging the new resources to accelerate growth, execute the business plan, and prepare for future funding rounds. It’s a time for reflection and strategic planning, ensuring that the startup is positioned for long-term success.

                          5. Mastering Technical Due Diligence

                          A. Understanding Technical Due Diligence (Tech DD)

                          The next keynote, presented by Anshuman Nanda and Alexis Philippart de Foy from AWS, emphasized the importance of technical due diligence for investors. This process involves validating the technology assets, risks, and liabilities associated with a startup. Key focus areas include software and hardware architecture, security, scalability, APIs, and code quality.

                          Technical due diligence is a critical process that investors undertake to validate the technology assets, risks, and liabilities associated with a startup. It is an essential step in the investment decision-making process, helping investors reduce risks and make informed choices. For startups, undergoing tech DD is an opportunity to showcase the robustness and scalability of their technology, thereby increasing their chances of securing funding.

                          B. Focus Areas of Tech DD

                          The tech DD process encompasses several critical areas, including:

                          • Software and hardware architectures
                          • Scalability and performance
                          • Security measures and compliance
                          • Development workflows and processes
                          • Team expertise and capabilities
                          • Budget and resource allocation
                          • Verifying levels of technical debt
                          • Assessing the scalability of the solution or product
                          • Reviewing the technology stack architecture
                          • Identifying potential security weaknesses
                          • Ensuring compliance with data privacy standards
                          • Addressing other potential issues related to business operations

                          Startups must be prepared to answer questions related to these areas, demonstrating their understanding and readiness for growth.

                          C. The AWS Well-Architected Framework

                          A significant portion of the keynote presentation was dedicated to the AWS Well-Architected Framework, which provides a comprehensive guide for building secure, high-performing, resilient, and efficient infrastructure for applications. The framework is built around five key pillars:

                          1. Operational Excellence: Focuses on running and monitoring systems to deliver business value and continually improving processes and procedures.
                          2. Security: Concentrates on protecting information and systems, ensuring confidentiality, integrity, and availability of data.
                          3. Reliability: Ensures that a system can recover from failures and meet customer demands.
                          4. Performance Efficiency: Looks at using computing resources efficiently to meet system requirements and maintaining efficiency as demand changes and technologies evolve.
                          5. Cost Optimization: Aims to avoid unnecessary costs and maximize the value of investments.

                          Startups should align their technology and processes with these pillars to demonstrate their commitment to best practices and operational excellence.

                          D. Preparing for Tech DD

                          To prepare for technical due diligence, startups should:

                          • Ensure their technology architecture is well-documented and aligned with business goals.
                          • Have a clear understanding of their team’s capabilities and roles.
                          • Develop and maintain comprehensive documentation covering product features, development processes, and architecture diagrams.
                          • Implement monitoring and alerting mechanisms to understand the health of their operations.
                          • Establish security protocols and compliance measures to safeguard against threats and adhere to regulations.
                          • Prepare for scalability and reliability by having strategies for handling increased demand and recovering from failures.
                          • Optimize performance and cost by selecting appropriate resources and regularly reviewing expenses.

                          6. Leveraging Generative AI for Growth

                          The next keynote, by Basil Fateen and Saubia Khan from AWS, highlighted the potential of generative AI in enhancing startup growth. Generative AI, a subset of machine learning, focuses on creating new data and has the power to transform various aspects of a startup’s operations.

                          Startups can leverage generative AI to increase revenue through customer success insights and automated sales decks. On the cost reduction front, coding assistants, knowledge querying for staff, and project planning can significantly streamline operations. It’s essential to understand the token economics of Gen AI and how it can be integrated into your business model to maximize its benefits.


                          A. Understanding Generative AI

                          Generative AI, a subset of machine learning, focuses on creating new data that mirrors the characteristics of the training data. Think of it as a small jockey guiding a massive elephant on a journey – the jockey (AI model) directs the elephant (data) towards the desired destination (output). This technology has become possible due to advancements in algorithms, cloud computing, data availability, and GPU acceleration.


                          B. The Gen AI Hype Cycle

                          The hype cycle for Generative AI indicates that we are currently in a phase of heightened expectations, with the technology’s potential impact becoming more widely recognized. According to Clem Delangue, Co-founder and CEO of Hugging Face,

                          "2022 was the year of usage for AI, 2023 the year of revenue, and 2024 will be the year of profit and the economics of AI."

                          Clem Delangue


                          C. Gen AI Token Economics

                          Tokens, or chunks of data approximately four characters in length, play a crucial role in the economics of Generative AI. The cost of using Gen AI models, such as Claude Instant and Claude V2, is determined by the number of tokens processed, with pricing based on AWS Lambda, Amazon S3, and Amazon Bedrock prices.


                          D. Where Can Gen AI Add Value?

                          Generative AI can significantly enhance both internal and external business operations. Internally, it can provide customer success insights and auto-generate sales decks. Externally, it can enhance products or features, and enable personalized and automated marketing campaigns. Moreover, it can reduce costs through coding assistants, knowledge querying for staff, project planning, hiring and skills mapping, customer virtual assistants, and onboarding automation.

                          Conclusion

                          The “Road to Series A” workshop offered invaluable insights for startups preparing for their Series A funding round. Understanding the current funding landscape, leveraging emerging technologies like generative AI, ensuring technical robustness, and strategically planning the founder’s journey are key components of a successful funding strategy.

                          As startup founders navigate this challenging yet exciting phase, focusing on building strong relationships with the right investors, demonstrating aggressive growth, and being prepared for rigorous due diligence will be crucial for securing a successful Series A round. With these insights in mind, startups can approach their funding journey with confidence and clarity, paving the way for future growth and success.

                          If you are a founder with a passion for building innovative solutions in the Future of Finance or Future Economies industries, we invite you to get in touch with us.

                          Download the Road to Series A resources in this article

                            ​

                            Insights

                            Halfway Through 2024: A Deep Dive into Venture Capital in the UAE

                            Introduction

                            As we reach the midpoint of 2024, the venture capital landscape in the UAE and the broader Middle East Africa South Asia (MEASA) region presents a compelling narrative of resilience and opportunity for startup founders, VC funds, and institutional investors. Not to mention, in the context of the global VC landscape, the UAE continues to assert itself as a robust and adaptive hub for innovation, attracting substantial investments and fostering a thriving entrepreneurial ecosystem.

                            This article delves into the key trends and developments in the UAE and international venture capital space, as well as shares our insights on what this means for stakeholders across the VC ecosystem.

                            Contextualizing the UAE VC Industry vs. the Global Landscape

                            As we move through 2024, the venture capital landscape in the UAE exhibits a distinctive offering to founders and investors, setting it apart from other VC markets.

                            Investor participation increased in H1 2024, compared to the same period last year, by 58% largely driven by an increase in international investors. Also, the UAE saw an increase in deal count in H1 2024, compared to H1 2023, the only country in MENA to see an increase in this metric for the time period.

                            By analyzing how the market has performed in the first half of 2024, in comparison to the more mature US market and the broader global landscape, we can gain a clearer understanding of the UAE’s strategic position and its implications for investors and entrepreneurs alike.

                            H1 2024 vs. H1 2023

                            Aspect

                            		 UAE 🇦🇪 USA 🇺🇸 Global 🌎

                            Deal Volume

                            		 - 19% YoY
                            Reaching $225 million                            		 - 4.4% YoY
                            Reaching $77.8 billion                            		 - 6.6% YoY
                            Reaching $135.6 billion

                            Deal Count

                            		 + 11% YoY
                            Totaling 83 deals                            		 - 23.5% YoY
                            Totalling 6,619 deals                            		 - 23.7% YoY
                            Totalling 16,997 deals

                             

                            What Are The Factors Driving the UAE’s VC Ecosystem?

                            As the data mentioned above indicate, the UAE’s comparative performance in the venture capital space highlights its maturing VC ecosystem. Its economic resilience is a key factor making it an attractive destination for both startup founders and venture capitalists.

                            This resilience is built on several foundational elements:

                            1. Strategic Government Initiatives: The UAE government has implemented numerous initiatives to foster a robust entrepreneurial ecosystem. Key among these is the establishment of free zones, like the Dubai International Financial Centre (DIFC), which provide tailored infrastructure and flexible regulatory frameworks for tech startups and international enterprises. The formation of the Dubai Future Foundation and Dubai Chamber of Digital Economy further bolsters the region’s digital economy.
                            2. Regulatory Environment: The UAE’s progressive regulatory framework, exemplified by the establishment of the Virtual Assets Regulatory Authority (VARA) in 2022 and Dubai Financial Services Authority (DFSA)’s FinTech sandbox in 2018, supports emerging sectors like cryptocurrency and digital assets. This regulatory environment is designed to attract global players and foster innovation.
                            3. Infrastructure: The city’s state-of-the-art digital hubs, such as the AI campus in DIFC, extensive transportation networks, and advanced logistics capabilities, like those provided by DP World, make it an ideal base for startups aiming to scale globally.
                            4. Cultural Diversity: Home to over 200 nationalities, Dubai’s cultural diversity fosters a vibrant entrepreneurial ecosystem. This diversity brings together a wide range of perspectives, driving innovative solutions and creative business models.
                            5. Quality of Life: Dubai’s high quality of life, safety, and strategic location between Europe, Asia, and Africa make it an attractive destination for talent and investment. The introduction of innovative visa policies, such as the Golden Visa, further enhances its appeal to global entrepreneurs and investors.
                            6. Economic Stability: The UAE’s economic policies have ensured stability and growth even during global economic downturns. The World Bank’s 2020 report, ranking the UAE 16th globally for ease of doing business, reflects this stability and the country’s strategic adaptation to the digital age.
                            7. Maturing Market with Strong Fundamentals: Unlike many mature markets, like the United States, where the high cost of borrowing and rising non-performing loan (NPL) rates pose significant challenges. This makes venture capital a risky asset class. However, in the UAE, this macroeconomic climate is inverted, enabling startups to take capital without the same level of financial risk. This makes venture capital a highly attractive asset class.

                            How Does the UAE Stack Against the VC Industry in the Wider Middle East?

                            Despite a global downturn, the MENA region has demonstrated resilience with the smallest decline among other regions worldwide, experiencing only an 18% dip in VC deal count in H1 2024 compared to the same period last year. Narrowing in on the UAE, it accounted for 36% of deals across MENA, underscoring its growing attractiveness as a hub for venture investments in the region.

                            Creating Exit Opportunities for Startups & Investors

                            The UAE’s venture capital ecosystem offers robust exit opportunities for startups, underscoring its resilience and attractiveness. A key element of the UAE’s venture success is the availability of diverse liquidity events, including local IPOs and acquisitions. This diversity in exit strategies ensures that startups have multiple pathways to scale and return value to investors.

                            For starters, the private market had a notable management buyout in the first half of 2024 — Property Finder, which essentially doubled the returns for its investors. This highlights the UAE’s capability to nurture startups that can achieve substantial growth and profitability, eventually leading to successful public offerings.

                            For startup founders, the presence of a dynamic exit environment means that there is a path to liquidity, which is crucial for attracting investment and scaling operations. Meanwhile, for investors, the availability of multiple exit routes increases the likelihood of achieving favorable returns, making the UAE a compelling destination for venture capital investments.

                            Sector Spotlight

                            Future of Finance

                            FinTech continues to lead in deal count, maintaining its position as a key driver of venture capital activity. FinTech deals accounted for 32% of total funding volume in H1 2024 in the UAE despite a 36% YoY drop. Notably, the FinTech sector saw an 15% increase in VC deal count over the same time period, maintaining its position as the leading sector for VC investing since 2019. This consistency highlights FinTech’s enduring appeal even amidst broader market contractions and is a testament to the sector’s critical role in shaping the future economy.

                            This dominance matters because FinTech is the backbone of digital transformation, enabling financial services to be more accessible, efficient, and inclusive.

                            Future Economies

                            The concept of Future Economies encompasses a range of innovative sectors beyond FinTech, including the Future of Properties & Real Estate (PropTech), Future of Health, Future of Logistics, Future of Climate, and the Future of AI. These areas continue to attract substantial investments, reflecting a broader shift towards technologies and business models that address long-term structural changes in the economy.

                            The emphasis on Future Economies is crucial because it represents the UAE’s strategic pivot towards sectors that will define the next phase of global economic development. Each of these sectors — PropTech, health, logistics, climate, and AI — plays a significant role in addressing some of the most pressing challenges and opportunities of our time.

                            By investing in these future-focused sectors, the UAE is not only diversifying its economy but also ensuring long-term resilience and growth. 

                            Implications for Stakeholders

                            What Does This Mean for Startup Founders Looking to Raise Capital in the Rest of 2024?

                            For startup founders in the UAE and the wider MEASA region, the rest of 2024 presents a landscape of both challenges and opportunities. Despite a decline in overall deal volume and funding, the UAE has demonstrated resilience, particularly in early-stage investments.

                            However, founders must navigate a competitive environment where demonstrating robust business fundamentals and clear growth trajectories is essential. Leveraging the UAE’s strengths in sectors like FinTech and verticalized E-commerce/Retail, which continue to attract significant interest, can improve fundraising prospects.

                            Globally, early-stage investments are also favored, indicating a broader trend that founders can tap into by aligning their strategies with global investor expectations. The global economic conditions, including high interest rates and cautious investor sentiment, may affect funding availability, so founders should be prepared for rigorous scrutiny and adaptable to changing market conditions. More recently, investors have been interested in bottom line dynamics as well just the traditional focus on top line.

                            What Does This Mean for VC Funds Looking to Deploy Capital in the Rest of 2024?

                            For VC funds looking to deploy capital in the remaining months of 2024, a strategic and cautious approach is necessary given the current market dynamics. The MENA region shows a strong preference for early-stage investments, with 38% of deals in H1 2024 falling below the $1 million range. This mirrors global trends where early-stage funding rounds are increasingly prominent, driven by the potential for high returns and lower risks compared to later-stage investments.

                            Focusing on sectors that have demonstrated resilience and strong investor interest, such as FinTech and E-commerce/Retail, can be advantageous, as well as real use cases leverage AI and GenAI. The rise in non-mega deal funding and increased investor participation in the UAE suggests that there are ample opportunities for well-positioned startups.

                            Global factors such as potential interest rate cuts by the US Federal Reserve and the rebound of the IPO market could enhance liquidity and create more exit opportunities, influencing the timing and scale of investments. By aligning investment strategies with these trends, VC funds can effectively navigate the current market conditions and capitalize on emerging opportunities.

                            What Does This Mean for LPs and GPs Looking to Invest in VC in the Rest of 2024?

                            Limited Partners (LPs) and General Partners (GPs) looking to invest in venture capital in the rest of 2024 must balance the risks and opportunities presented by the current market environment. Globally, stability in high interest rates and the potential for rate cuts later in the year, combined with the recovery of the IPO market, could boost investor confidence and liquidity. These conditions create favorable opportunities for late-stage investments and exits, providing a balanced investment approach across different stages of the venture lifecycle.

                            By strategically diversifying portfolios and focusing on resilient and high-growth sectors such as FinTech and digital commerce, LPs and GPs can position themselves to maximize returns. Leveraging insights from both regional and global VC trends will be crucial for navigating the dynamic venture capital landscape of 2024 and beyond.

                            Conclusion

                            As we move through the second half of 2024, the venture capital landscape in the UAE, Middle East, and the wider MEASA region presents a complex yet promising picture. Despite declines in deal volumes and counts, the sustained investor interest and sector-specific resilience offer a beacon of optimism. The UAE’s resilience amidst global economic challenges, coupled with its strategic focus on early-stage and sector-specific investments, positions it as a significant player in the emerging venture markets.

                            For startup founders, VC funds, LPs, and GPs, the focus should be on strategic investments in high-potential sectors and early-stage ventures, leveraging the robust interest in the region’s innovation ecosystem. The comparison of the UAE’s performance with global and US VC markets highlights both shared trends and unique regional dynamics, emphasizing the importance of agility and informed decision-making.

                            By staying attuned to market trends and investor sentiments, stakeholders can navigate the challenges and seize the opportunities that lie ahead in the remainder of 2024. Understanding these comparative dynamics is crucial for leveraging the strengths of the UAE’s ecosystem and learning from global and US trends. This approach will enable investors and entrepreneurs to capitalize on emerging opportunities and drive the next wave of innovation and economic growth in the region.

                            Sources
                            • CBInsights, “The State of Venture Q2’24 Report.” June 2024.
                            • PitchBook, “Q2 2024 PitchBook-NVCA Venture Monitor First Look,” June 2024.
                            • PitchBook, “2024 US Venture Capital Outlook: Midyear Update,” June 2024.
                            • MAGNiTT, “H1 2024 EVM Venture Investment Summary report” July 2024.
                            • MAGNiTT, “https://magnitt.com/research/h1-2024-UAE-venture-investment-premium-report-50945” July 2024.
                            • Rania Helmy, Khadija Ba. “From Sands to Skylines: Dubai’s Rise as a Global Epicenter for Entrepreneurship.” MIT Sloan School of Management, May 27, 2024.

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                              Navigating Web2.5

                              In a first of its kind series for the region, Aquanow, a leading digital asset platform, and DFDF, Dubai’s evergreen VC firm focused on investing in the future of finance, will be publishing joint insights on the Web3 and digital assets space. Our hope with this series is to provide investors, peers and the market at large with a better understanding of the regional landscape and broader industry. 

                              A Prolonged Transition to Web3

                              While Generative AI and Large Language Models (LLMs) dominate the headlines today, blockchains maintain their gradual pace of disruption — a phenomenon often called Web3.

                              Consider the earliest consumer internet (Web1), primarily serving as a global information repository, which featured static, read-only web pages and limited interactivity. Web2 introduced dynamic, user-generated content and interactive platforms, giving rise to social media, e-commerce, and a more connected web experience. Now, Web3 is pushing the boundaries further by leveraging blockchain technology to create a decentralized internet. This new era emphasizes digital ownership, enhanced privacy, and trustless transactions, transforming the way we interact online and empowering users with more control over their data and online identities.

                              However, this transition cannot be instantaneous; it requires patience, iteration, and adaptation. The length of time necessary and the significance of obstacles to be surmounted will result in a hybrid phase we’re calling Web2.5. This article explores why we believe that this period will be prolonged, as well as how the changes that are ahead pose unique challenges for enterprises.

                              Complex Transition

                              Integrating digital assets and blockchains represents a monumental shift that involves rethinking and restructuring everything from infrastructure to organizational culture. Enterprises have long built their operations around centralized models, relying on hierarchical decision-making, centralized data storage, and consolidated control mechanisms. Because of this legacy way of working, transitioning these systems is not a straightforward process. Rather, it’s akin to trying to change the wheels on a moving car!

                              Existing workflows, software architectures, and security protocols must be overhauled to accommodate new frameworks like blockchain. This shift requires deep integration of new technologies into existing systems without disrupting ongoing operations, making it a complex and likely slow process. Enterprises must also develop new skill sets within their workforce, as managing these advanced systems demands a different approach compared to traditional IT environments.

                              Given the degree of change required, incumbents would be well-served to partner with Web3 native firms that have already developed deep knowledge of the new systems. Such a collaborative approach would allow for the preservation of the enterprises’ cultures of success while leveraging a Web3-native perspective.

                              While many enterprises are cautious in adopting blockchain technology, some front-runners are leading the way with innovative applications. IBM has been a pioneer with its IBM Blockchain platform, enabling businesses to create more transparent and efficient supply chains. For instance, IBM has collaborated with Walmart to enhance food traceability, significantly reducing the time required to trace produce origins from seven days to just 2.2 seconds. In the financial sector, JPMorgan Chase has developed Onyx, a blockchain platform that facilitates secure and efficient transactions, along with launching the JPM Coin for instantaneous payments. Maersk in partnership with IBM, has introduced TradeLens, a blockchain-based shipping solution that has onboarded over 150 members, revolutionizing global trade logistics. These trailblazers highlight the transformative potential of blockchain, setting benchmarks for other enterprises to follow.

                              Regulatory Challenges

                              The environment for the oversight of new systems is still catching up, and enterprises must navigate this evolving landscape. Traditional regulatory frameworks were designed with centralized models in mind, and applying these rules to emerging systems often results in legal and compliance ambiguities. Enterprises must ensure compliance with current regulations while anticipating future changes, requiring significant effort and resources.

                              Regulatory bodies are also grappling with understanding and crafting appropriate guidelines for new systems like blockchain, cryptocurrencies, and decentralized finance (DeFi). This uncertainty adds a layer of complexity to the transition, as businesses must remain agile and adaptable to changing compliance requirements. Navigating this regulatory minefield is a key reason why the shift to Web3 is more gradual, as enterprises cautiously move forward to avoid potential legal pitfalls. The pace of change in oversight models will significantly impact the transition to Web3 and is an important part of our thesis for why Web2.5 will be a prolonged period of transition. 

                              The Virtual Assets Regulatory Authority (VARA), the Abu Dhabi Global Market (ADGM) and the Dubai Financial Services Authority (DFSA) in the UAE are at the forefront of global blockchain regulation, setting high standards for the industry. All three regulatory bodies regulate the blockchain industry by implementing robust frameworks that encompass licensing, consumer/ investor protection, and AML (anti-money laundering) measures. They are leading globally by fostering innovation while ensuring regulatory compliance, attracting blockchain businesses through clear legal frameworks and supportive environments conducive to growth and development in the digital assets sector. Together, these bodies are positioning the UAE as a leading hub for blockchain technology, balancing innovation with stringent regulatory oversight. 

                              Technological Maturity

                              Emerging blockchain solutions are still maturing, and enterprises are understandably cautious. While blockchain promises enhanced security, transparency, and efficiency, it also comes with challenges related to scalability, interoperability, and energy consumption.

                              Many blockchain networks are still in the experimental stage, and their long-term viability and performance under large-scale enterprise use are yet to be fully proven. However, recent advancements in consensus mechanisms like proof-of-stake (PoS) to address energy efficiency concerns, and the rise of enterprise-grade blockchain platforms offering enhanced privacy features and smart contract capabilities, as well as reduced transaction cost through layer 2 chains (L2), signal a promising trajectory. For now it seems like most enterprises are still waiting for these solutions to become more robust and secure before fully committing to them.

                              This wait-and-see approach is driven by the need to mitigate risks associated with early adoption, such as technical failures, security vulnerabilities, and integration issues with existing systems. As a result, the prolonged Web2.5 phase allows for the gradual adoption of decentralized systems, providing time for these innovations to evolve and mature.

                              Again, we believe that incumbent institutions can accelerate their pace of learning through partnerships with specialized providers who can create solutions that seamlessly integrate with their existing architecture.

                              Cultural Shifts

                              Transitioning to Web3 isn’t just about embracing new technology; it entails a significant cultural shift within organizations. Web3 challenges traditional approaches to governance and decision-making, requiring more collaborative and participatory models. This shift involves major changes in data management, decision-making processes, and stakeholder interactions within the enterprise.

                              Employees need to be trained to understand and work with new Web3 technologies, which often requires a change in mindset and working habits. Additionally, Web3 emphasizes principles like transparency and community involvement, which can be at odds with established corporate cultures that prioritize confidentiality and control.

                              These cultural adjustments take time, as organizations must create an environment that supports new values and practices. This gradual cultural transformation is a key factor extending the Web2.5 period, as enterprises slowly adapt to the ethos of Web3 while maintaining their operational integrity.

                              Additionally, businesses that rely on established hierarchical structures for strategic decision-making and streamlined operations may find the decentralized approach incompatible with their core processes and objectives. Thus, while decentralization can drive innovation, its application must be carefully assessed against the specific needs and constraints of each business and industry. 

                              Web2.5 and DFDF’s Future of Finance Thesis

                              We believe that the models incubated during this transitional period will be particularly disruptive in the FinTech sector. As incumbents and startups navigate the complexities of moving towards Web3, they are laying the foundation for a reimagined economy.

                              With a focus on developing and integrating new financial solutions that cater to evolving market demands and regulatory landscapes, DFDF’s Future of Finance thesis embraces this disruption. For our specific ideas on how Web3 will impact the SaaS model, take a look at our previous blog post on the future of DAOs as an open source business model. 

                              Hybrid Business Models

                              The idea of a lengthy Web2.5 phase supports the development of hybrid FinTech solutions that combine the stability and user familiarity of traditional models with the innovation and efficiency of decentralized technologies. By maintaining familiar interfaces and structures, businesses can ensure a smoother user experience while gradually introducing decentralized features. Web3 solutions bring innovative possibilities to the table, such as blockchain for immutable accounts and smart contracts for automation. These innovations can significantly enhance efficiency and reduce operational costs.

                              The hybrid model allows businesses to cater to new market demands that require both centralized and decentralized capabilities. For example, a FinTech company might offer a traditional savings account with the added feature of earning interest through decentralized finance (DeFi) protocols. Further, such integrated solutions provide a balanced approach to compliance. While centralized systems adhere to existing regulations, decentralized components can gradually adapt as the regulatory environment evolves.

                              API-ification and Infrastructure

                              A move towards more open and composable architecture, Web2.5 should be accompanied by greater codification of financial primitives. The resulting APIs are expected to enable interactions between traditional financial systems and decentralized services, creating a seamless user experience. For instance, a banking app could use compliant APIs to access blockchain-based payment networks, enabling faster and cheaper cross-border transactions.

                              This is particularly important in regions with hard-to-navigate regulations and fragmented markets. By leveraging codified financial primitives, FinTechs can offer services to underserved populations. For example, APIs could connect a decentralized lending platform to traditional banking services through a single user interface, providing access to credit and transaction accounts for individuals who lack a conventional credit history. This API-ification is a key aspect of DFDF’s Future of Finance thesis and is aligned with Aquanow’s approach to integrating crypto into financial services.

                              Personalizing Consumer Finance

                              Blockchains ensure reliable and transparent transactions. This not only reduces fraud but also increases consumer confidence in digital financial services. Further, using decentralized identity solutions, consumers could control their personal data, enhancing privacy and security. Trust is a cornerstone of financial systems and these new solutions have the potential to reinforce it, especially in regions lacking modern infrastructure and regulations.

                              However, the sensitive nature of the information and services provided means that developments here are likely to be quite slow. The notion of a hybrid phase supports the customization of services for niche markets while enabling platform accessibility.

                              Charting the Path Forward

                              As enterprises move towards Web3, they face complexities in infrastructure, regulation, maturity, and culture. These challenges intertwine with the development of hybrid business models, API-ification, and personalized finance solutions.

                              Hybrid models blend centralized stability with decentralized innovation, ensuring compliance and readiness for future changes. APIs enhance regulatory compliance by facilitating transparent and auditable interactions between systems.

                              Caution surrounds immature systems, but the Web2.5 phase allows these innovations to mature while delivering immediate benefits. Incremental adoption ensures businesses can leverage new advancements without compromising security or reliability.

                              Cultural shifts are essential, and hybrid models gradually introduce new concepts, helping organizations align governance and operations with decentralized principles.

                              Web2.5 will be a critical and prolonged transitional period for integrating decentralized elements into existing frameworks. This phase supports incremental adoption, hybrid models, and gradual cultural and infrastructural changes. By leveraging partnerships with groups that have developed specialized knowledge in these emerging fields, institutions can navigate this period effectively, fostering innovation, sustainability, and growth. This approach ensures a balanced ecosystem and paves the way for a digital economy.

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                                Marketing Against The Norm: Lessons Learnt from Zywa About Organic vs. Paid Marketing

                                Introduction

                                In the realm of startups, moving from an idea to product-market fit is a complex journey. Many startups tend to dive into paid marketing to find their early adopters, burning resources in the process.

                                This problem has been front of mind for Zywa, the go-to financial services provider for Gen Z in the region. Having “crossed the chasm” themselves, the co-founders of Zywa, Alok Kumar, and Nuha Hashem, attribute their growth path to organic marketing instead of paid marketing.

                                In this blog post, we share insights from Alok and Nuha about how startups can implement organic initiatives to help them in their early quest for product-market fit.

                                But First, Why is Product-Market Fit Important?

                                Product-market fit is a quintessential moment in a startup’s journey where the company realizes users actually want to buy the offering. It’s usually a point where enough users become customers — ideally, recurring, loyal customers.

                                Note, though — it’s not a revenue milestone as much as a customer base achievement. Achieving this is important as it is at that point that a founder knows there is enough demand for their product to go after — that the effort they’ll be putting into the business could see a path to profitability, that it would be worthwhile pursuing an ultimate exit.

                                What Does it Take to Achieve Product-Market Fit?

                                To reach this goal post, entrepreneurs typically go down two paths. The first is the path of creating value that solves a significant pain point better than the other options in the market. Meanwhile, the second path provides enough incentive for customers to switch over to using your product instead of whatever else they’re used to. Now, these two paths are not mutually exclusive — they can even comprise two parallel lanes you can hop between quite easily (or better yet, tread down the middle with precise balance).

                                A commonly used booster card by many founders who’ve raised venture funding is to accelerate their journey using turbo-charged paid ads. While the path to product-market fit may be more about the destination than the journey for startups that are very scarce on resources and can’t afford a leisurely journey, the risk of the company crashing and burning is quite high, as Alok and Nuha caution.

                                Paid Ads: Proceed With Caution

                                Alok and Nuha share that paid ads, used in a startup’s early days, give them a hazy view of reaching product-market fit. Seemingly, founders may think they’re at their destination when in fact the goalpost is still far out, barely visible in the distance amidst the fog. Paying for customer attention instead of giving them a product or service they willingly want can lead to the kind of customers you don’t want. That’s the kind that has high churn and low lifetime value, meaning they’re only there for the moment, not the long haul.

                                The reason this is “bad” is because it leads to you having to continue spending more and more marketing dollars without your customer acquisition costs necessarily leveling down as you build your company. After all, getting customers in your early days is hard — there’s no brand equity that customers are bought into, one that they can trust. The assumption is that as you grow your company, you build your brand simultaneously so that eventually, you’d need to spend less on paid marketing — your brand value should be covering some of that marketing spend to help grow your business.

                                Enter Organic Marketing.

                                Zywa’s Philosophy on Taking Early-stage Startups to Market

                                Zywa emphasizes the role of the value proposition in getting to product-market fit. Their motto was to build a business such that its product and user experience would provide such value to their target audience that switching to them would be a no-brainer. In the process, they emphasize always looking out for user behavior and getting continuous customer feedback, and continue to refine the product repeatedly to make it even more “organically” appealing to a wider audience base.

                                Alok and Nuha suggest aiming for a 70% customer retention rate as a key indicator of product-market fit. Next, they suggest refraining from spending on paid marketing until you’ve crossed the million-dollar revenue mark. Once you hit that, you can assume that the market you’re going after is big and sticky enough. Only after that should you consider stepping over to the paid marketing lane, beyond the product-market fit route onto the next destination — growth.

                                Zywa’s Approach to Finding Their Tribe

                                With Zywa’s primary demographic being Gen Z, Alok and Nuha went about their marketing plan with the target audience in mind. You guessed it — they leveraged TikTok big time! In fact, they decided to market to them directly after they first tried to raise awareness about Zywa through universities. Sure, a certain credibility comes with associating yourself with an academic institution, but that doesn’t really sell “cool” as a value proposition, does it? It matters if that’s part of the brand you’re trying to build, which was certainly true for Zywa.

                                And so, Alok and Nuha suggest founders identify exactly the customer demographic they are targeting as customers. Specifically, they suggest that you understand their pain points so deeply, as well as how they’re currently solving for them, so you can create an offer they truly can’t resist. One that you don’t need to make look more attractive with dressing. Something that they organically share with their friends and family.

                                Next, Alok and Nuha suggest that founders research on how their customers consume information. This allows them to know exactly where, when, and how to position their offer to them.

                                Product and Experience Go Hand-in-hand

                                Once you can convince a customer that your product solves their problems, you need to deliver (through your product) and nurture that relationship (through a stellar customer experience). While we’ve already explained the importance of selling value as a product, let’s shift gears to customer experience for a moment.

                                Part of Zywa’s work culture is that all team members perform all types of roles and functions — with handling customer queries being one of them. That way, everyone will get a sense of what their customers actually want. And then they deliver that. On top of that, Zywa makes sure that they provide customer support 24/7. One of the reasons they believe it’s so important to provide this round-the-clock experience is so that they can continuously iterate their product in real-time, no matter the time!

                                Conclusion

                                In conclusion, Zywa’s journey from startup to success offers valuable insights into the organic versus paid marketing debate for aspiring entrepreneurs. Alok and Nuha’s emphasis on building a strong value proposition, understanding customer demographics and pain points, and delivering exceptional customer experiences have proven effective strategies in achieving product-market fit.

                                Their caution against premature reliance on paid advertising echoes the importance of nurturing a loyal customer base before investing heavily in marketing. By balancing organic initiatives and incentives, startups can navigate the growth path more effectively, ultimately setting themselves up for long-term success in the ever-competitive business landscape.

                                If you are a founder passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                                  Excelling as an Entrepreneur: 6 Lessons from Wellx

                                  Introduction

                                  We’re sure you’ve heard that startups face numerous challenges, from getting together the right team, to raising capital and then having the pressure of finding product-market fit for their innovative solution. All this, whilst often believing they need to beat out fierce competition from larger, well-resourced players. Not to mention these challenges are further exemplified with external factors beyond an entrepreneur’s control, such as the economic climate and market volatility.  

                                  For starters, attracting paying customers early in a startup’s journey is not only one of the hardest challenges, but often an expensive one too. Sure, your friends and family might be early adopters of a freemium service, but to attract a wider audience, you have to account for the cost of acquisition — and digital marketing doesn’t come cheap. Even when selling to businesses, getting a corporation to buy in to integrate or embed your services is a tale similar to that of David and Goliath.

                                  So, what does it take as an entrepreneur to excel? 

                                  To excel, in school, means achieving an A. So let’s start with an A, or two A’s: awareness and agility. Founders have to have their ears to the ground, staying on top of the information available to them — for example, competitor insights, market dynamics, and customer feedback — to be able to develop and iterate one solution after another. The most successful founders recognize that small, incremental experimentation is key to utilizing existing capital effectively. 

                                  In this blog post, we explore how Wellx grew its business despite the odds of the difficult-to-penetrate insurance and healthcare industries in the UAE. For context, Wellx is a technology startup in the health, well-being, and insurance space with a unique value proposition to employers and their employees, based on population health analytics and behavioral science. Through embedded gamification and personalized incentivization, Wellx succeeds by driving healthier behaviors, for employees and employers alike to reduce sickness, absenteeism, and insurance premiums. Seems like a win for all, right?

                                  Co-founders Vaibhav Kashyap and Javed Akberali share their experiences, from which we hope that many of you founders reading this will derive lessons learned for you to apply to your business strategies.

                                  Lesson #1: Cautionary Note — Do Not Overpromise

                                  Many founders are people-pleasers, which means they are more likely to fall into the trap of promising too much value or too many features, mistakenly believing that by doing so you will increase customers’ willingness to pay. This approach can potentially jeopardize your business in the long run, internally creating pressure on your employees to deliver at pace and potentially even affecting your brand reputation.

                                  Furthermore, founders often may make concessions — for example, discounting the rack rate price, too quickly; again, in desperation to secure a contract and revenue. Although, in the short term this may help with cash flow, if you provide one customer with a generous deal, there’s a likelihood that they will expect the same discount over the long term. This diminishes their lifetime value, or worse, other customers will expect the same terms, diminishing your business value and ability to attract future profitable business. 

                                  The founders of Wellx, for instance, reflect on their early challenges of financial and mental strain resulting from overcommitting, highlighting the importance of understanding the market first and then managing customer expectations effectively.

                                  Lesson #2: Strategic Direction is Crucial

                                  Whether going to a new networking event, partnering up with a peer, or any of the hundreds of little decisions startups face regularly, everything should revolve around your vision, a future-focused statement detailing what you are trying to achieve. Once you’ve got that clear, the next critical piece is to define how you will get there. Careful consideration and detailing of your mission, strategic objectives, and goals are required.

                                  Losing focus is so very easy in entrepreneurship, where pace and pressure are high, and distractions are plenty. With every decision you make, you should answer one question first, “Does this align with my vision?” If so, then ask yourself, “Where does it fit into my strategy?” If the answer is that it doesn’t, you may need to do the unthinkable and decline. 

                                  With Wellx, their mission revolves around creating healthier, happier, and more resilient communities globally. And so, the founders had an added pull of wanting to give back to society positively too — being global, with a local touch.

                                  With this in mind, their community-focused partnership with Amal Counsel, a local social enterprise, aligned with their mission as a business. Together, they gave their customers access to around-the-clock mental health counseling, as well as a free counseling session for members of the community who couldn’t afford it in normal circumstances.

                                  Lesson #3: Don’t Play the Blame Game

                                  “We didn’t look for blame. If something didn’t work; we tried to understand why; failing fast and learning faster. Blame not only takes time to process but sets you back as a company — we didn’t want our culture to be centered on blame; we chose it to be obsessed with solutions, innovating and solving to drive our customers and our business forward.”

                                  In times when things go wrong, it may feel like time, energy, money, and effort were wasted. It becomes easy to give in to the frustration of it all and look for a scapegoat. But it’s in these circumstances that the company values should influence and govern behaviors.

                                  Recognizing being in a start-up, particularly an early stage one, is challenging. This uncertainty requires each member of the team to develop their own resilience to be able to ride the rollercoaster of entrepreneurship. Wellx’s founders reflect that most entrepreneurs succeed not because of their capabilities, but because of their capacity to stay calm, creative, and collaborative when faced with situations where things don’t quite go as planned. 

                                  Lesson #4: Passion as a Trust-Building Tool

                                  “How do you get other people to believe in what you're doing? It starts with you believing in it yourself and then projecting that excitement, energy, and passion into everything that you say and that you do.”

                                  Passion is contagious. When founders and their team members are genuinely passionate about the mission and vision of the startup, it creates a positivity that inspires — and from there, their enthusiasm becomes a trust-building tool that communicates sincerity and commitment to others. External stakeholders, including investors, partners, and customers, are more likely to trust and support a startup when they witness the authentic passion of those driving it. 

                                  Without genuine enthusiasm for what you’re building and the impact you want to make, stakeholders may question the startup’s ability to survive and thrive.

                                  Lesson #5: Boldness-driven Growth

                                  In the startup ecosystem, being brave, and taking (measured) risks are not just traits, they form the driving force behind entrepreneurial growth. In particular, their ability to problem-solve at pace and adapt plans to drive improved success.

                                  Entrepreneurs fueled by this seek out new perspectives, actively engage with challenges, and view setbacks as opportunities for discovery. This mindset not only propels individual growth but also fosters a culture within the startup that values exploration and embraces the unknown.

                                  An example of an unconventional partnership proposal from Wellx to WHOOP — from a small, aspiring wellness startup to one of a global household name in fitness — demonstrates the benefits of boldness in opening new avenues for growth.

                                  On the other hand, a rigid mindset can backfire in the world of startups. It can stifle collaboration and discourage the “out-of-the-box” thinking that is crucial for breakthrough innovations.

                                  Lesson #6: Humility in Collaboration

                                  Some founders may be hesitant to admit their inexperience, especially to potential partners — afraid of being passed over to someone more experienced. While this thought process may seem rational at first, it fails to account for human nature and the desire to help.

                                  The key, Wellx founders say, is to admit your shortcomings but also admit and show your openness to feedback and be curious to learn. Potential partners may have once been in the same situation — after all, all businesses have had their share of falling on hard times.

                                  Conclusion

                                  Successful entrepreneurship and partnerships hinge on achievable expectations, a clear direction, resilience in adversity, passion, curiosity, and humility. As illustrated by Wellx’s journey, these principles provide a roadmap for startups and partners alike, fostering enduring collaborations in the dynamic business landscape.

                                  If you are a founder who is passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    At our recent 2024 AGM, our CEO Sharif El-Badawi shed light on the evolving dynamics of venture capital at the company’s annual general meeting.

                                    In this blog post, we’ll recap his insights, as presented at the event, offering valuable perspectives for investors, startups, and ecosystem enablers seeking to understand and navigate the new norms of venture capital, particularly in the UAE and the wider Middle East, Africa, and Southern Asia (MEASA) region. We’ll also cover Sharif’s top 5 areas of tech that he’s bullish on, going into 2024. 

                                    The State of Venture Capital Across UAE, MENA, and Beyond

                                    1. Startups: Catalysts for Job Creation and Sustainability

                                    Startups play a crucial role in job creation and sustainability. Data shows that the vast majority of net new jobs come from startups and small businesses, with a majority from innovative small businesses. This number reaches around 60-70% of all jobs in most developed countries according to the OECD.

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    The UAE and Dubai have historically been entrepreneurial hubs, with a significant number of small businesses contributing to the GDP. This trend is consistent with mature markets like the US, where new companies create most of the jobs.

                                    2. MENA vs. Global VC Deal Flow

                                    The MENA region, particularly the UAE, has shown resilience in venture capital activity compared to global trends. 

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    While mature markets experienced a decline in VC deal flow due to economic downturns, the MENA region rebounded sooner and continued to grow. This growth is attributed to government motivation, increased interest rates, inflation pressures, and a robust pipeline of capital.

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    3. UAE Investment Rounds and Exits

                                    The number of UAE investment rounds has plateaued relative to the region, signaling a need for increased focus and resources to sustain growth according to MAGNiTT.

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    However, UAE exits remain healthy, with a history of technology exits since the 1980s. The frequency and size of exits have increased in the last five to seven years, indicating that exits are possible and happening in the region.

                                    4. Sustaining Momentum: The Need for Continued Investment

                                    In 2022, UAE total VC investments reached $1.26 billion. 

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    To sustain momentum, a minimum of $1.31 billion is required in 2024. This underscores the importance of continued investment to support the growth of the venture capital ecosystem in the UAE. This number is poised to balloon to $4 billion by next year if the UAE expects to leap forward.

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    Top 5 Tech Trends Shaping the Future

                                    1. Sustainability and Clean Energy

                                    Sustainability is a core focus for the Dubai Future District Fund, with an emphasis on three lenses: business practices, startup economics, and the planet. The push for sustainability addresses the need for sound underlying economics, responsible growth, and environmental stewardship. Clean energy and sustainability solutions are becoming increasingly vital for the future of the planet.

                                    2. Artificial Intelligence (AI) and Robotics

                                    AI and robotics are poised to revolutionize most industries. These technologies offer the potential to enhance efficiency and effectiveness across a variety of sectors. The focus on AI and robotics aligns with the goal of investing in deep tech and leading-edge technologies to drive innovation in the region.

                                    3. Financial Services and Fintech

                                    The future of finance is a significant area of focus, with fintech playing a crucial role in transforming financial services. The emphasis on fintech includes various subsectors, such as regulation tech and legal tech, which are important for compliance, governance, and data sharing.

                                    4. Healthcare

                                    Healthcare innovation is essential for addressing regional and global health challenges. The focus on digital health, precision medicine, and therapeutics is critical for advancing healthcare solutions. Investing in healthcare innovation is aligned with the goal of improving outcomes and enhancing the quality of care.

                                    5. Agri-tech

                                    Agri-tech is vital for addressing food sustainability and security. Given the unique environmental conditions in the region, technology plays a crucial role in ensuring food supply and sustainability. The focus on agri-tech is aligned with the goal of developing solutions that are relevant and impactful for the region.

                                    Conclusion: Navigating the New Norms

                                    Navigating the New Norms of Venture Capital: Insights From Our CEO at Our 2024 AGM

                                    As the venture capital landscape continues to evolve, stakeholders must remain agile and forward-thinking. Embracing sustainability, focusing on strategic investment areas, and fostering global collaboration will be key to thriving in the new norms of venture capital.

                                    If you are a founder with a passion for building innovative solutions in the Future of Finance or Future Economies industries, or a member of the government interested in being a part of our wider value creation efforts, we invite you to get in touch with us. Together, we can build a sustainable future that leverages the power of technology and entrepreneurship to drive positive change.

                                    A Year in Review

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                                      Annual Report 2023: Fostering an Enduring Ecosystem

                                      Annual Report 2023: Fostering an Enduring Ecosystem

                                      Summary of our 2023 Annual Report

                                      • Portfolio Overview: Direct investments & fund investments
                                      • Value creation & ecosystem development
                                      • 2023 initiatives
                                      • Sustainability & governance
                                      • Introduction to our anchor investors
                                      • Commentary on UAE’s VC ecosystem 2023
                                      • Management’s outlook for 2024

                                      A Year in Review

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                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        Introduction

                                        At our 2024 Annual General Meeting, we hosted a panel discussion that delved into the intricacies of the evolving tech landscape. Moderated by Nader AlBastaki, Managing Director at DFDF, the panel featured the following industry leaders:

                                        In this blog post, we’ll highlight the valuable insights shared by the panelists, ranging across several topics — from government support to adapting to change and embracing digital transformation.

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        1. Government's Role in Tech Startup Growth

                                        A critical theme discussed was the government’s role in facilitating the growth of tech startups. Huda Al-Lawati highlighted the supportive actions taken by GCC governments: 

                                        Our governments in the GCC do a great job. They've catalyzed the sector, funded it, and created ecosystems.

                                        Huda emphasized the importance of strategic verticals and creating forums for discussion, especially in areas like fintech regulation and licensing.

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        Echoing this sentiment, Mahmoud Adi highlighted the pivotal components that serve as the bedrock for entrepreneurial success: a reservoir of talent, access to capital, favorable regulatory frameworks, and expansive markets. He commended the region’s leadership for their visionary approach, which has cultivated a dynamic environment conducive to innovation and commercial advancement.

                                        To further amplify this growth trajectory, he proposed targeted strategies to increase the influx of capital, such as offering incentives to attract international investors and encouraging local financial institutions to diversify their portfolios by including alternative investment managers:

                                         
                                         
                                         

                                        In this region, we are fortunate to have leaders with foresight who consistently push the envelope, affording us the liberty to operate with autonomy and to expand the horizons of our potential.

                                        2. Adapting to Change and Cultivating Resilience

                                        The panelists agreed that adaptability is crucial for startups in today’s rapidly changing market landscape. Jeff Harbach shared his perspective on Dubai’s unique position in the global innovation ecosystem, highlighting its role as a hub that connects different regions and its ability to serve as a sandbox for testing and implementing new technologies:

                                        The UAE has developed a massive spike in this region. And so, what can they do in leveraging this? It is making sure that they continue to be the hub.

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                         Mahmoud Adi emphasized the critical need for a mindset centered on continuous learning and humility among investors and entrepreneurs alike. He urged startup founders to focus on solving substantial challenges, building formidable teams, and maintaining a clear vision, while also being open to adapting their strategies based on market feedback and evolving trends:

                                        To achieve success, it's essential for us to possess the humility required to challenge our own biases and assumptions.

                                        3. Embracing Technology and Digital Transformation

                                        Huda Al-Lawati discussed the significance of digital transformation in traditional sectors, noting that technology adoption is not just about innovation but also about survival in an increasingly competitive landscape. She highlighted the need for businesses to embrace digital tools and platforms to enhance their operations and customer experiences:

                                        It's very important to drive technology into traditional businesses, and the way we do that is invest in them. A lot of our capital, which is growth equity, goes into digital transformation of those businesses.

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        The panelists also touched on the challenges of technology adoption at the enterprise level, where legacy systems and resistance to change can hinder progress. They agreed that fostering a culture of innovation and digital readiness is essential for businesses to thrive in the digital age.

                                        4. Cultivating a Culture of Innovation

                                        The panelists emphasized the importance of nurturing a culture that embraces innovation, encourages risk-taking, and learns from failure. Jeff Harbach highlighted the need for ecosystems to support the constant push for innovation:

                                        The ethos of Silicon Valley is this willingness to innovate, to constantly push the bounds, to constantly change and adapt. That's what needs to happen across any ecosystem.

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        In the context of Jeff Harbach’s comments on Dubai’s unique position in the global innovation ecosystem, Nader highlighted the importance of Dubai’s convening power in attracting talent, startups, and capital to the region. He facilitated a discussion on how Dubai, through initiatives like DFDF, has become a hub that connects different regions and serves as a sandbox for testing and implementing new technologies.

                                        Huda Al-Lawati discussed the necessity of integrating technology into traditional businesses to drive innovation:

                                        A lot of traditional businesses run with very limited or legacy ERPs. It's become a lot easier to adopt and embrace technology.

                                        5. The Importance of Regional Integration

                                        The panelists also discussed the significance of regional integration for tech startups in the Middle East. Huda Al-Lawati highlighted the challenges startups face in expanding across borders:

                                        Regional scale is very important for tech startups.Facilitating the process of being a startup in Dubai and expanding into neighboring markets cross-border — what governments can do to enable that would be very helpful.

                                         

                                        Expanding on the theme of regional integration, Mahmoud Adi underscored the importance of a framework that promotes regional expansion:

                                        How can we effectively extend the regulatory frameworks from the UAE to foster regional synergy? How can we leverage the UAE's soft power, know-how, and influence to implement regulatory passporting that benefits businesses both domestically and regionally? The region is poised to cement its position as a beacon of entrepreneurial and investment excellence.

                                        Conclusion: Building a Sustainable Future

                                        Creating a Sustainable Ecosystem for Tech Startups in Dubai: Key Insights from our AGM

                                        The insights shared by the panelists at our Annual General Meeting underscore the importance of collaboration, adaptability, and innovation in shaping the future of tech startups and the broader economy. As we navigate the challenges and opportunities ahead, the role of government, investors, and entrepreneurs in fostering a supportive ecosystem for growth and development cannot be overstated.

                                        If you are a founder with a passion for building innovative solutions in the Future of Finance or Future Economies industries, or a member of the government interested in being a part of our wider value creation efforts, we invite you to get in touch with us. Together, we can build a sustainable future that leverages the power of technology and entrepreneurship to drive positive change.

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                                          Dubai Future District Fund Sets New Course for Sustainability and Innovation at Annual General Meeting 2024

                                          “صندوق حي دبي للمستقبل” يستعرض إنجازاته ورؤيته المستقبلية لتمكين ريادة الأعمال وتمويل الشركات الناشئة

                                          دبي، 06 مارس 2024: انعقدت اليوم في “متحف المستقبل” أعمال اللقاء السنوي الثاني لصندوق حي دبي للمستقبل بهدف استعراض نتائج الأداء السنوي للعام 2023، وذلك في إطار حشد الجهود وتعزيز مستوى الدعم المقدم من قبل القطاعين العام والخاص لتعزيز المنظومة الابتكارية لدولة الإماراات العربية المتحدة عبر تفعيل الاستثمارات الاستراتيجية للمشاريع. كما تم الاطلاع على الدعم المقدم لمصممي المستقبل من رواد الأعمال والمبتكرين والشركات الناشئة والتكنولوجية في دبي والعالم، وآليات تمكينهم من توسيع الأعمال على النطاق المحلي والإقليمي والعالمي انطلاقاً من دبي، والحوافز التي توفرها الأسواق المالية في الإمارة لتلك المشاريع والشركات لإدراج نفسها والاستفادة من فرص التمويل الواعدة في دبي

                                          وعرض اللقاء السنوي الثاني لصندوق حي دبي للمستقبل، الذي أطلقه سموّ الشيخ مكتوم بن محمد بن راشد آل مكتوم، النائب الأول لحاكم دبي نائب رئيس مجلس الوزراء وزير المالية رئيس مركز دبي المالي العالمي، في نوفمبر 2021، وتشرف عليه مؤسسة دبي للمستقبل وسلطة مركز دبي المالي العالمي، محطات رئيسية حققها الصندوق ودوره في تمكين رواد الأعمال والشركات الناشئة في مجال التكنولوجيا وتشجيعهم على الإدراج مستقبلاً في أسواق دبي المالية.

                                          .

                                          وقدم اللقاء صورة عامة عن أبرز استثمارات الصندوق، الذي يبلغ رأسماله الأولي مليار درهم، والتي وصلت في الوقت الراهن إلى أكثر من 25 مشروعاً استثمارياً منذ تأسيسه؛ بما في ذلك 14 استثماراً جديداً خلال العام الماضي؛ خمسة منها في شركات ناشئة، إلى جانب ستة استثمارات تعتمد النهج الابتكاري للارتقاء بمستقبل القطاع المالي وقطاعات اقتصادات المستقبل في دبي، ودعم ثلاث شركات في إطار الاستثمار والرعاية اللاحقة.

                                          وأعلن “صندوق حي دبي للمستقبل” في وقتٍ سابق من العام الماضي تخصيص  ما يصل إلى 20% من رأسماله البالغ مليار درهم لدعم شركات التكنولوجيا والابتكار الناشئة والسريعة النمو القائمة على الاستدامة. يشير التعاون إلأى الالتزام المتواصل لتفعيل مستهدفات دولة الإمارات في مجال الاستدامة  وانسجاماً مع أهداف رؤية “نحن الإمارات 2031″ الهادفة إلى رفع الناتج المحلي الإجمالي للدولة إلى 3 تريليون درهم بحلول عام 2031.

                                          وحضر اللقاء معالي عبدالله بن طوق المري، وزير الاقتصاد، ومعالي عمر بن سلطان العلماء، وزير دولة للذكاء الاصطناعي والاقتصاد الرقمي وتطبيقات العمل عن بعد،وسعادة عيسى كاظم، محافظ مركز دبي المالي االعالمي وعضو لجنة الإشراف على صندوق حي دبي للمستقبل، وسعادة خلفان جمعة بلهول، الرئيس التنفيذي لمؤسسة دبي للمستقبل، رئيس مجلس إدارة صندوق حي دبي للمستقبل، وعارف أميري، الرئيس التنفيذي لسلطة مركز دبي المالي العالمي وعضو مجلس إدارة صندوق حي دبي للمستقبل، وشريف البدوي، الرئيس التنفيذي لصندوق حي دبي للمستقبل، وتخلل الحدث كلمات رئيسية ألقاها عدد من الرؤساء التنفيذيين ورواد الأعمال والمستثمرين والخبراء والشخصيات العالمية الذين بحثوا فرص التعاون المشترك في تعزيز الابتكار وتبني تطبيقات التكنولوجيا الحديثة والتعرف على خطط الصندوق.

                                          عبدالله بن طوق: يجب مواصلة التركيز على تفعيل فرص نوعية غير مسبوقة تؤسس لاقتصاد مستقبلي متنوع مستدام

                                          وقال معالي عبدالله بن طوق المري، وزير الاقتصاد، في كلمته الرئيسية التي ألقاها أمام اللقاء السنوي الثاني لصندوق حي دبي للمستقبل بعنوان “الاستدامة في التمويل والمناخ“، إن دولة الإمارات تواصل تحقيق هدفها الاستراتيجي الرامي لمضاعفة حجم اقتصادها ورفع ناتجها الإجمالي الوطني وذلك بدعم من القيادة الرشيدة، عبر التحوّل لاعتماد نهج اقتصادي مستدام يقوم على محاور رئيسية في مقدمتها التركيز على البحث والتطوير والابتكار، ودمج التوجهات العالمية الحديثة، ودعم التعاون والمنافسة في القطاع الخاص لتسريع عجلة الابتكار، وتعزيز الاستفادة من نقاط القوة والتميّز، وتمكين نجاح الشركات الناشئة وتمهيد الطريق أمام الجديدة منها، بموازاة تكريس مقومات الاستدامة في نمو القطاعات الاقتصادية كافة.

                                          وأشاد معاليه بالدور التمكيني الذي يلعبه “صندوق حي دبي للمستقبل” في تفعيل فرص اقتصادية نوعية غير مسبوقة تؤسس لاقتصاد مستقبلي متنوع مستدام النمو يعزز تنافسية الدولة ويحفز قطاعاتها الاقتصادية على مواصلة الابتكار وجذب الاستثمارات الجريئة.

                                          خلفان جمعة بلهول: “صندوق حي دبي للمستقبل” داعم مؤثر في تنمية فرص الاقتصاد المستقبلي في دبي وتمكين ريادة الأعمال

                                          وأكّد سعادة خلفان جمعة بلهول، الرئيس التنفيذي لمؤسسة دبي للمستقبل رئيس مجلس إدارة صندوق حي دبي للمستقبل،فيكلمتهأماماللقاء،أندبيتواصلدورهاكمختبرعالميمفتوحلتقنياتالمستقبلوفرصالاقتصادالجديد،وهيتوفرمنصةدوليةلتسليطالضوءعلىالفرصالاستثماريةالواعدةكصلةوصلبينأصحابالأفكارالمستقبليةالإبداعيةوالممولينوالمستثمرينوالمهتمينبمشاريعتصميمالمستقبلوصناعته،

                                          وأضاف: “شكّل ‘صندوق حي دبي للمستقبل’ منذ إطلاقه حافزاً عملياً وداعماً مؤثراً لتنمية فرص الاقتصاد الجديد في دبي، كونه يدعم الشركات الناشئة الواعدة ويدعم روّاد الأعمال من خلال تسهيل تمويل مشاريعهم المبتكرة انطلاقاً من دبي رائدة مدن المستقبل“.

                                          عارف أميري: دبي مركزاً إقليمياً وعالمياً رائداً لقطاع التمويل والابتكار، وتسهم في تمكين وتسريع الأعمال لتحقيق المزيد من النمو

                                          بدوره، قال عارف أميري، الرئيس التنفيذي لسلطة مركز دبي المالي العالمي وعضو مجلس إدارة صندوق حي دبي للمستقبل، ” مع مواصلة مركز دبي المالي العالمي لمسيرة الإنجازات عبر تعزيز مكانة دبي مركزاً إقليمياً وعالمياً رائداً لقطاع التمويل والابتكار، فأن التعاون مع منصة تُمكّن النمو على غرار ‘صندوق حي دبي للمستقبل’، يُعد بالتأكيد التوجه الأمثل للاستفادة من فرص التمويل الاستثنائية، ومن المراكز عالمية المستوى التي تدعم تفعيل واحتضان الأفكار وتسريع الأعمال والحلول عبر استقطاب ألمع وأفضل العقول للارتقاء بمستقبل القطاع نحو آفاق جديدة. كما يضمن اعتماد هذا النهج تشكيل منظومة بيئية متكاملة تجسد علامة فارقة تدعم  وتوجد تأثير حقيقي على المستوى الاجتماعي والاقتصادي يتوافق مع الرؤية المستقبلية لقيادتنا الرشيدة.”

                                          شريف البدوي: “صندوق حي دبي للمستقبل” يوفر مجموعة من التمويلات والتسهيلات والفرص الواعدة للأعمال الناشئة

                                          من جهته، لفت شريف البدوي، الرئيس التنفيذي لصندوق حي دبي للمستقبل، خلال استعراضه لأبرز إنجازات الصندوق إلى أن “صندوق حي دبي للمستقبل” يدعم إرساء دعائم أكبر منطقة لصناعة الاقتصاد الجديد في الشرق الأوسط، من خلال توفير التمويلات والتسهيلات والفرص الواعدة للأعمال، بحيث يمكن للشركات الناشئة بدء رحلتها للإدراج في الأسواق المالية بدبي بمساعدة من الصندوق، بما يمكّن رواد الأعمال وأصحاب المشاريع المستقبلية الناشئة من جهة ويعزز ثقة المستثمرين من جهة ثانية، ويرسخ أيضاً موقع دبي الريادي كوجهة مفضلة لتأسيس وتنمية وتوسع المشاريع الناشئة والواعدة محلياً وإقليمياً وعالمياً.

                                          منظومة مستدامة في دبي

                                          وأجمع كلٌ من جيف هارباك عضو لجنة صندوق حي دبي للمستقبل، وهدى اللواتي، المؤسسة والرئيسة التنفيذي لألف كابيتال، ومحمود عدي، الشريك المؤسس في “شروق بارتنرز” في جلسة نقاشية أدارها نادر البستكي، المدير الإداري في صندوق حي دبي للمستقبل، بعنوان “منظومة مستدامة لشركات التكنولوجيا الناشئة في دبي” على أهمية تحقيق كافة معايير الاستدامة في توفير البيئة الحيوية الداعمة لشركات التكنولوجيا الناشئة التي تتأسس وتنمو وتتوسع من دبي إلى المنطقة والعالم.

                                          من كرة القدم إلى ريادة أعمال استدامة

                                          وتفاعل حضور اللقاء مع الحوار المتميز بعنوان “التحوّل الأخضر” مع لاعب الكرة الفرنسي المخضرم ماتيو فلاميني، الذي لعب لفترة طويلة في صفوف نادي “أرسنال” لكرة القدم، حيث تحدث عن محطات رحلته من الرياضة المدرسية إلى أندية كرة القدم العالمية وصولاً إلى نادي أصحاب المليارات الذين يوظفون ثرواتهم في دعم مسارات التنمية المستدامة والتحول نحو الاقتصاد الأخضر على مستوى العالم.

                                          صندوق لتمويل المستقبل

                                          ويمثل «صندوق حي دبي للمستقبل» إحدى المبادرات التطويرية التي أعلنت عنها اللجنة العليا لتطوير أسواق المال والبورصات في دبي، برئاسة سموّ الشيخ مكتوم بن محمد بن راشد آل مكتوم، النائب الأول لحاكم دبي نائب رئيس مجلس الوزراء وزير المالية رئيس مركز دبي المالي العالمي، لدعم الأفكار المبتكرة والمشروعات الواعدة، وتطوير حلول ومنتجات وخدمات جديدة انطلاقاً من دبي. ويركّز الصندوق في استراتيجيته على تقنيات صاعدة محورية في هيكلة اقتصادات المستقبل، مثل الذكاء الاصطناعي، والروبوتات، وتحليل البيانات، والحوسبة السحابية، وإنترنت الأشياء، والواقع المعزز، والجيل الخامس لشبكات الاتصال، والأمن السيبراني، وتقنية “بلوك تشين” وغيرها.

                                          لتبقى على اطلاع على أخبارنا، يرجى الاشتراك في نشرتنا الإخبارية

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                                            Dubai Future District Fund Sets New Course for Sustainability and Innovation at Annual General Meeting 2024

                                            Dubai Future District Fund Sets New Course for Sustainability and Innovation at Annual General Meeting 2024

                                            Dubai, UAE – March 06, 2024: The Dubai Future District Fund (DFDF), established by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, and President of the Dubai International Financial Centre (DIFC), and co-anchored by Dubai International Financial Centre and Dubai Future Foundation (DFF), today held its Annual General Meeting (AGM) on 2023 performance at the Museum of the Future in Dubai, uniting efforts between public and private sectors to amplify the UAE’s innovation ecosystem through strategic venture investments.

                                            The DFDF AGM serves as a cornerstone for reviewing the Fund’s remarkable progress in its second year of operation, and attracted distinguished attendees, including government officials, investors, and top executives from leading national corporations, including His Excellency Abdullah bin Touq Al Marri, UAE Minister of Economy; His Excellency Omar Al Olama, UAE Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications; His Excellency Essa Kazim, Governor of DIFC and Member of the DFDF Oversight Committee; His Excellency Khalfan Belhoul, Chairman of the DFDF Board and CEO of DFF; Arif Amiri, Chief Executive Officer of DIFC and member of the DFDF Board; and Sharif El-Badawi, CEO of DFDF.

                                            The AGM included keynotes from high-profile attendees and panel discussions with entrepreneurs, investors, and thought leaders, covering collaborative initiatives driving innovation, adopting new technologies, further delving into the Fund’s forward-looking strategies.

                                            In his keynote speech on “Sustainability in Finance and Climate”, His Excellency Abdullah bin Touq Al Marri, UAE Minister of Economy, said: “In pursuit of its strategic goal, the UAE, under the directives of its wise leadership, aims to double the national economy’s gross domestic product over the next decade. The Ministry of Economy, alongside its partners, is dedicated to achieving this objective, focusing on sectors such as the circular economy, sustainability, and entrepreneurship. In these sectors, the UAE has crafted a sustainable economic strategy grounded in foundational pillars such as research and development, innovation, and technology.”

                                            His Excellency added: “The UAE is focused on activating opportunities within the circular economy, clean energy, smart transportation, sustainable aviation, and agricultural technology sectors with the aim of transitioning towards a diversified, knowledge-based economy. The UAE offers a number of incentives and initiatives to support small and medium-sized companies and venture capitalists in the green economy sectors. In addition, it supports strengthening partnerships and enhancing the private sector’s competitiveness to foster innovation.”

                                            In his remarks, His Excellency also commended DFDF for its critical role in unlocking high-quality economic opportunities, driving the creation of a diverse and sustainable economy. He highlighted how these efforts boost the nation’s competitiveness and encourage ongoing innovation and substantial investments across various sectors.

                                            The ambitious ‘We the UAE 2031’ strategy aims to double the UAE’s GDP to AED 3 trillion by 2031, focusing on social, economic, investment and development aspects to enhance its global economic influence and attractiveness. It presents a unified strategy for government and private sector collaboration to foster development, support leading companies, and encourage new ventures, all while integrating sustainability across all economic activities.

                                            During the meeting, DFDF outlined its significant contributions to enhancing Dubai’s venture capital landscape. With an initial allocation of AED 1 billion, the Fund has been instrumental in energising the local venture ecosystem. It has made strategic investments across 14 start-ups and funds, comprising 5 new start-ups, 3 follow-on investments, and 6 fund commitments. In total, DFDF has supported over 25 projects, leading to a substantial broadening of its investment portfolio and achieving an impressive 84 per cent increase in talent within these ventures.

                                            DFDF also allocated 20 per cent of its AED 1 billion fund to help accelerate sustainable technology and innovation start-ups and scale-ups. The progress further underscores the Fund’s commitment to the UAE’s sustainability objectives and the ambitious ‘We the UAE 2031’ strategy to escalate the nation’s GDP to AED 3 trillion by 2031.

                                            The AGM further underscores DFDF’s vital role in cementing the UAE’s reputation as a global economic leader and a thriving landscape for innovative tech start-ups. By prioritising advanced technologies such as AI, robotics, and blockchain, DFDF is crafting a foundation for a sustainable, diversified global economy.

                                            His Excellency Khalfan Belhoul, Chairman of the DFDF Board and CEO of DFF underscored Dubai’s enduring commitment as a global hub for future technologies and novel economic ventures. He hailed DFDF as a key player in connecting innovative thinkers with financial backers, thereby acting as a dynamic engine for new economic opportunities in Dubai by supporting entrepreneurs and their visionary projects.

                                            During his welcome remarks, Arif Amiri, Chief Executive Officer of DIFC and member of the DFDF Board emphasised Dubai’s appeal to regional and international companies, attributing this to its dynamic, supportive business environment and future-forward infrastructure. He noted that initiatives like DFDF are instrumental in nurturing companies focused on future economies and technology, positioning Dubai as a nurturing ground for ambitious projects by attracting significant investments and top talent.

                                            Mr. Amiri said: “As DIFC continues to drive forward Dubai’s position as a leading global hub for finance and innovation, collaboration with growth enablers such as the DFDF are alpha and omega to provide access to funding, world-class platforms for ideation, incubation, acceleration, and by attracting the brightest minds to future-proof the sector. This approach ensures the creation of a vibrant ecosystem that supports socio-economic impact and aligns with the long-term vision of our leadership.”

                                            Sharif El-Badawi, CEO of DFDF, highlighted the Fund’s pivotal role in establishing the Middle East’s leading region for the new economy industry. By offering financial support and business opportunities, DFDF aids emerging companies in their journey towards listing on Dubai’s financial markets. This, in turn, boosts investor confidence and cements Dubai’s status as a premier location for the development and expansion of innovative projects on a local, regional, and global scale. “This year’s AGM was a testament to our ongoing commitment to sustainable financial growth and to making a tangible impact on the environment and society”, Mr. El-Badawi said.

                                            In the “Creating a Sustainable Ecosystem for Tech Startups in Dubai” panel session, moderated by Nader Albastaki, Managing Director of DFDF, Jeff Harbach, DFDF IC member and CEO of Kauffman Fellows; Huda Al Lawti, Founder and CEO of Aliph Capital; and Mahmoud Adi, Founding Partner at Shorooq Partners, explored the crucial aspects of fostering a supportive environment for technology companies emerging in Dubai, aiming for regional and global expansion.

                                            During a panel session titled “Flamini’s Green Revolution: Championing Sustainability, Innovation, and Legacy”, former Arsenal player and GF Biochemicals Co-founder Mathieu Flamini shared his transition from sports to advocating for a green economy, emphasising the role of wealthy investors in promoting sustainable development paths worldwide.

                                            DFDF continues to champion innovative technology startups, driving them towards additional funding and nurturing a flourishing venture ecosystem. With a strategic focus on emerging technologies, DFDF is poised to play a pivotal role in shaping future economies and reinforcing Dubai’s position as a leading hub for promising projects both locally and internationally.

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                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Introduction

                                              In the heart of the vibrant Sharjah Entrepreneurship Festival, a panel discussion took place, offering valuable insights crucial for the journey ahead of startup founders navigating the intricate world of venture capital fundraising in 2024.

                                              Titled “Hacking the Fundraising Journey,” the panel brought together luminaries from the venture capital world: Sharif El Badawi, CEO of Dubai Future District Fund (DFDF); Khaled Talhouni, Managing Partner at Nuwa Capital; and Luma Fawaz, CEO at Oasis 500, moderated by Erika Welch, Editor at Lucidity Insights.

                                              The discussion was rich with insights, strategies, and reflections on the current state and future of venture capital engagement. In a world where every pitch and partnership can pivot the path of a startup, understanding the nuances of this interaction becomes pivotal. This blog post distills the essence of that conversation into practical, actionable advice for founders looking to court venture capital effectively in the year ahead.

                                              “Some advice to anyone who is fundraising is to actually invite total brutal honesty.”

                                              Erika Welch

                                              This blog post aims to empower founders with the wisdom shared by seasoned investors at SEF, preparing them to make the most of their fundraising endeavors in the dynamic year ahead.

                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Embracing the Venture Ecosystem

                                              Understanding the ecosystem within which VCs operate is crucial for any founder. The conversation at the festival illuminated how the venture ecosystem in 2024 has evolved, becoming more specialized and segmented.

                                              This diversification means founders must identify and engage with investors whose focus aligns with their startup’s domain, stage, and values. Founders are encouraged to research deeply, leveraging platforms like Crunchbase and AngelList, to map out potential investors’ portfolios and investment theses.

                                              “If you don't start with that foundation of pipelining, identifying, and understanding what they invest in, you're going to go in and it's going to be very tone deaf, and it's going to be a terrible experience for both sides."

                                              Sharif El Badawi

                                              The Early Bird Connects

                                              Building relationships with potential investors long before the fundraising round cannot be overstressed. Casual coffee meetings, industry forums, and even brief exchanges on social media can lay the groundwork for more formal future engagements.

                                              “When you've done your homework and socialize this for months, let's say before you even start your first pitch, you become part of a community that gives you closer access or a network.”

                                              Sharif El Badawi

                                              The panel emphasized the value of authenticity and mutual interest in these early interactions, suggesting that founders should seek advice, feedback, and market insights to naturally evolve these relationships into potential funding conversations.

                                              “Your first hurdle as a founder looking to raise money is to get a solicited introduction. Meaning, find someone who knows the VC or interested in the question, and then have that person introduce you. I think that's a great way to kind of get a warm introduction to a VC and get to the head of the queue.”

                                              Khaled Talhouni

                                              Solving Problems with Innovation

                                              The core of any startup’s pitch to investors is the problem it aims to solve and the innovation it brings to the table. However, the panelists pointed out that genuine innovation extends beyond technology — it encompasses innovative business models, market entry strategies, and user engagement techniques.

                                              Founders should articulate how their solution creates value, disrupts existing markets, or addresses underserved needs with clarity and conviction.

                                              “You're looking at businesses reshaping their industries, reshaping the entire market with a huge addressable consumer base. So that's what we're really looking for at the outset, and everything flows from that. So whether it's capital efficiency or unit economics, those become tertiary to this kind of big problem idea. And that's what we're really, really looking for."

                                              Khaled Talhouni
                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Data-Driven Storytelling

                                              While storytelling remains an art, grounding narratives in data is what transforms a pitch into a compelling investment case. The importance of metrics — user growth, engagement rates, lifetime value, and burn rate — was highlighted, with a focus on how these metrics tell a story of past growth and future potential.

                                              Founders are advised to present data transparently, acknowledging challenges and how they plan to address them, thereby building trust with potential investors.

                                              “We can tell from the first moment we meet you, you're not speaking the language of that sector or industry you claim to be able to disrupt — in 30 seconds. We know right away. You're not saying the metrics that everybody in that industry speaks. You're not understanding the problems close enough.”

                                              Sharif El Badawi

                                              Flexibility and Resilience

                                              “The idea you start with, the business you start with at the pre seed or very early stage, tends not to be what the business you end up with at the end. And what you're really betting on is the ability of the founder to kind of build and evolve and navigate that.”

                                              Khaled Talhouni

                                              Adaptability in strategy and resilience in execution are qualities that investors value highly, especially in the face of 2024’s dynamic market conditions.

                                              “We are out of the frothy 2020-2021 days where all the VCs had FOMO and checks, and money was growing on trees, and every startup seemed to be able to fundraise. We are seeing high interest rates. Capital is expensive. There are governance issues that are coming to play. Valuations of startups are plummeting. We are in a bit of a VC winter that we don't know when it's going to end.”

                                              Erika Welch

                                              The panelists shared stories of startups that pivoted successfully in response to feedback or market changes, illustrating the importance of flexibility. Founders should be prepared to discuss past pivots or strategy adjustments and the rationale behind those decisions, showcasing their ability to navigate uncertainty.

                                              “You should be in love with the problem because you can always pivot, you can always change. It’s the problem that I care about.” - Luma

                                              Luma Fawaz
                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Investor Alignment

                                              “Before you come and say, ‘I have a great idea, will you fund me?’ The expectation is that you're going to grow 20 to 30% per month, month over month. That's what we would look at.”

                                              Sharif El Badawi

                                              A significant part of the fundraising journey is identifying and engaging with investors who share a startup’s vision and values. The conversation stressed the importance of understanding an investor’s portfolio strategy, sector preferences, and investment horizon. Founders should tailor their pitches to highlight how their startup aligns with the investor’s goals, potentially leveraging case studies or analogies with successful portfolio companies.

                                              “If you are asking for VC funding, you're also committing to a higher level of governance, reporting. You're actually saying, ‘I'm going to do a lot more work to run my business in a certain way in order to be responsible to my investors.’”

                                              Erika Welch

                                              Crafting the Perfect Pitch

                                              The art of the pitch evolves continually, and in 2024, it demands a balance of passion, precision, and pragmatism. Founders must hone their ability to succinctly articulate their vision, the problem they’re solving, their solution’s unique value proposition, and the market opportunity.

                                              “I love the analogy of treating fundraising like a sales process. If anybody has ever done sales in their life — to do sales well, you prospect, you prioritize your target list, you segment them perhaps. You understand each of them and their motivations and who the buyer is and what do they need, and you speak in their language. And then you go after it and you start to pitch. Fundraising is very similar.”

                                              Sharif El Badawi
                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Engaging storytelling that weaves together the startup’s journey, team dynamics, and customer testimonials can make a pitch memorable. Additionally, addressing potential risks and mitigation strategies upfront can demonstrate strategic foresight and maturity.

                                              “I meet a lot of founders who are raising money for the first time, and I think that there needs to be this sort of mental switch when you take on third party capital, when you take on money from somebody else. You're still the driving force of the company, but the minute you bring in outside capital, it's not your company alone. I think some founders struggle with that concept.”

                                              Khaled Talhouni
                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Cultural Fit and Beyond

                                              The chemistry between founders and investors extends beyond the boardroom — it’s about shared beliefs, ethics, and visions for the future. The panelists shared anecdotes highlighting how cultural fit and shared values have underpinned some of the most successful founder-investor partnerships.

                                              Founders are encouraged to seek out investors who are not just financial backers but true partners in their entrepreneurial journey.

                                              “This is what smart money is, right? Strategic advisors that are not just giving you $50,000 or $100,000 but they are actually giving you access and building on your business.”

                                              Erika Welch
                                              Hacking the Fundraising Journey: A Recap from Our Panel Discussion at SEF

                                              Conclusion

                                              The insights from the “Hacking the Fundraising Journey” panel at the Sharjah Entrepreneurship Festival offer a roadmap for founders navigating the fundraising landscape in 2024. By understanding the venture ecosystem, building early relationships, articulating their value proposition with clarity, and aligning with the right investors, founders can position themselves for success in the increasingly competitive and complex world of venture capital.

                                              “I think the worst of it is now behind us. I think this quarter we saw a frenzy of activity in the first few weeks of January. This was attested by many of the other VCs as well. We saw two mega rounds last quarter and we only expect Q2, Q3, Q4, this year to be up, up, up in terms of deployment.”

                                              Sharif El Badawi

                                              This extended guidance not only equips founders with the knowledge to make informed decisions but also prepares them for the evolving dynamics of investor engagement. Through proactive relationship building, strategic alignment, and a clear articulation of their value proposition, entrepreneurs can enhance their attractiveness to potential investors. In doing so, they contribute to a vibrant, innovative startup ecosystem that thrives on mutual respect, shared vision, and collaborative success.

                                              The path to successful fundraising is multifaceted, requiring meticulous preparation, strategic positioning, and a deep understanding of the venture capital landscape. By synthesizing the wisdom shared by the panelists, we hope that this blog served as a comprehensive manual for founders on their journey to secure venture capital in 2024.

                                              Founders are encouraged to approach fundraising with a mindset of partnership, viewing investors not merely as financial backers but as strategic allies who can provide invaluable support beyond capital.

                                              If you are a founder who is passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                                                DFDF blog header featuring Mustafa Koita, Hassan Jafer, and Nader Al Bastaki at SEF

                                                Feeling the Fear, Building It Anyway: A Recap from Our Panel Discussion at SEF

                                                Introduction

                                                In a world where the only constant is change, the Sharjah Entrepreneurship Festival panel titled “Feeling the Fear, Building It Anyway: Startup Founders’ Perspectives” offered an intimate glimpse into the heart of entrepreneurship.

                                                Moderated by Nader Al Bastaki, Managing Director at Dubai Future District Fund, the session featured Mustafa Koita, the visionary founder of Koita Foods, and Hassan Jaffar, the strategic mind at Jaffar Ventures.

                                                “Entrepreneurship, as we know it is both, financially, and in terms of social impact, a high risk endeavor. The statistics are 9 out of 10 fail. And that very statistic creates a feeling of unease when we go into building and starting ventures.”

                                                Nader Al Bastaki

                                                For founders embarking on this journey, the insights shared by Koita and Jaffar offer a roadmap for navigating the uncertainties of startup life with resilience, adaptability, and a clear vision. This conversation peeled back the layers of startup glamor to reveal the gritty, emotional, and often turbulent journey of building a business from the ground up.

                                                The Psychological Battleground of Entrepreneurship

                                                “I think fear is part of the entrepreneur journey. You have to have an element of that.”

                                                Mustafa Koita

                                                Entrepreneurship is as much a psychological journey as it is a business venture. The panelists shared their personal stories of doubt, fear, and the internal battles faced when stepping into the unknown. This segment of the discussion highlighted the importance of mental resilience, self-awareness, and the ability to harness fear as a driving force rather than a barrier to innovation and growth.

                                                “You have to be persistent and it's a key trait, but you have to marry that persistence with honesty about what's working and what's not working.”

                                                Hassan Jaffar
                                                DFDF blog image featuring Mustafa Koita, Hassan Jafer, and Nader Al Bastaki at SEF

                                                “I look back at my past history — my personal life and professional life — and remind myself of how many times I overcame stuff, and that would be like, ‘Hey, here's a problem. I got through two or three in the past. I can do this.”’ And that gave me some confidence.”

                                                Mustafa Koita
                                                Feeling the Fear, Building It Anyway: A Recap from Our Panel Discussion at SEF

                                                Building Resilience Through Community and Mentorship

                                                A key takeaway from the discussion was the invaluable role of community and mentorship in building resilience. The founders shared how relationships with mentors, peers, and even competitors provided crucial support, advice, and sometimes the harsh truths needed to navigate the ups and downs of startup life. This narrative underscores the significance of building a strong support network that can offer guidance, encouragement, and perspective in times of need.

                                                “You need a good peer group that can help support you. In my case, it was partially peer group, and then part of it was myself and how I was built and how I dealt with challenges.”

                                                Mustafa Koita

                                                Learning from Failure: The Foundation of Success

                                                “You have to be very honest with yourself about what works and what doesn't work.”

                                                Hassan Jaffar

                                                Perhaps one of the most impactful themes of the panel was the perspective on failure. Both Koita and Jaffar spoke candidly about their failures, emphasizing that each setback was a stepping stone toward greater understanding and success.

                                                “Just being able to navigate that through honest conversations and being honest with yourself about what needs to be done and taking the hard decisions. I think it ends up being extremely important.”

                                                Hassan Jaffar
                                                Feeling the Fear, Building It Anyway: A Recap from Our Panel Discussion at SEF

                                                The conversation delved into how these experiences shaped their strategic decisions, refined their business models, and ultimately strengthened their leadership skills.

                                                Founders are encouraged to embrace failure as an essential part of the learning process, fostering a culture within their startups that views setbacks as opportunities for growth.

                                                Adapting to Change: The Entrepreneur's Superpower

                                                In today’s rapidly evolving market landscape, adaptability is not just an advantage — it’s a necessity. The panelists discussed their experiences with pivoting business models, entering new markets, and redefining product offerings in response to changing consumer needs and global trends.

                                                “Pivoting to us is not just about finding something and making the move. There's also an element of letting go of the old position or business plan that you had.”

                                                Mustafa Koita

                                                This adaptability extends beyond business strategy to personal growth, requiring founders to continually reassess their assumptions, learn new skills, and remain open to change.

                                                “Each pivot, we learned something and we used those learnings to feed into the next pivot. As that cycle continued, by the third pivot, we had taken the learning from the previous two iterations, and the third iteration is what helped us get to the final outcome, where we were confident that this is gonna work. I think it was a process of learning through those iterations.”

                                                Hassan Jaffar

                                                The Art of Letting Go

                                                One of the more poignant lessons from the panel was the art of letting go. Whether it’s relinquishing control to bring on expert team members, abandoning a product that doesn’t fit the market, or pivoting from a cherished business model, the ability to let go is crucial. The founders shared how learning to detach from ego and preconceived notions.

                                                “A key point of failure is being able to let go and move on to the next thing.”

                                                Nader Al Bastaki
                                                Feeling the Fear, Building It Anyway: A Recap from Our Panel Discussion at SEF

                                                “We've made so many mistakes in our 10 year career and we've pivoted — we've just learned how to let go a lot easier. I can let go more without the ego issues coming up.”

                                                Mustafa Koita

                                                Nurturing a Culture of Innovation and Resilience

                                                Creating a culture that embraces innovation, encourages risk-taking, and learns from failure is essential for startup resilience. The panelists shared strategies for building such a culture, including open communication, celebrating small wins, and creating a safe space for team members to share ideas and failures. This culture fosters a sense of belonging and commitment, driving teams to innovate and push boundaries.

                                                “There are definitely two types of failures. There is failure where you just fail because you didn't put in the effort, and that's not the type of failure you want to encourage, and that's definitely the type of failure that you would absolutely be rightful to be upset about. But then there's a failure where you gave it everything you have, you tried everything you can, you did your best and you still failed — and those are the best learning journeys you have, and you definitely want to encourage those types of failures and get your culture to be revolving around that.”

                                                Hassan Jaffar

                                                Conclusion: The Journey is the Reward

                                                The “Feeling the Fear, Building It Anyway” panel demonstrated the multifaceted nature of entrepreneurship, revealing that the journey itself, with all its fears, failures, and triumphs, is the true reward.

                                                As we look to the future, these lessons remind us that the essence of entrepreneurship lies not in avoiding fear, but in embracing it as an integral part of building something truly meaningful.

                                                If you are a founder who is passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                                                  8 of DFDF’s portfolio companies makes it to the inaugural Future 100 list

                                                  8 of DFDF’s portfolio companies makes it to the inaugural Future 100 list

                                                  Official Future 100 group photo

                                                  Introduction

                                                  Future 100 is a collaborative initiative between the UAE’s Ministry Of Economy and the Government Development and the Future Office, featuring a list of 100 companies that have successfully passed an evaluation process deeming them the top 100 emerging companies contributing to enhancing the competitiveness of the future economy’s sectors.

                                                  Congratulations to our 8 direct investment portfolio companies for making it to the inaugural list — Camb.ai, FinFlx, Lune, Valeo Health ME, VUZ, Wellx, Zest Equity, Zywa.

                                                  It is with great pleasure that we share with you the Future 100 Report for 2023. You can access the report to learn more about the initiative, including the full list of UAE-based startups and scale-ups that are poised to make significant contributions to the future economic landscape of the UAE.

                                                  To download this report, please complete the form below

                                                    ​

                                                    Insights

                                                    DFDF blog header featuring Museum of the Future

                                                    Dubai Future District Fund Drives the Future of Finance and Economies with Focus on Innovation and Sustainability

                                                    Dubai Future District Fund Drives the Future of Finance and Economies with Focus on Innovation and Sustainability

                                                    Dubai, February 8, 2024: The Oversight Committee of Dubai Future District Fund (DFDF) met to assess the Fund’s significant achievements to date and outline future strategies aimed at enhancing the entrepreneurial ecosystem in Dubai and the broader UAE.

                                                    The Oversight Committee reviewed DFDF’s completion of over 25 investments since its inception in 2022 and discussed the AED 1 billion fund’s mission to enhance Dubai’s venture capital ecosystem by driving sustainable finance and innovation on a global scale.

                                                    Launched by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, and President of Dubai International Financial Centre (DIFC), DFDF is a collaborative effort between the DIFC and the Dubai Future Foundation (DFF).

                                                    The meeting saw the participation of His Excellency Essa Kazim, Governor of DIFC; His Excellency Khalfan Belhoul, Chairman of the Dubai Future District Fund’s Board of Directors and CEO of the Dubai Future Foundation; Arif Amiri, CEO of the Dubai International Financial Center Authority and board member of the Dubai Future District Fund; Jacques Visser, Chief Legal Officer at the DIFC Authority; and Sharif El-Badawi, CEO of the Dubai Future District Fund.

                                                    DFDF further reinforced its commitment to sustainability and climate technology by earmarking up to 20 percent of its AED 1 billion fund for supporting climate technology and innovation in December 2023, a move that was welcomed by the Oversight Committee and aligned with the Dubai Clean Energy Strategy 2050 and the UAE Net Zero 2050 strategy.

                                                    As DFDF embarks on its third year of operations, the Oversight Committee acknowledged the fund’s key achievements of the past year, including 14 new investments in five startups and three follow-on investments as well as six fund investments that are innovating in the Future of Finance and Future Economies sectors in Dubai.

                                                    The Oversight Committee also hailed the fund’s capacity building efforts of the inaugural DFDF Venture Fellows programme, where 12 aspiring Emirati professionals and entrepreneurs participated in the Venture Capital Fund Simulation programme which drew 40 participants from the UAE venture capital ecosystem.

                                                    The Committee emphasised the importance of supporting startups in their growth journey to become successful, internationally active scale-ups and underscored the role of venture capital investment in supporting startups, not only through funding but also by creating value in the portfolio companies, scaling operations, and strengthening corporate governance.

                                                    The meeting also highlighted the collaborative efforts of government and private sector leaders to drive innovation, support startups, contributing to the UAE’s transition to a sustainable future. DFDF remains a key player in this journey, actively shaping the landscape of innovation and investment in the region.

                                                    His Excellency Essa Kazim, Governor of DIFC, commented: “DFDF’s growth journey is encouraging and epitomises the vision for Dubai’s venture capital landscape by pioneering sustainable finance, catalysing global innovation, and aligning with strategic missions such as the Dubai Clean Energy Strategy 2050 and UAE Net Zero 2050. The Oversight Committee’s recognition of DFDF’s role in fostering scale-ups and the collaborative drive toward a sustainable future underscores the pivotal partnership between public and private sectors in shaping Dubai’s innovation trajectory.”

                                                    His Excellency Khalfan Belhoul, CEO of the Dubai Future Foundation and Chairman of DFDF, confirmed that DFDF contributed significantly during the previous period to strengthening the entrepreneurship scene in the city of Dubai in fulfillment of the leadership’s vision that Dubai is the best destination for emerging companies and entrepreneurs and the ideal incubator for business expansion in the region and the world starting from Dubai.

                                                    He added: “During the coming period, the Fund will focus on continuing its efforts to provide an integrated system to support emerging companies and provide financing, expertise, guidance, and other support programmes such as business accelerators and capacity building initiatives, in a way that contributes to enhancing their ability to grow and benefit from the business-friendly environment that stimulates innovation.”

                                                    Arif Amiri, Chief Executive Officer, DIFC Authority and Board Member of DFDF, said: “DFDF stands as a beacon in Dubai’s venture capital landscape, co-anchored by Dubai International Finance Centre. The fund’s commitment to climate technology, coupled with a strong investment strategy, has propelled over 25 ventures and continues to nurture international and Emirati talent through its bespoke venture-building programmes. This steadfast dedication marks DFDF as a driving force in shaping the future of sustainable innovation, talent and growth.”

                                                    Sharif El-Badawi, Chief Executive Officer, Dubai Future District Fund, said: “In 2023, DFDF championed the fusion of sustainable finance with global innovation, proudly contributing to Dubai’s emergence as a venture capital powerhouse. Our collaborations with DIFC and Dubai Future Foundation have been pivotal, aligning with the Dubai Clean Energy Strategy 2050 and UAE Net Zero 2050 to propel over 25 ventures and cultivate a diverse talent pool. As we advance, our commitment deepens to nurturing startups and driving sustainable growth, ensuring DFDF’s role in shaping a vibrant, innovation-driven future for Dubai. With steadfast dedication, we look forward to a year of transformative impact, reinforcing our promise to foster a sustainable and prosperous tomorrow.”

                                                    UAE startups account for an impressive 52 percent of all venture deals in the MENA region, with 44 percent of all venture capital having a presence in the UAE.

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                                                      Press Releases

                                                      DFDF blog header featuring Museum of the Future

                                                      صندوق حي دبي للمستقبل يواصل تعزيز استثماراته ودعمه للشركات الناشئة ورواد الأعمال انطلاقاً من دبي

                                                      Dubai Future District Fund Drives the Future of Finance and Economies with Focus on Innovation and Sustainability

                                                      دبي،08 فبراير 2024: عقدت لجنة الإشراف على “صندوق حي دبي للمستقبل” الذي أطلقه سمو الشيخ مكتوم بن محمد بن راشد آل مكتوم، النائب الأول لحاكم دبي نائب رئيس مجلس الوزراء وزير المالية رئيس مركز دبي المالي العالمي في نوفمبر 2021، اجتماعاً لاستعراض أبرز إنجازات الصندوق خلال الفترة الماضية، ومناقشة الأهداف والخطط المستقبلية لتعزيز منظومة ريادة الأعمال في دبي ودولة الإمارات.

                                                      شارك في الاجتماع سعادة عيسى كاظم محافظ مركز دبي المالي العالمي؛ وسعادة خلفان جمعة بلهول رئيس مجلس إدارة “صندوق حي دبي للمستقبل” والرئيس التنفيذي لمؤسسة دبي للمستقبل؛ وعارف أميري الرئيس التنفيذي لسلطة مركز دبي المالي العالمي وعضو مجلس إدارة صندوق حي دبي للمستقبل ؛ وجاك فيسر الرئيس التنفيذي للشؤون القانونية في سلطة مركز دبي المالي العالمي؛ وشريف البدوي الرئيس التنفيذي لصندوق حي دبي للمستقبل.

                                                      استثمارات مهمة

                                                      واستعرض المشاركون في الاجتماع أهم استثمارات الصندوق الذي يبلغ رأس ماله الأولي مليار درهم وتحتضن محفظته الاستثمارية حالياً أكثر من 25 مشروعاً استثمارياً منذ إطلاقه، بما في ذلك 14 استثماراً جديداً خلال العام الماضي منها 5 استثمارات في شركات ناشئة ودعم 3 شركات في إطار الاستثمار والرعاية اللاحقة (follow-on investments)، بالإضافة إلى 6 استثمارات تعتمد النهج الابتكاري للارتقاء بمستقبل القطاع المالي وقطاعات اقتصادات المستقبل في دبي.

                                                      الابتكار والاستدامة

                                                      وأكد أعضاء اللجنة أيضاً التزام “صندوق حي دبي للمستقبل” بتعزيز الاستدامة من خلال تخصيص ما يصل إلى 20% من رأس ماله الأولي البالغ مليار درهم لدعم تطوير تكنولوجيا.

                                                      المناخ، بما يتماشى مع استراتيجية دبي للطاقة النظيفة 2050 واستراتيجية الإمارات للحياد المناخي 2050.

                                                      بناء القدرات 

                                                      وحرص “صندوق حي دبي للمستقبل” خلال العام الماضي على مواصلة بناء القدرات من خلال إطلاق برنامج زملاء الاستثمار الجريء الذي شارك فيه اثنا عشر من المهنيين ورواد الأعمال الإماراتيين الطموحين، كما نظمت برنامج محاكاة صندوق رأس المال الجريء الذي استقطب 40 مشاركًا من منظومة رأس المال الجريء في دولة الإمارات.

                                                      وشدد المشاركون في الاجتماع على أهمية دعم الشركات الناشئة بما يعزز مسيرة نموها لتصبح ناجحة وقادرة على التوسع على المستوى العالمي، مع  التأكيد على دور استثمارات رأس المال الجريء في دعم الشركات الناشئة، ولا يقتصر ذلك على الجانب التمويلي للدعم ولكن أيضاً من خلال خلق قيمة للمحافظ الاستثمارية الخاصة بالشركات، وتوسيع نطاق العمليات، وتعزيز حوكمة الشركات.

                                                      عيسى كاظم: رحلة النمو التي حققها “صندوق حي دبي للمستقبل” مُشجعة وتجسد الرؤية الواعدة لمشهد رأس المال الجريء في دبي.

                                                      وقال سعادة عيسى كاظم محافظ مركز دبي المالي العالمي: ” إن رحلة النمو التي حققها ‘صندوق حي دبي للمستقبل’ مشجعة وتجسد الرؤية الواعدة لمشهد رأس المال الجريء في دبي عبر اعتماد النهج الريادي في تحقيق التمويل المستدام، وتحفيز الابتكار العالمي، وذلك انسجاماً مع التوجهات الاستراتيجية مثل استراتيجية دبي للطاقة النظيفة 2050  واستراتيجية الإمارات للحياد المناخي 2050. إن اعتراف لجنة الإشراف بدور الصندوق في تعزيز جهود التوسع والتعاون نحو بناء

                                                      مستقبل مستدام، يؤكد كذلك على الشراكة المحورية بين القطاعين العام والخاص وقدرتها على  الارتقاء بمسيرة الابتكار في دبي.

                                                      خلفان جمعة بلهول: “صندوق حي دبي للمستقبل” ساهم بشكل بارز خلال الفترة السابقة بتعزيز مشهد ريادة الأعمال في مدينة دبي.

                                                      ومن جهته أكد سعادة خلفان جمعة بلهول الرئيس التنفيذي لمؤسسة دبي للمستقبل، أن “صندوق حي دبي للمستقبل” ساهم بشكل بارز خلال الفترة السابقة بتعزيز مشهد ريادة الأعمال في مدينة دبي تحقيقاً لرؤية القيادة بأن تكون دبي الوجهة الأفضل للشركات الناشئة ورواد الأعمال والحاضنة الأمثل لتوسيع الأعمال في المنطقة والعالم انطلاقاً من دبي.

                                                      وأضاف: “سيركز الصندوق خلال الفترة المقبلة على مواصلة جهوده لتوفير منظومة متكاملة لدعم الشركات الناشئة وتوفير التمويل والخبرات والتوجيه وبرامج الدعم الأخرى مثل مسرعات الأعمال ومبادرات بناء القدرات بما يسهم بتعزيز قدرتها على النمو والاستفادة من البيئة الصديقة للأعمال والمحفزة للابتكار”.

                                                      عارف أميري: يمثل “صندوق حي دبي للمستقبل” حلقة متينة في مشهد رأس المال الجريء في دبي، والذي شارك مركز دبي المالي العالمي في تعزيز مكانته وتفعيل دوره. 

                                                      وقال عارف أميري، الرئيس التنفيذي لسلطة مركز دبي المالي العالمي وعضو مجلس إدارة صندوق حي دبي للمستقبل: “يمثل ‘صندوق حي دبي للمستقبل’ حلقة متينة في مشهد رأس المال الجريء في دبي، والذي شارك مركز دبي المالي العالمي في تعزيز مكانته وتفعيل دوره. وقد أدى التزام الصندوق بتبني تكنولوجيا المناخ، إلى جانب استراتيجية الاستثمار القوية، إلى تمكين وتوسيع وتيرة نمو  أكثر من 25 مشروعاً، ويواصل رعاية المواهب العالمية والإماراتية من خلال برامجه المخصصة والموجهة

                                                      لبناء المشاريع. إن هذا الالتزام الثابت يمثل قوة دافعة لصندوق دبي للتنمية نحو تشكيل مستقبل الابتكار المستدام وتعزيز منظومة استقطاب المواهب ودفع عجلة النمو والتنافسية.”.

                                                      وقال شريف البدوي الرئيس التنفيذي لصندوق حي دبي للمستقبل: “ساهم الصندوق بشكل كبير في تعزيز قطاعات الاستدامة وريادة الأعمال بمدينة دبي خلال الفترة الماضية بالتعاون مع مركز دبي المالي العالمي ومؤسسة دبي للمستقبل. وسنواصل التزامنا برعاية الشركات الناشئة ودفع مسيرة النمو المستدام بما يتماشى مع دور صندوق حي دبي للمستقبل لتصميم مستقبل مستدام ومزدهر”.

                                                      منظومة متكاملة

                                                      كما سلط الاجتماع الضوء على أهمية تعزيز التعاون بين القطاعين الحكومي والخاص لدفع عجلة الابتكار ودعم الشركات الناشئة، والمساهمة في تصميم وتنفيذ مستقبل مستدام في دولة الإمارات. ويدعم “صندوق حي دبي للمستقبل” تحقيق هذه الأهداف من خلال تشكيل مشهد الابتكار والاستثمار في المنطقة ويشكل جزءاً مركزياً متقدماً من منظومة استشراف المستقبل التي تحتضنها دبي وتشرف عليها مؤسسة دبي للمستقبل بالتعاون مع شركائها في مختلف القطاعات المستقبلية الحيوية.

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                                                        Press Releases

                                                        DFDF Blog Header Featuring FinFlx

                                                        Insights from FinFlx on How to Build a B2B2C Marketing Strategy

                                                        Introduction: The Opportunity that FinFlx Tackles

                                                        The prevailing sentiment in the UAE suggests that the gratuity process is relatively smooth. Timely payments to departing employees are thought to be the norm, and concerns about gratuity liabilities seemed remote. However, the arrival of COVID-19 challenged Amr Yussif’s perception of this.

                                                        Suddenly, businesses faced the daunting task of letting go of significant portions of their workforce due to the pandemic’s impact. It became evident that proper gratuity management and the safeguarding of employees’ end-of-service benefits was more critical than ever before. Enter FinFlx.

                                                        Born from the idea of filling a gap in the UAE’s gratuity process, FinFlx has evolved into a platform offering the UAE’s equivalent of 401(k) plans, financial literacy content, and financial aid benefits to company employees. Yes, that’s quite a comprehensive offering!

                                                        At present, central to FinFlx’s success is a strategic approach rooted in B2B2C principles, placing end-consumer needs at the forefront while appealing to B2B clients without direct consumer interaction. However, FinFlx didn’t offer this full suite of solutions from the get-go. Rather, first-time founder Amr built FinFlx’s value proposition as the business evolved in its early days.

                                                        In this blog post, we’ll take you through FinFlx’s journey from how it started to where it is today, with a spotlight on building the product and value proposition for both institutional customers and end-users in mind. From there, we share lessons learned from Amr so that founders can adopt strategies when building out their B2B and B2B2C go-to-market strategies.

                                                        Crafting a B2B2C strategy — What to Look Out for

                                                        FinFlx’s initial core value proposition revolved around automating HR processes related to gratuity. The message was straightforward: the platform streamlined operations, ensuring seamless employee recordkeeping starting from gratuity forecasting all the way up until departures and terminations, thereby avoiding disruptions and legal complications.

                                                        However, Amr found that the conversations he was having with decision makers at prospective institutional clients were shifting from initial endorsement to risk management — analyzing HR-provided turnover numbers to recommend coverage percentages for liability mitigation.

                                                        “The more you talk to your clients, the better you understand the challenges that they are facing which helps ensure that your product is designed to address their key problems and jobs to be done. You need to see their day-to-day patterns and what tools they are currently using so you can make sure your solution offers as seamless a customer journey as possible.”

                                                        Amr Yussif

                                                        And so, Amr realized there was an opportunity to simplify FinFlx’s process by translating insights from the HR team into a risk management discussion directly on their platform, fostering seamless interactions, scheme creation, modification requests, and approvals, thereby eliminating the need for extensive email exchanges or complex financial models that are hard to maintain accurately. In addition, Amr realized the platform had the potential to become a comprehensive flexible workplace savings plan, promoting financial well-being within the workplace.

                                                        In parallel, Amr reflected on the following key insights that became more and more apparent to him as he took FinFlx to market:

                                                        1. Help the buyer (employer) to help the users (employees): By helping employers develop a sure financial footing for their gratuity schemes, employers would then be in a better position to support their own employees’ need for liquidity. In addition, employees naturally trust their employer so they are receptive to financial wellbeing schemes that the employer endorses.
                                                        2. Financial maturity varies: FinFlx recognized that employers had varying states of financial sophistication and that FinFlx would need to adjust its sales and marketing approach along with the onboarding journey accordingly.
                                                        3. Craft a compelling win-win for all: FinFlx made its financial well-being services available to clients’ employees at no additional cost, benefiting both parties. Employees gained access to valuable resources, while companies fostered employee engagement and well-being.

                                                        “Employees tend to adopt solutions that are endorsed by employers and practiced by their colleagues and co-workers. Employers have an incredible opportunity to ensure the financial wellbeing of their staff and there is increasing recognition that financial wellbeing is critical for mental wellbeing”

                                                        Amr Yussif

                                                        Essential Tactics for B2B2C Success

                                                        For founders of B2B2C businesses looking to really drive sales by marketing with the end-users in mind, as opposed to the direct buyers (i.e. the institutional buyers), Amr suggests the following aspects be kept in mind, based on his own experience:

                                                        1. Build for Scale: Beyond a single B2B connection sits many other B2B2C end-users. You need to ensure your product is built for scale from the get-go. You need to also ensure the experience is optimized primarily for the end-user rather than the purchaser. 
                                                        2. Personalize sales: Rather than spending extensively on platforms like Google and Facebook ads, focus on direct and personalized engagement methods, such as webinars and face-to-face interactions. FinFlx also leverages platforms like LinkedIn and attends industry-related events and gatherings to understand customer needs firsthand.
                                                        3. Remember B2B2C Client stickiness: Despite their intricate sales cycles, B2B2C clients often foster longer-lasting relationships and offer greater potential for consistent revenue streams. The B2B2C model’s stickiness, especially concerning gratuity, leads to quicker payback periods. Go the extra mile to secure your clients as the retention is usually strong. 
                                                        4. Find channel partners: Look at who you can collaborate with to offer a more comprehensive experience and pool your resources to deliver more value and execute your go-to-market strategy at a larger scale. 
                                                        5. Map Customer Personas. In FinFlx’s case, the Human Resources department emerges as their “target market,” though the final approval typically rests with the finance officer, responsible for allocating company funds to the gratuity scheme. Map out the sales process and all the key stakeholders.

                                                        “Mapping your sales cycle is an ongoing process that varies significantly based on market segments and customer size and sometimes even industries. Getting the timing right is critical”

                                                        Amr Yussif

                                                        Conclusion

                                                        FinFlx’s B2B2C journey exemplifies the power of strategic thinking, a commitment to customer well-being, and the value of maintaining strong B2B relationships. By focusing on end-consumer needs while catering to B2B clients, FinFlx has not only navigated challenging times but has also set a precedent for businesses looking to thrive in the ever-evolving landscape of the UAE’s gratuity ecosystem.

                                                        If you are a founder who is passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

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                                                          Insights

                                                          DFDF Blog Header Featuring the Fund Manager Program

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          Introduction — The Need for Targeted Venture Education Initiatives in Dubai

                                                          Last month we brought together a diverse group of aspiring investors — from seasoned professionals at Shorooq Partners and COTU Ventures to our own Venture Fellows and bright minds nominated by DIFC, Dubai Chambers, e&, ADQ, Mubadala. Over three action-packed days, the participants weren’t just learning about fund management – they were putting their skills to the test in a fund management simulation, building connections, and shaping the future of the UAE’s VC ecosystem.

                                                          The goal was simple: split into teams and create a fund, then compete with each other to achieve the best returns for investors.

                                                          IRL, the stakes of launching a venture capital fund are high. That’s mostly because, though venture capital historically has yielded returns that outperform other sectors, the risks are high as well. So, for aspiring venture capitalists, practicing what it takes to launch a successful fund, in a safe environment (such as a simulation) prepares them for what to expect when they place real bets in the real world. As the saying goes, practice makes perfect.

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          Since it’s part of our fund’s strategy to be an anchor in Dubai’s VC ecosystem, we decided to introduce a program to equip the next generation of venture capitalists in the emirate. In this blog post, we cover how our pilot intake went, as well as some of our participants’ feedback.

                                                          Before we dive deeper, we would like to extend gratitude to our program sponsors Amazon Web Services (AWS) and Knowledge Fund, as well as our venue host Area 2071, for their generous support.

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          Breaking Down the Program Structure

                                                          Ahead of the program, 40 participants were divided into 8 mixed groups. It was important to the experience that participants did not form groups of their choosing to get them used to working with people whom they had not met before — just as they would in real life.

                                                          After the kick-off presentation (which we broadcasted live on LinkedIn to our wider community), participants were introduced to their fellow team members and were asked to make it official — well, within the game. They were asked to elect a team leader, assign other roles amongst each other (presumably after a discussion of each person’s key skills), give their fund a name, and head off to the race!

                                                          “The simulation is quite fun because I feel we get to choose our own roles… I became the Managing Partner and I'm getting to see the day-to-day life of the Managing Partner — the meetings, the amount of work, and multitasking.”

                                                          Zebo Furqatzoda, Program Associate at Shurooq Partners
                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          Following, over three intense days, participants navigated through 15 years’ worth of simulated real-life scenarios, whilst working with startups, scale-ups, and funds that exist in real life. This allowed participants to experience how their mock funds would have performed with realistic parameters built by design.

                                                          Pink note that says: BOOM! "We invest in the future of Finance and Future Economics," says the young associate next to you on the plane to London. DFDF's evergreen structure has 10 direct and 7 fund investments to date. If you are a match, you can apply for the DFDF SuperLP.

                                                          “We just closed our first fund and we invested in 6 companies so far. We're going to invest in 15 more before we close our second fund.”​

                                                          Talal Khatib, VC at BECO Capital

                                                          Overall, the simulation not only imparts knowledge about the intricacies of fund management but also allows participants to step into the shoes of key roles, fostering a deeper understanding of the challenges and responsibilities involved.

                                                          “We learn a lot about the entire life cycle of setting up a fund, investing the fund, and, hopefully, exiting the fund as well… We've just gone through the fundraise of our first fund. We're about to go through the fundraise of our second fund. We started deploying out of the first fund and we have some amazing companies already.”

                                                          Khaled Lababidi, Operating Partner at Arbor Ventures, on the second day of the program
                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          Congratulations to the participants of Enterprise Ventures for making their way to the top of the leaderboard by the end of the program!

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          About Strategy Tools

                                                          The architects of the program are the bright minds at Strategy Tools, who have been running this program all around the world in collaboration with ecosystem leaders. They are experts at creating visual canvases, tools, and simulations around complex topics such as corporate strategy, venture capital, and innovation, to aid in learning and development.

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          “We're super, you know, grateful to be learning the in and out of, like, fund management.”

                                                          Kenzie Falcoz, Head of Platform at Outliers Venture Capital

                                                          Thank you to Chris Rangen and his team at Strategy Tools for leading our pilot program experience this year!

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          DFDF’s Role In Fostering the VC Ecosystem in Dubai

                                                          We believe it’s important that the basics and the fundamentals of running a fund are taught, exercised, and experienced. Ultimately, VC is not just about raising a fund and deploying capital into good deals as much as it is about how you harvest those deals over time, add value, and eventually provide liquidity and returns to your General and Limited Partners.

                                                          The truth is, this is something that not everybody in venture capital in the Middle East has been able to experience yet because they haven’t experienced the full life cycle of a fund, given the regional ecosystem is still nascent. And so, we believe that bridging this experience gap with other forms of knowledge-rich experiences, such as this program and our Venture Fellows program that we run in parallel, are important to nurture the local ecosystem.

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

                                                          “It's been a rigorous three days of tension, learning how to do very different things we haven't done before; but, more importantly than not, working to collaborate and value create together as multiple funds in the ecosystem here today.”

                                                          Nader AlBastaki, Managing Director at Dubai Future District Fund

                                                          Conclusion: How to Get Involved

                                                          We’d like to extend an open invitation for stakeholders looking to partake in nurturing the VC ecosystem in the UAE — from aspiring or current venture capitalists, to funds looking to upskill their team, to corporations looking to build their venture expertise — to contact us if they are interested in joining future intakes of the Fund Management program. Together, we can nurture the local and wider regional VC ecosystem.

                                                          Nurturing the Future of Venture Capitalists: Fund Manager Program Overview

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                                                            Insights

                                                            Dubai Future District Fund Unveils Ambitious Commitment: Allocating up to 20% of AED 1 Billion Fund to Climate Tech, Pledges Leadership at COP28

                                                            صندوق حي دبي للمستقبل يخصص ما يصل إلى 20% من تمويلاته البالغ حجمه مليار درهم لخطة دعم تكنولوجيا المناخ

                                                            دبي – 12 ديسمبر 2023 – أعلن صندوق حي دبي للمستقبل تخصيص ما يصل إلى 20%، أو ما يعادل 200 مليون درهم، من إجمالي حجم الصندوق البالغ قيمة مليار درهم لدعم تكنولوجيا المناخ والابتكار، وذلك بالتزامن مع فعاليات يوم التمويل في مؤتمر الأطراف في اتفاقية الأمم المتحدة الإطارية بشأن تغير المناخ (COP28)،  الذي تستضيفه دولة الإمارات العربية المتحدة في مدينة إكسبو في دبي في الفترة من 30 نوفمبر حتى 12 ديسمبر 2023، والتزاماً من الصندوق بدور محوري في بناء مستقبل مستدام وتعزيز الابتكار فيه، بما يتماشى مع الرؤية الاستراتيجية الشاملة لدولة الإمارات للتنويع الاقتصادي والتنمية المستدامة.

                                                            وقد أطلق سمو الشيخ مكتوم بن محمد بن راشد آل مكتوم، النائب الأول لحاكم دبي، نائب رئيس مجلس الوزراء وزير المالية، صندوق حي دبي  بدعم مشترك من مركز دبي المالي العالمي ومؤسسة دبي للمستقبل. ويؤكد هذا الإعلان رسالة الصندوق المتمثلة في تعزيز منظومة رأس المال الاستثماري في دبي ودعم التمويل المستدام والابتكار على نطاق عالمي.

                                                            وبهذه المناسبة، قال سعادة خلفان بلهول، رئيس مجلس إدارة صندوق حي دبي للمستقبل والرئيس التنفيذي لمؤسسة دبي للمستقبل: “تخصيص ما يصل إلى 200 مليون درهم من صندوق حي دبي للمستقبل لمشاريع التكنولوجيا المستدامة هو أكثر من مجرد التزام مالي؛ بل دليل على مواصلة وتوسيع رسالتنا المتمثلة في تعزيز منظومة رأس المال الاستثماري ا لجريء في دبي لتشمل الاستدامة. وتركز عمليات صندوق حي دبي للمستقبل على مستقبل التمويل واقتصادات المستقبل، وهي مجالات نؤمن بأهميتها في تسريع الأجندة العالمية للاستدامة والابتكار.”

                                                            وأضاف بلهول: “يتماشى هذا النهج الواضح مع الرؤية الشاملة لصاحب السمو الشيخ محمد بن راشد آل مكتوم، نائب رئيس الدولة رئيس مجلس الوزراء حاكم دبي “رعاه الله“، ورؤية دولة الإمارات للتنويع الاقتصادي والتنمية المستدامة. ولتعاوننا مع مركز دبي المالي العالمي دور أساسي في هذا السياق، حيث يمكننا تحقيق أقصى استفادة من الموارد والخبرات والشراكات لتحفيز النمو في هذه المجالات المحورية. ونلتزم معاً بتأسيس منظومة ناجحة يزدهر فيها الابتكار ويصبح التمويل المستدام حجر الزاوية في اقتصادنا“.

                                                            بدوره، قال عارف أميري، الرئيس التنفيذي لسلطة مركز دبي المالي العالمي وعضو مجلس إدارة صندوق حي دبي للمستقبل: “بينما نواصل مسيرتنا نحو مشهد مالي أكثر استدامة، يواصل مركز دبي المالي العالمي التزامه بتسهيل تمويلات أكثر استدامة. ويمثل تخصيص ما يصل إلى 20% من صندوق حي دبي للمستقبل البالغة قيمته مليار درهم إماراتي حرصنا على تحفيز النمو ودعم مشاريع التكنولوجيا والابتكار التي تركز على الاستدامة.”

                                                            وأوضح أن: “تعاوننا مع مؤسسة دبي للمستقبل كشريكين مؤسسين يجسد حرصنا المشترك على تعزيز مستقبل التمويل والابتكار. وهذه المبادرة هي جزء من استراتيجيتنا لعام 2030، التي تؤكد على تمكين شركات التكنولوجيا الرائدة التي توفر حلولاً مبتكرة تهدف إلى مواجهة التحديات العالمية الملحة“.

                                                            ويؤكد قرار تخصيص جزء كبير من تمويل الصندوق لمشاريع التكنولوجيا المستدامة على التزامه الثابت بدعم مستقبل التمويل والاقتصاد في مناطق الشرق الأوسط وأفريقيا وجنوب آسيا ودول الجنوب بشكل عام. ويلعب هذا الالتزام دوراً محورياً في تعزيز المنظومة العالمية للاستدامة والابتكار، لا سيما في سياق التحولات النوعية في هذا المجال في منطقة الشرق الأوسط. كما يهدف صندوق حي دبي للمستقبل إلى العمل مع شركاء متعددي الجنسيات ومؤسسات ووكالات حكومية لتوجيه رأس المال نحو مبادرات تكنولوجيا المناخ الاستراتيجية، بما في ذلك أنشطة تطوير سوق رأس المال الاستثماري.

                                                            وفي عام 2021، اتخذت دولة الإمارات خطوة رائدة لتصبح أول دولة في الشرق الأوسط تتعهد باقتصاد محايد مناخياً بحلول عام 2050. وتلتها المملكة العربية السعودية ومملكة البحرين، مما يمثل محطة مهمة لاستثمارات تكنولوجيا المناخ في المنطقة. علماً بأن تحقيق الحياد المناخي يجعل منطقة الشرق الأوسط وشمال أفريقيا من بين المناطق الأكثر استفادة على مستوى العالم، حيث يقلل ما يزيد عن 17% من خسائر الناتج المحلي الإجمالي ويولد أكثر من مليون فرصة عمل. وتتمتع دول مجلس التعاون الخليجي بميزة تنافسية كبيرة في إنتاج الطاقة النظيفة بالاعتماد على الطاقة الشمسية والهيدروجين الأخضر، وذلك بفضل إنتاجها المرتفع من الطاقة الشمسية مقارنة بالمستوى العالمي.

                                                            وتشمل هذه الخطوة الاستراتيجية لصندوق حي دبي للمستقبل في مجال تكنولوجيا المناخ قطاعات محورية مثل تكنولوجيا الأغذية والزراعة، ومواد البناء، والتكنولوجيا اللوجستية. كما يأتي هذا التوسع بعد تعاون صندوق حي دبي للمستقبل مع مؤسسة دبي للمستقبل في تقرير “مستقبل الغذاء“، ويؤكد التزامهما الثابت بالبحث والتطوير في مجال الاستدامة.

                                                            من جانبه، قال شريف البدوي، الرئيس التنفيذي لصندوق حي دبي للمستقبل: “يخصص الصندوق بشكل استراتيجي جزءاً مهماً من تمويلاته لمشاريع تكنولوجيا المناخ، مما يؤكد التزامنا الثابت بدعم الاستثمارات المناخية ويعزز تركيزنا على مستقبل الغذاء ومستقبل الخدمات اللوجستية والشمول المالي. كما يمتد تعهدنا إلى ما هو أبعد من مجرد الاستثمارات المالية؛ ويرمز إلى التزامنا الراسخ بإعادة تشكيل مشهد رأس المال الاستثماري في دبي. ونهدف من خلال تركيز الموارد وتضافر الجهود والخبرات إلى تعزيز تأثيرنا الجماعي، وتحفيز النمو، وإرساء منظومة ناجحة للابتكار والتمويل المستدام.”

                                                            ومع استضافة دولة الإمارات لمؤتمر الأطراف الثامن والعشرين (COP28)، يتعاون كل من صندوق حي دبي للمستقبل ومؤسسة دبي للمستقبل ومركز دبي المالي العالمي لتعزيز التزامهم بدعم التمويل المستدام والابتكار. ويتمثل الهدف الأساسي في وضع معيار عالمي للمبادرات المستقبلية في هذا المجال، بما يتماشى مع الإمكانات المزدهرة للمنطقة في مجال تكنولوجيا المناخ، ويضعها في موقع الصدارة في تشكيل مستقبل الاقتصادات المستدامة والتجارة العالمية.

                                                             

                                                            نبذة عن صندوق حي دبي للمستقبل

                                                            يهدف صندوق حي دبي للمستقبل، الذي أنشأه سمو الشيخ مكتوم بن محمد بن راشد آل مكتوم، نائب حاكم دبي نائب رئيس مجلس الوزراء وزير المالية، إلى تعزيز مشهد رأس المال الاستثماري الجريء. ويقع المقر الرئيسي للصندوق في دولة الإمارات حيث يدير عملياته من مركز دبي المالي العالمي، ويركز على تمكين الشركات الناشئة في مجال التكنولوجيا من خلال استثمارات  في صندوق الصناديق والتمويل المباشر للشركات الناشئة، ويعد مركز دبي المالي العالمي ومؤسسة دبي للمستقبل المساهمين المؤسسين فيه .

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                                                              Press Releases

                                                              Dubai Future District Fund Unveils Ambitious Commitment: Allocating up to 20% of AED 1 Billion Fund to Climate Tech, Pledges Leadership at COP28

                                                              Dubai Future District Fund Unveils Ambitious Commitment: Allocating up to 20% of AED 1 Billion Fund to Climate Tech, Pledges Leadership at COP28

                                                              "As we progress towards a more sustainable financial landscape, DIFC remains committed to fostering access to more sustainable funding. The allocation of up to 20 percent of the AED 1 billion Dubai Future District Fund represents our dedication to driving growth and supporting sustainability-focused tech and innovation ventures. Collaborating with the Dubai Future Foundation as founding partners exemplifies our unified pursuit of shaping the future of finance and innovation. This initiative is a testament to our Strategy 2030, emphasizing the empowerment of leading tech firms with innovative solutions aimed at addressing pressing global challenges."

                                                              Arif Amiri, CEO of DIFC Authority and Board Member of DFDF

                                                              Dubai, UAE – 04 December 2023 – The Dubai Future District Fund (DFDF) has reinforced its commitment to sustainability by earmarking up to a substantial 20 percent, equivalent to AED 200 million, of its AED 1 billion fund for supporting climate technology and innovation. This momentous announcement, made on COP28’s Finance Day, underscores DFDF’s pivotal role in fostering a sustainable and innovative future, aligning with the United Arab Emirates’ broader vision for economic diversification and sustainable development.

                                                              Launched by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, DFDF is a collaborative effort between the Dubai International Financial Centre (DIFC) and the Dubai Future Foundation (DFF). This commitment reiterates DFDF’s mission, enhancing Dubai’s venture capital ecosystem and reinforcing its dedication to driving sustainable finance and innovation on a global scale.

                                                              Khalfan Belhoul, Chairman of DFDF and CEO of Dubai Future Foundation, emphasised:

                                                              “The substantial allocation of up to AED 200 million from DFDF to sustainable technology ventures represents more than a monetary commitment; it signifies our continued mission to enhance Dubai’s venture capital ecosystem. At the heart of DFDF’s operations is a deep focus on the Future of Finance and Future Economies; areas we believe are critical in driving forward the global agenda for sustainability and innovation.

                                                              “This approach is in clear alignment with the UAE’s broader vision for economic diversification and sustainable development, a vision supported by His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai. Our collaboration with DIFC is instrumental in this context, enabling us to pool resources, expertise, and networks to catalyze growth in these pivotal areas. Together, we are committed to creating a thriving ecosystem where innovation flourishes, and sustainable finance becomes the cornerstone of our economic framework.”

                                                              Arif Amiri, CEO of DIFC Authority and Board Member of DFDF, stated:

                                                              “As we progress towards a more sustainable financial landscape, DIFC remains committed to fostering access to more sustainable funding. The allocation of up to 20 percent of the AED 1 billion Dubai Future District Fund represents our dedication to driving growth and supporting sustainability-focused tech and innovation ventures.

                                                              “Collaborating with the Dubai Future Foundation as founding partners exemplifies our unified pursuit of shaping the future of finance and innovation. This initiative is a testament to our Strategy 2030, emphasizing the empowerment of leading tech firms with innovative solutions aimed at addressing pressing global challenges.”

                                                              The decision to earmark a significant portion of the fund for sustainable technology ventures underscores DFDF’s steadfast commitment to shaping the future of finance and economies across the Middle East, Africa and South Asia regions of the Global South. This dedication plays a pivotal role in advancing the global agenda for sustainability and innovation, particularly in the context of the momentous developments in the Middle East. DFDF aims to work with multinational partners, foundations and government agencies to galvanize capital towards strategic Climate Tech initiatives, including venture capital and market development activities. 

                                                              In 2021, the UAE took a groundbreaking step by becoming the first country in the Middle East to pledge a net zero economy by 2050. Following suit, Saudi Arabia and Bahrain swiftly joined in, marking an exciting inflection point for Climate Tech investments in the region. Achieving a net zero economy positions the MENA region among the most globally benefited, mitigating over 17% of GDP losses and generating over 1 million jobs.

                                                              As emphasised by the International Renewable Energy Agency (IRENA), the region’s current electrification rate stands at 16%, with cautionary warnings that the established targets only fulfil 50% of the renewable energy capacity needed by 2030 to stay below the 1.5°C degree benchmark. However, the GCC countries boast a significantly competitive edge in producing solar-based electricity and green hydrogen, thanks to their status as having some of the highest solar voltaic output in the world.

                                                              This strategic move by DFDF into Climate Tech encompasses pivotal sectors such as Food and Agriculture Tech, Building Materials, and Logistics Tech. This expansion follows DFDF’s collaboration with DFF on the ‘Future of Food’ paper, underscoring their unwavering dedication to research and development in sustainability.

                                                              Sharif El Badawi, CEO of Dubai Future District Fund, added:

                                                              “DFDF is strategically allocating a considerable portion of the fund to climate technology ventures, underscoring our unwavering commitment to the COP/CIF landscape and reinforcing our focus on the Future of Food, Future of Logistics, and the overarching theme of Financial Inclusion. Our pledge extends beyond mere financial investments; it symbolizes our resolute dedication to reshaping Dubai’s venture capital landscape.

                                                              “In harmony with the UAE’s vision for economic diversification and sustainable development, as endorsed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, underscores our responsibility to the wider neighborhood of the Global South. By synergizing resources and expertise, we aim to amplify our collective impact, catalyzing growth and fostering a thriving ecosystem where innovation flourishes, and sustainable finance becomes the cornerstone of our economic framework.”

                                                              With the UAE hosting COP28, DFDF, DFF, and DIFC are united in their dedication to advancing sustainable finance and innovation. Their collective aim is to set a global benchmark for future initiatives in this field, aligning with the region’s burgeoning potential not only in Climate Tech, but also in alternative proteins. Credit Suisse estimates the worth of this sector to be a staggering US$1.4 trillion by 2050. By establishing themselves as global leaders in alternative protein production, Middle Eastern countries anticipate a significant reduction in their reliance on food imports, currently constituting 85% of the GCC’s domestic food needs. This transformative approach positions the region as a frontrunner in shaping the future of sustainable economies and global trade.

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                                                                DFDF Blog Header Featuring DXwand called ' From Niche Tech to Global Trend — Lessons About AI From DXwand '

                                                                From Niche Tech to Global Trend — Lessons About AI From DXwand

                                                                Introduction: What Does DXwand Do?

                                                                Exploring the history of Artificial Intelligence (AI) innovation before it reached mainstream recognition can be truly captivating. DXwand is an intriguing case in point. 

                                                                Before AI became a household term earlier this year, companies like DXwand toiled in the shadows of a technology that seemed so futuristic that it was truly out of reach, fueled by a profound belief in the technology’s potential. Not so far back as early 2022, AI was a niche domain, and convincing businesses and investors to invest in AI solutions required unwavering dedication.

                                                                DFDF made a direct investment in DXwand in March 2023. Its Co-founders, Ahmed Mahmoud, and Mahmoud Gomaa,

                                                                created an AI platform from the ground up for AI-powered conversational digital assistants. Their core infrastructure is a knolwedge mining engine that tackles current limitations in LLMs for reliable and consistent knowledge retrieval. Their engine produces knowledge in English, Arabic, and other languages.

                                                                Ahmed and Mahmoud also saw that businesses across the Middle East struggled to use conversational AI in Arabic. Every Arabic country (and often even within countries themselves) has its own local dialect, making it especially difficult when it comes to understanding conversational content.

                                                                On top of the engine that Ahmed and Mahmoud built from scratch, they developed a conversational knowledge mining and knowledge retrieval AI application, as the first application of the core technology. DXwand’s offering now includes Arabic virtual agent software that empowers businesses to automate interactions with customers and seamlessly interact and retrieve enterprise knowledge. This virtual assistant handles a wide array of tasks, from answering queries to executing actions within a company’s systems. Effectively, DXwand enables companies to provide a seamless and automated customer experience across various channels, including call centers, WhatsApp, mobile apps, and websites, allowing them to engage with their Arabic-speaking customers at scale.

                                                                In this blog post, we cover the journey of how DXwand was founded, from the point of view of the Co-founders who saw the opportunity to integrate AI to power a solution to a mass problem that they identified.

                                                                The Challenges of Building an MVP in a New Product Category

                                                                In developing their platform, DXwand began with the end result in mind — how their solution can enhance operations, streamline efficiency, and deliver quantifiable benefits to prospective business customers. Further, Ahmed and Mahmoud emphasized the importance of preserving existing human behavior when building their technology, which was especially important given that they are selling the ability for businesses to have scalable conversations with people. So, they focused on integrating their product seamlessly into their customers’ users’ behaviors, emphasizing that it not only maintains but enhances human interaction styles. They anticipated that this would overall improve response times, customer acquisition, and retention.

                                                                Throughout development, Ahmed and Mahmoud observed that as their MVP transitioned from obscurity to ubiquity, they could better anticipate how to sell their solution to prospective customers. However, despite how complex the development of the technology may be, Ahmed and Mahmoud still wanted to offer personalization to their customers. Lucky for them, a core feature of machine learning technology is the ability for specialization, which would allow for customer-specific solutions over time. customization So, taking this bespoke approach to the market was not as cumbersome as it might be for other software-as-a-service businesses to offer the same without sacrificing scalability. Even as they took the product to market, the founders found themselves continuously tweaking their technology as they adapted various aspects of it to suit individual customers’ needs.

                                                                The Challenges of Selling an Unfamiliar Product to Customers

                                                                DXwand encountered initial challenges when selling its product as the technology was novel, making it difficult for prospective customers to grasp its potential. To overcome this hurdle, DXwand employed creative strategies to convey their product’s value, from which lessons learned can be derived for founders looking to sell their technology that is still not mainstream enough to have predictable, swift sales cycles:

                                                                • Customer-centric design: Focusing on how the technology benefits your customers as opposed to explaining features that don’t resonate with them will help them better understand your product’s practical utility.
                                                                • Simplify your pitch: Presenting to prospective customers in non-technical lingo (i.e. refraining from overusing tech jargon — which can be tempting at a time when the term “generative AI” is commonly used these days) can help them better understand how your technology can practically help them.
                                                                • Educate within your sales cycle: Offering a solution that is unfamiliar in the market requires a longer time to close leads as you would need to spend time educating customers about why what you’re offering is better than what they’re currently using. Creating thought leadership content that you can share with prospective customers for education purposes can also be helpful.
                                                                • Leverage market trends: Selling a solution that the market is looking for is a factor to take in your favor. The more the general population understands and demands a technology that was only recently nascent, the easier the sales process will inevitably be. Though initially you’ll benefit from first-mover advantage, as the market adapts and competition increases, being able to maintain a competitive edge becomes critical.

                                                                If I go to a client now and say generative AI, it has, I would say, a meaning in their mind that I don't need to explain. But back in, like, one year ago, it may take us a month to explain why this is important.

                                                                Ahmed Mahmoud

                                                                Thriving in a Saturated AI Market

                                                                In an industry that is — at the time of publishing this article (approximately two years after Ahmed and Mahmoud started developing DXwand) — saturated with generative AI offerings, staying competitive requires constant innovation, differentiation, and a relentless focus on delivering unique value to customers. Ahmed and Mahmoud share with us their strategies to remain at the forefront of AI innovation:

                                                                1. Strategic Data Acquisition: Invest strategically in traditionally challenging areas, particularly data acquisition.
                                                                2. Quality and Specificity: Focus on the quality of the data that you use in your models and their use cases across various industries.
                                                                3. Flexible and Scalable Solutions: Offer your customers the flexibility to host their solutions on your own data centers, if needed. This adaptability positions them favorably, especially when catering to highly regulated customers like government agencies and banks.

                                                                Our Value Creation Efforts for AI Companies

                                                                We recently collaborated with the Dubai Center for AI, an initiative led by the Dubai Future Foundation (DFF), and were appointed as the official Venture Partner. The Dubai Center for AI, situated within the innovative space of Area 2071, is a flagship initiative driven by the Dubai Future Foundation. Its mission was to seamlessly integrate artificial intelligence into various government services, effectively ushering in a new era of efficiency and innovation in Dubai’s public sector.

                                                                The Dubai Center for AI recently hosted 28 forward-thinking AI startups, with two of them, DXwand and Camb.ai, being companies within our direct investments portfolio. These startups worked closely with government agencies to develop an impressive portfolio of unique AI use cases that promise to transform the way government services are delivered.

                                                                Through this collaboration, we committed to fueling the growth of AI startups that are selected through comprehensive support that encompasses venture capital training, mentorship, networking opportunities, and more. For example, we facilitated introductions to government entities, enabling collaborative efforts to address real-world challenges through AI-driven solutions.

                                                                Ahmed and Mahmoud credit the UAE’s Ministry of AI for playing a pivotal role in supporting DXwand, facilitating talent acquisition, and providing access to essential computational and research facilities — two critical aspects for an AI company.

                                                                Conclusion and Additional Resources

                                                                DXwand’s journey reflects the transformative power of belief in AI technology, creative sales strategies, and adaptability in the ever-evolving landscape of AI. Their commitment to customer-centric solutions and continuous innovation positions them as a key player in the exciting world of generative AI.

                                                                At DFDF, we look forward to a future marked by groundbreaking AI innovations, collaborations, and a thriving ecosystem that benefits the entire community. If you are a founder who is passionate about building innovative AI solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

                                                                In addition to providing capital to support the growth of our portfolio companies, we offer our value creation capabilities to assist them in building commercial partnerships, receiving guidance from experienced experts, and more. 

                                                                If you’re interested in learning more about today’s generative AI investment landscape, you can download a report that we published earlier this year here.

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                                                                  Cover image from Embracing Pivots: Insights from Lune's Journey

                                                                  Embracing Pivots: Insights from Lune’s Journey

                                                                  Introduction: Lune Today

                                                                  In the ever-evolving world of entrepreneurship, startups are synonymous with adaptability and agility. However, there’s one skill that’s increasingly vital for startups: pivoting.

                                                                  In a candid conversation with Alexandre Soued, Co-founder of Lune Technologies, a UAE-based FinTech startup that navigated not one, but two significant pivots, we explore the nuances of pivoting – when to pivot, how to pivot successfully, and the importance of embracing change.

                                                                  From vision to pivot to success, Lune began its journey as a B2C savings platform from a realization that social savings circles (which are traditionally a common way to save money in the Middle East) were still cash-based and limited. Though the demand for a digital solution was there in the market, the fact that holding customer money was highly regulated locally made the business model too complex to successfully execute.

                                                                  Lune then pivoted into a B2C Personal Financial Management (PFM) app which allowed them to move away from holding client money, but offer several savings features. The founders eventually realized that it would have to grow to the size of a neo-bank in order to monetize at a VC-backable scale. It was during the process of trying to scale the app that the founders realized that there was a glaring need for a B2B data management solution in the financial industry regionally — a problem area that was ripe for them to solve. Ultimately, Lune transformed into a B2B financial data processing platform.

                                                                  In this blog post, we’ll cover how these strategic shifts were not arbitrary but were born out of a deep understanding of their industry, clientele, regulations, and market dynamics, as well as how other founders who find themselves in similar situations can apply lessons learned.

                                                                  Recognizing the Right Time to Pivot

                                                                  Pivoting is an art that requires entrepreneurs to discern the signs of market resistance or unmet needs. It necessitates a blend of self-reflection, market analysis, and the courage to change course when the current path proves unproductive. The timing of a pivot can breathe new life into a venture and pave the way for sustainable success. To be able to navigate this, here are some lessons that Alexandre shared with us through his journey with Lune so far:

                                                                  1. Understanding Industry and Regulatory Complexities: Founders must be well-versed in the industry and regulatory framework they are entering. If navigating these complexities becomes too daunting, it might signal a need to reconfigure the startup for a more conducive market.
                                                                  2. Market Analysis and Competition: A thorough assessment of regional competitors is crucial to determine if the market is already saturated with formidable players. Lune’s pivot was influenced by recognizing that the region had abundant banking options, leading them to reconsider their strategy.
                                                                  3. Identifying a Gap in the Market: Lune’s pivotal moment came when they identified a persistent need for a missing data layer in the financial industry. Their pivot was rooted in addressing this gap and providing value where it was lacking.
                                                                  4. Regional Specifics Matter: Not all fintech solutions that thrive in global markets apply seamlessly to the MENA region. Regulatory and cultural differences necessitate adaptation and sometimes even a pivot.
                                                                  5. Addressing Product Challenges: Lune’s pivot was prompted by challenges related to data handling. When faced with complex and unclean data, they wisely shifted their focus to data enrichment.
                                                                  6. Revenue Generation Realities: Entrepreneurs must be prepared for revenue generation strategies that might not succeed. Flexibility and the willingness to pivot when necessary are key to finding the right path to sustainable revenue.

                                                                  I think there's a big difference between having a great idea and having a business, and then also having a venture-backed business.

                                                                  Alexandre Soued

                                                                  Evaluating the Pivot

                                                                  Evaluating a pivot is a critical phase where founders assess the viability of their strategic shift. Alexandre outlines three essential parameters for this evaluation process:

                                                                  1. Demand Assessment: Understand the scale of demand for the pivoted product. It’s not just about demand; it’s about gauging its size and potential growth.
                                                                  2. Future Potential and Constraints: Consider whether the demand for your pivot might restrict your business down the road. Some forms of demand may limit your market or create constraints on future expansion.
                                                                  3. Regional Relevance and Adaptation: Assess whether a similar concept has succeeded regionally and if it can be successfully adapted to your specific market. Regulatory and cultural differences can significantly impact adaptability.

                                                                  Announcing the Pivot

                                                                  Transparent communication is key when announcing a pivot, both internally and externally, to stakeholders like employees, customers, and investors. A clear and official announcement ensures everyone is aligned and helps manage expectations while presenting the pivot as an exciting step forward in the company’s evolution.

                                                                  1. Co-founders and Team Alignment: Co-founders and team members should share the goal of creating a sustainable, value-driven business. Open and honest discussions about the need for a pivot, supported by data and market insights, can facilitate understanding and decision-making.
                                                                  2. Client Engagement: Maintain transparent communication with clients, highlighting how the pivot enhances their experience and the value they receive. Solicit their feedback and involve them in the transition process.
                                                                  3. Investor Relations: Prioritize investors who align with your business goals and clearly communicate the reasons for the pivot and expected outcomes.
                                                                  4. Marketing and Branding: Update marketing materials to reflect the new value proposition. Ensure that the pivot is communicated as an opportunity for transformation and growth.

                                                                  Conclusion

                                                                  Lune’s remarkable journey from vision to pivot to success exemplifies the art of adaptation and change in the dynamic landscape of entrepreneurship. Alexandre’s insights into recognizing the right time to pivot, evaluating the pivot, and announcing it transparently offer invaluable lessons for startups navigating the challenging path to success.

                                                                  If you are a founder that’s building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. You can also learn more about our Direct Investments deal lifecycle process here.

                                                                  In addition to providing capital to support the growth of our portfolio companies, we offer our value creation capabilities to assist them in building commercial partnerships, receiving guidance from experienced experts, and more. 

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                                                                    Blog header featuring Sundeep Sahni

                                                                    Building a Startup: The Wisdom of Experience

                                                                    Introduction: Do Founders Need Prior Experience?

                                                                    In the realm of entrepreneurship, there is a widespread belief that experienced founders possess a distinct advantage over their less-experienced peers. Many budding entrepreneurs are led to believe that they must amass years of industry expertise before venturing into the world of startups. But is this belief genuinely a game-changer, or is it somewhat overrated?

                                                                    The argument in favor of experienced founders hinges on several factors, including industry knowledge, an extensive network, and a profound understanding of business intricacies. These attributes are often perceived as tools to make fewer mistakes and secure funding more easily. However, it’s essential to scrutinize whether these advantages truly translate into a substantial edge for experienced founders.

                                                                    Knowledge comes from doing. The thing you want to know is the problem that you want to solve.”

                                                                    Sundeep Sahni

                                                                    In this blog post, we will explore the lessons learned from Sundeep Sahni, the co-founder of the UAE-based HealthTech startup Valeo, who also happens to be a serial entrepreneur. For context, before establishing Valeo in the UAE, Sundeep successfully launched two other startups in different Asian markets, all within the direct-to-consumer space. Sundeep will share with us the similarities and differences when it comes to building startups with experience under your belt, as well as the nuances of how it shapes the journey.

                                                                    Industry Knowledge & Versatility

                                                                    As Sundeep found success in a D2C business the first time around, he inevitably found himself preferring to establish more direct-to-consumer (D2C) businesses over business-to-business (B2B) models.

                                                                    However, he ventured into various industry verticals — from e-commerce to logistics to healthcare. Consequently, he had to navigate the intricacies of each industry. Sundeep emphasizes that even within one country, there can be significant differences between regions. He believes that a business thriving in Dubai may not necessarily replicate that success just an hour’s drive away in Sharjah, a neighboring emirate.

                                                                    This underscores the point that while prior experience in a specific industry can provide founders with invaluable insights into market dynamics, trends, and customer behavior, it can also inadvertently foster complacency or resistance to change. In contrast, inexperienced founders, unburdened by preconceived notions, often bring innovation, enthusiasm, and a fresh perspective to the table.

                                                                    Networking Alchemy: Turning Contacts into Gold

                                                                    Sundeep recalls how he was once a small fish in an already established pond when he was a new entrant in Indonesia and Iran, where competitors already had, and leveraged, their strong networks and relationships; a relatable dilemma for many new founders. What helped Sundeep, in this case, was his clarity and focus on his comparative advantage: He had access to more advanced technology from outside the region (India) that his competitors with established local relationships did not.

                                                                    Established founders build extensive networks of industry contacts, mentors, and potential collaborators over time. These relationships offer access to resources, funding, advice, and partnerships that can fuel startup growth. However, Valeo’s journey highlights that even without local relationships, founders can leverage their comparative advantages to thrive.

                                                                    Flexibility Rules

                                                                    Through years of navigating the challenges of running a business, founders accumulate a wealth of knowledge about what works and what doesn’t. Experience hones one’s problem-solving skills and foresight, enabling one to tackle unexpected obstacles with confidence and agility and proactively adjust operations to stay competitive.

                                                                    In Valeo’s case, Sundeep is implementing an idea he learned back in Tehran, with the Snapp Group, where he was discouraged from entering the ride-hailing market due to the small consumer base at the time. Still, through good forward thinking, his team saw the city go from 6,000 cars to 50,000 over three months. Sundeep’s learning from this experience was the perspective of customer convenience, one of the foundations for Valeo, as he believes that disruption in healthcare should center on catering to the needs of the customer, but is often overshadowed by considerations of doctors, insurers, and hospitals.

                                                                    Experience can bestow founders with the ability to adapt to changing market conditions and shifting consumer preferences. This adaptability is invaluable for responding to unforeseen circumstances and pivoting when necessary, especially in markets with unique demographic and cultural nuances.

                                                                    Learning Curve Overdrive

                                                                    For entrepreneurs like Sundeep, continuous learning means not only keeping up with industry trends but also deeply understanding demographic and market intricacies. Each of Sundeep’s ventures has been vastly different from the last, in different regions of the world, no less, but he didn’t take past success as the definite roadmap to walk on; he continued to observe, research, and then adjust his learnings to best incorporate his venture’s next move, such as strategizing Valeo to revolve around premium care and be marketed towards a certain group of consumers, versus his previous ventures that were all about affordability and were geared towards the mass market.

                                                                    The entrepreneurial journey is an ongoing learning experience, irrespective of one’s level of experience. The business landscape is in perpetual motion, with advancing technologies, evolving consumer preferences, and emerging strategies. Embracing a mindset of continuous learning isn’t just a means to stay competitive; it’s the path to innovation, adaptability, and sustained growth.

                                                                    Cultural Compass

                                                                    Upon inquiring about the challenges faced when expanding into Valeo’s next market, Saudi Arabia, the conversation unveiled the distinct nature of the Saudi market — a unique market where a strong physical presence is not just desired but expected. In Saudi Arabia, Sundeep says, it is considered a normal form of business communication for your clients to develop a relationship where they can call you late in the evenings or even invite you for coffee after working hours, a level of personal engagement rarely seen in most other markets where digital meetings suffice. To thrive in this environment, it’s essential to either fully embrace the local culture or establish a dedicated, culturally aligned team capable of accommodating such interactions.

                                                                    Understanding and respecting local business culture is paramount for success, whether through a local team or personal engagement. It builds trust, fosters partnerships, and aids in navigating international markets effectively.

                                                                    Diverse Tastes, Global Trends

                                                                    Consumer responses to businesses can vary significantly across different countries due to various factors. Some countries are more forgiving than others, Indonesia and Iran over the UAE in Sundeep’s case, as the former countries, for example, were not as used to a fast-paced lifestyle, or there was simply not another alternative in the market to go to at the time. A website crash was met with significant patience and understanding and was not too dangerous to your consumer base in Indonesia and Iran. However, in Dubai, that same error could lead to a loss in consumer base and reputation, making it an issue of the highest degree.

                                                                    Consumer preferences are shaped by complex interactions of culture, economics, and social factors. What resonates with consumers in one country may not appeal to another. Adapting marketing strategies and understanding cultural nuances are key to expanding globally successfully.

                                                                    Choosing the Right Investors Beyond the Funding Game

                                                                    For new founders, Sundeep emphasizes the importance of patience and finding the right investors. He stresses that VCs are not banks, as a VC’s role is not to provide quick, risk-free funding. Instead, founders approach VCs because they seek patient investors who are willing to dilute their ownership in exchange for support and mentorship, with the understanding that the business may not guarantee a 100% success rate.

                                                                    Ultimately, the decision to engage with VCs hinges on the desire to have them on board as long-term partners in the venture. Recognizing the right investors aligning with your company’s vision and values is vital. It’s equally crucial to learn when to say “no” to investors who don’t share your long-term goals. Careful selection ensures not only capital infusion but also valuable expertise and industry connections.

                                                                    Conclusion: Wisdom, Innovation, and Beyond

                                                                    Valeo’s journey is a testament to the multifaceted nature of the founder’s experience. While prior experience offers distinct advantages, it doesn’t overshadow the potential of inexperienced founders, who often bring innovation and a fresh perspective to the entrepreneurial landscape. In a constantly evolving business world, continuous learning, adaptability, and a deep appreciation of local culture and consumer preferences are the linchpins of long-term success.

                                                                    If you are a first-time founder, or one with prior startup experience under your belt, and are passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. In addition to providing capital to support the growth of our portfolio companies, we offer our value creation capabilities to assist them in building commercial partnerships, receiving guidance from experienced experts, and more.

                                                                    You can also learn more about our Direct Investments deal lifecycle process here.

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                                                                      DFDF blog post featuring zest equity co-founders Zuhair Shamma and Rawan Baddour

                                                                      How to Launch a Tech Startup as Non-Technical Founders: Lessons from Zest Equity

                                                                      Introduction: Beyond Code

                                                                      The world of tech startups often revolves around brilliant programmers and tech-savvy individuals who innovate and reshape industries. However, that is not to say that non-technical visionaries don’t emerge. They often step onto the startup scene armed not with lines of code, but with a passion for innovation and an unwavering commitment to their dreams.

                                                                      In fact, in the Middle East, it’s not uncommon for this to be the typical background of tech startup founders. Instead, they tend to come from business or industry backgrounds. A study by Wamda in 2022 found that only 20% of tech startup founders in the Middle East have a technical background.

                                                                      Several region-centric dynamics typically contribute to this skew, with the main ones being:

                                                                      1. Expanding Access to Technical Education: The Middle East is steadily advancing in this domain, with opportunities for growth. Although there is still room for more qualified tech professionals, the region is on the right track.
                                                                      2. Inspiring role models: While there may be a limited number of tech entrepreneurs from non-technical backgrounds in the Middle East, this landscape is evolving. Aspiring founders can look forward to an increasing pool of role models, paving the way for their own achievements in the thriving tech industry.

                                                                      Despite these challenges, there is a growing number of successful tech startups in the Middle East founded by non-technical individuals, and one notable example is Zest Equity.

                                                                      But First, About Zest Equity

                                                                      Zest Equity digitizes private market transactions. In their own words, they are on a mission to:

                                                                      "Democratize access to venture capital, empowering investors, founders, and their companies on a single platform."

                                                                      Why did Zuhair Shamma and Rawan Baddour, both non-technical, decide to take the leap and create their tech company in the first place? Both co-founders come from backgrounds in investment banking, where they saw a gap in the market for private secondaries in the Middle East. With the concept being fairly established in more sophisticated financial markets, such as the US, the opportunity to create a regional solution was there for the taking.

                                                                      You can dive deeper into what secondary markets are and how startups can use them as a route to access liquidity in a previous blog post we wrote here.

                                                                      Two Words: Control and Quality

                                                                      Though the duo did not have a technical background, they certainly did not let that be their kryptonite. Instead, it fueled their determination to learn about the product development process as they launched their tech startup. They understood the importance of closely monitoring the development of their Minimum Viable Product (MVP) and the journey beyond.

                                                                      “The most challenging thing was, because we're non-technical, how do you actually vet the quality of the code and the quality of the work? You either have to blindly trust or find ways to just get comfortable with what you can control versus what you can't control.”

                                                                      Rawan Baddour

                                                                      Their approach wasn’t about rolling up their sleeves and coding themselves, nor did they settle for an off-the-shelf solution that didn’t align with their vision. Instead, they made early hires of experienced technical team members while equipping themselves with enough knowledge to fully immerse themselves in the process and contribute meaningfully.

                                                                      Their understanding of technology didn’t progress in a linear fashion; rather, it was a steep learning curve that, while becoming less daunting over time, remained challenging. Their commitment shone through as they infused their business vision into the product’s features, functionality, and customer experience. This hands-on approach ensured rigorous bug testing and quality assurance, ultimately preparing their product for a successful launch.

                                                                      Translating their ideas into the language of technology presented its set of challenges and valuable lessons:

                                                                      1. Transitioning from Miscommunication to Iterative Learning: Initially, collaboration hurdles plagued their team. As they evolved from basic rebuilds to more intricate platforms, they encountered glitches stemming from misinterpreted processes and branching. They realized that even seemingly minor design nuances on the front-end could pose significant coding challenges, highlighting the importance of transitioning from casual discussion to methodical technical communication.
                                                                      2. Precision in Communication and Process Orientation: Recognizing that clarity was paramount in the tech domain, Zuhair and Rawan embraced articulate and precise communication. They created detailed Product Requirements Documents (PRD) that delved into process flows and feature intricacies. This shift marked a significant milestone, offering a comprehensive understanding of their product’s nuances.
                                                                      3. Alignment to Execution: Their approach evolved to ensure not only alignment but also seamless execution. PRDs became the foundation for a structured system that spanned from conceptualization to launch, resulting in a systematic workflow.

                                                                      Actionable Lessons for Non-Technical Founders Navigating Tech Challenges

                                                                      Zuhair and Rawan share the following lessons learned from their journey building Zest, which they hope will be helpful to other founders who are starting in similar shoes.

                                                                      1. Trust, but Verify: Founders should strike a balance between trusting their technical team and verifying their work. Distinguishing between controllable aspects and those requiring relinquishment is essential. Blind trust may lead to unintended consequences, while rigorous verification shouldn’t hinder progress.
                                                                      2. Navigate Uncertainty with Caution: Embracing uncertainty, especially in quality assurance, is vital. When dealing with technical aspects beyond your understanding, focus on surface-level functionality initially. However, don’t shy away from addressing underlying code quality and long-term viability challenges.
                                                                      3. Seek Trustworthy Partners: For non-technical founders, finding reliable partners for technical tasks is daunting but necessary. Look for individuals or teams whose skills and values align with your startup’s vision. While full technical comprehension may be elusive, diligent vetting and endorsements from reliable sources offer reassurance.
                                                                      4. Embrace Unfamiliar Territory: Non-technical founders, like Zuhair and Rawan, may find themselves in unfamiliar territory when searching for tech leadership. As outsiders to the tech community, align your expectations with the candidate’s experience to bridge the gap.
                                                                      5. Leverage External Validation: Enlist the help of friends and colleagues to review your work. External validation serves as a bridge between technical and non-technical aspects, providing reassurance and ensuring your project stays on track.
                                                                      6. Accept Limited Understanding: Acknowledge that as a non-technical founder, you won’t fully comprehend all technical intricacies. Instead of aiming for comprehensive understanding, focus on establishing robust internal processes, fostering effective communication, and exploring alternative channels for assurance.

                                                                      “Persevere, but also don't take setbacks too seriously, because otherwise, they'll eat you alive.”

                                                                      Zuhair Shamma

                                                                      Conclusion: Embracing Non-technical Visionaries in the Middle East

                                                                      Zuhair and Rawan’s journey serves as a compelling testament to the challenges and strategies that non-technical founders can harness to thrive in the tech industry. Their narrative highlights the vital significance of proactive learning, effective communication, and strategic partnership-building as essential tools to bridge the gap between non-technical backgrounds and the demanding technical landscape of entrepreneurship. Embracing these inherent challenges and actively seeking external validation emerge as pivotal steps on the path to success for non-technical founders in the dynamic world of technology startups.

                                                                      Moreover, their story underscores the central conclusion that non-technical founders must wholeheartedly engage in the tech aspects of their business to exert control over the inputs shaping the quality of their distinctive brand. Their experience further underscores the critical importance of discerning partner selection and acknowledging the boundaries of their technical understanding. Ultimately, success hinges on nurturing a symbiotic relationship where non-technical founders seamlessly integrate internal processes and external insights, thereby aligning their visionary goals with the intricate realm of technical development.

                                                                      You can learn more about Zest’s recent Seed round, which we participated in, on TechCrunch.

                                                                      If you are a founder who is passionate about building innovative solutions in the Future of Finance or Future Economies industries and meet our investment thesis, we invite you to apply for consideration for direct investment. In addition to providing capital to support the growth of our portfolio companies, we offer our value creation capabilities to assist them in building commercial partnerships, receiving guidance from experienced experts, and more.

                                                                      You can also learn more about our Direct Investments deal lifecycle process here.

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                                                                        Blog header for DFDF post about called 'A Guide to Our Fund of Funds Deal Lifecycle Process'

                                                                        A Guide to Our Fund of Funds Deal Lifecycle Process

                                                                        Introduction

                                                                        In the dynamic world of investments, Fund of Funds (FoFs) investing has risen as a strategic beacon, offering a versatile and streamlined approach to investment management. This ingenious concept involves weaving a tapestry of investments across multiple underlying funds, crafting a multi-layered strategy that captures diverse market opportunities while standing as a bulwark against potential risks.

                                                                        In this blog post, we will take you through our Fund of Funds evaluation process and the vivid panorama of legal structures and jurisdictions that adorn the landscape of venture capital (VC) funds.

                                                                        Our Fund of Funds Mandate

                                                                        Our overarching Investment Thesis encompasses deploying capital into both burgeoning startups through direct investments and venture capital funds as Fund of Funds investments. In the realm of the latter, we intend to allocate 60% of our capital designated for FoF investments to regional funds, with the remaining 40% directed toward international funds.

                                                                        When it comes to regional funds, our focus extends to both emerging fund managers and established VC funds. The former category involves first-time fund managers who possess prior experience in VC investment. These managers present a distinctive vision for their funds, whether in terms of stage, sector, or geographic focus. Additionally, they operate within the UAE and harbor aspirations of expanding their footprint across various Middle East, Africa, and South Asia (MEASA) regions.

                                                                        Conversely, the latter category encompasses fund managers embarking on their second or subsequent fundraising rounds. These managers have demonstrated strong performance with their initial fund, exhibiting robust governance, a commendable track record of their team, sectorial expertise that is worth spreading, and a notable impact on the regional ecosystem. Operating either from the UAE or other parts of MEASA, these established VC funds bring a wealth of experience to the table.

                                                                        Mapping the Terrain Further

                                                                        Further dissecting our Fund of Funds mandate, we delve into the geographic scope of our investments. Currently, we are focused on Stage 1 of a comprehensive three-stage strategy.

                                                                        Stage 1 (focus area): Our investment focus is primarily directed towards Dubai and UAE-based funds, extending to encompass a broader regional emphasis on the GCC and the Levant.

                                                                        Stage 2: Our strategy unfolds with an expansion into North Africa, targeting specific countries such as Egypt, Morocco, and Tunisia.

                                                                        Stage 3: The journey continues as we shift our focus to the Middle East, Africa, and South Asia region. Notably, potential markets like India, Pakistan, and Bangladesh display promising deal flow. Given the limitation of available capital, our investment decisions in this stage are guided by meticulous market mapping and industry-specific analysis.

                                                                        Our Initial Screening Process

                                                                        When we receive a fund application, we embark on assessing the pitch deck to determine its alignment with our investment thesis. In instances where there’s a potential fit (or there are less clear areas), we initiate an introductory call or email exchange to gather more information. Once a fund meets our criteria, we move forward into the first phase of diligence.

                                                                        1. First Phase of Diligence

                                                                        An infographic that depicts the first phase of diligence for FoF Investments

                                                                        This step includes reviewing the fund’s deck and dataroom thoroughly, sharing our Due Diligence Questionnaire (DDQ), and conducting portfolio analysis. Note that our DDQ encompasses more than 180 questions, comprehensively covering investment strategy, organization, governance, team composition, fund terms, valuation policy, investment process, and documentation. Our Portfolio Analysis Template is shared with fund managers raising their second fund or beyond, providing a detailed breakdown of past investments.

                                                                        Analysis during this phase includes the following steps:

                                                                        • Scrutinizing the fund’s investment thesis, including preferred stages, sectors, and geographic focus
                                                                        • Understanding average ticket size and capital allocation for follow-on investments
                                                                        • Identifying the type of investments made, such as equity or convertible notes, and whether they lead or co-invest
                                                                        • Evaluating the fund’s team, their experience, cohesion, and driving factors, with a particular focus on legal aspects such as fund structure and carry distribution. Assessing the legal structure, ownership, and carry distribution to ensure interests are aligned
                                                                        • Gauging the fund’s fundraising status, including closing stages, timelines, the types of investor commitments (institutional funds, angels, family offices, or corporates), and capital raised

                                                                        This thorough evaluation process allows us to make informed decisions about which VC funds to invest in, ensuring alignment with our investment focus and criteria.

                                                                        2. Unveiling the VC Fund Performance Enigma

                                                                        A Guide to Our Fund of Funds Deal Lifecycle Process

                                                                        In addition to assessing the team and track record, we conduct a comprehensive evaluation of the fund’s financial and performance metrics. Some of the key metrics examined include the following:

                                                                        • Net Asset Value (NAV): This metric offers insights into the fund’s assets and liabilities, providing a holistic view of its financial standing
                                                                        • Fair Market Value: Determining the value of investments at the point of evaluation, providing an accurate snapshot of the fund’s current market position
                                                                        • Multiple on Invested Capital: By comparing the initial investment cost to the current value, this metric reveals the fund’s performance growth over time
                                                                        • Internal Rate of Return (IRR): This metric factors in the timing of funding and investments. It places primary emphasis on three key performance multiples:
                                                                        1. Residual Value to Paid In: This ratio represents the invested amount that hasn’t yet been exited or realized, relative to the paid-in capital
                                                                        2. Distributions to Paid In: The ratio of distributed amounts stemming from exited investments, compared to the paid-in capital
                                                                        3. Total Value to Paid In: This metric is the sum of Residual Value to Paid In and Distributions to Paid In. It showcases the current investment value compared to the initial contribution

                                                                        These meticulous performance assessments empower us to gain a profound understanding of a fund’s financial health and success trajectory, informing our investment decisions.

                                                                        3. The Tapestry of Portfolio Analysis

                                                                        Portfolio analysis goes beyond fund performance to include other pivotal factors. It entails a request for a comprehensive list of all fund investments, enabling us to examine crucial breakdowns.

                                                                        This analysis plays a pivotal role in evaluating the fund’s overall performance and its adherence to its strategy. It provides valuable insights into the fund’s investment choices, risk management strategies, and potential returns.

                                                                        Part of this analysis involves comparing the actual portfolio breakdown with the fund’s stated investment strategy to ensure consistency. This includes:

                                                                          • Geographical Breakdown: Understanding the fund’s investment distribution across different regions.
                                                                        • Sector Vertical Breakdown: Identifying the fund’s focus areas in terms of industry sectors.
                                                                        • Stage Breakdown: Analyzing the fund’s investments across stages, such as Pre-seed, Seed, Series A, and growth.

                                                                        Funds are further evaluated based on their investment behavior and portfolio performance:

                                                                        • Examining the date of investment to understand the fund’s entry timing
                                                                        • Evaluating the entry valuation to determine if the fund entered at a fair or inflated value
                                                                        • Analyzing the fund’s ownership size in each portfolio company
                                                                        • Monitoring the number of write-offs and write-downs in the fund’s portfolio
                                                                        • Tracking the number of active portfolio companies still performing well
                                                                        • Recognizing the industry’s rule that some startups may fail while others succeed

                                                                        4. Calibrating the Portfolio

                                                                        The portfolio recalibration process ensures transparency and alignment with market practices. It involves reevaluating the fund’s investments based on updated data and valuation policies. Recalibration generally takes place at the end of a specific period, such as the end of year two or quarterly.

                                                                        The criteria for recalibration include reassessing valuation if there has been a significant price increase and utilizing specific fund-provided data for recalculating portfolio estimates.

                                                                        The process adheres to market practices and guidelines to ensure consistency and fair valuation, aiming for an accurate and objective evaluation of the fund’s performance. This portfolio recalibration process serves to maintain transparency, ensure fair valuation practices, and gain better insights into the actual performance and returns generated by the fund’s investments.

                                                                        Unmasking the Second Phase of Diligence

                                                                        1. Presenting to the Investor Committee

                                                                        Once a deal has been cleared for consideration by our team, we prepare to present it to the final decision makers — our Investment Committee (IC).

                                                                        We present these opportunities to the IC through an Investment Committee Memo, a comprehensive document, reflecting the team’s analysis and evaluation, intended to guide the IC’s decision-making process — to help them make a go/no-go investment decision.

                                                                        2. Post-IC diligence

                                                                        Once our Investment Committee pushes an opportunity through, the Post-IC diligence begins. This phase involves finalizing the legal due diligence to ensure the fund’s structure and all entities are in place. It also includes conducting reference checks with co-investors, founders, and other LPs, while seeking support from external legal counsel for document review.

                                                                        3. Legal Documents

                                                                        The key documents that we gather when finalizing a FoFs deal Post-IC diligence include the following:

                                                                        1. Subscription Agreement:

                                                                        • Outlines the commitment of Limited Partners (LPs) to provide agreed-upon capital to the fund
                                                                        • Details of commitment amount, drawdown schedule, fees, and other legal and regulatory aspects

                                                                        2. Limited Partnership Agreement (LPA):

                                                                        • This crucial document defines rights, responsibilities, and relationships between General Partners (GPs) and LPs
                                                                        • It encompasses capital commitment, management fees, and profit distribution details

                                                                        3. Side Letter:

                                                                        • An optional document used when LPs require specific terms different from those offered in the LPA
                                                                        • It can modify the terms of the LPA for that specific LP

                                                                        4. Know Your Customer (KYC):

                                                                        • Involves collecting information about investors to ensure fund legitimacy, assess regulatory compliance, and determine risk profile
                                                                        • Extends beyond identifying investors’ identities

                                                                        These legal documents play a pivotal role in the closing of a FoFs investment deal and help establish clear terms and expectations between GPs and LPs, fostering transparency, compliance, and risk management.

                                                                        A Guide to Our Fund of Funds Deal Lifecycle Process

                                                                        Critical Elements in the Limited Partnership Agreement (LPA)

                                                                        Limited Partnership Agreements (LPAs) serve as foundational documents defining the relationship between investors and fund managers. They lay out the terms, rights, and responsibilities of both parties, shaping how investment funds are structured, managed, and operated.

                                                                        Accordingly, LPAs play a pivotal role in the legal due diligence process. Understanding these critical elements helps us assess the alignment of interests, distribution mechanics, and transparency within the fund structure.

                                                                        The tricky thing is that not all firms follow the same LPA template. In this case, we’d like to delver into some of the critical elements of our LPAs:

                                                                        1. GP Commitment:

                                                                        • This refers to the capital amount contributed by General Partners (GPs) to the fund
                                                                        • Typically ranging from 1% to 2% of the total fund size, it aligns the interests of GPs with Limited Partners (LPs)

                                                                        2. Waterfall Distribution:

                                                                        • This determines how capital returns are shared between LPs and GPs
                                                                        • It can follow a European or American model:
                                                                          • European model: GPs receive carry after returning the initial capital to LPs
                                                                          • American model: GPs receive their share of profit on a deal-by-deal basis

                                                                        3. Governance and Reporting:

                                                                        • This section covers the structure of the Investment Committee (IC), Limited Partner Advisory Committee (LPAC), and LP information rights
                                                                        • It is crucial for understanding power dynamics and transparency within the fund
                                                                        • Quarterly or annual reports fulfill reporting

                                                                        4. Carried Interest:

                                                                        • This represents a significant portion of the General Partner’s (GP) profit, acting as a performance incentive

                                                                        5. Management Fees:

                                                                        • Annual fees paid to GPs for managing the fund, typically ranging between 1.5% to 2.5% of the total fund size or invested capital
                                                                        • These fees may start higher and reduce over time based on invested capital post-investment

                                                                        6. Partnership Expenses:

                                                                        • Ongoing costs of running the fund, including legal fees, travel, insurance, and due diligence expenses
                                                                        • These expenses can impact the fund’s overall return and are subject to an annual cap, usually between 0.5% and 2% of committed capital throughout the lifetime of the fund

                                                                        7. Organizational Expenses:

                                                                        • One-time costs associated with setting up the fund, usually capped as a percentage of the fund (around 0.5%)
                                                                        A Guide to Our Fund of Funds Deal Lifecycle Process

                                                                        Major Considerations When Reviewing an LPA

                                                                        Evaluating a Limited Partnership Agreement (LPA) involves weighing numerous aspects, and we focus on four major ones:

                                                                        1. Alignment of Interest:

                                                                        • We assess whether the General Partners’ (GPs) economic incentives align with the objectives of Limited Partners (LPs)
                                                                        • This evaluation is based on factors such as carried interest, waterfall distribution, and information rights

                                                                        2. Protection Against Downside Risk:

                                                                        • We check clauses related to liability, indemnity, key person clauses, and defaults to mitigate potential risks

                                                                        3. Exit Rights and Liquidity:

                                                                        • Understanding the fund’s exit strategy and terms for liquidating assets is essential
                                                                        • We assess how remaining assets will be distributed, which is crucial for evaluating potential return on investment

                                                                        4. Fund Strategy and Decision-Making:

                                                                        • We seek to understand the fund’s investment strategy and any restrictions on investments
                                                                        • We determine if the decision-making rights of Limited Partners align with their investment goals
                                                                        A Guide to Our Fund of Funds Deal Lifecycle Process

                                                                        The limited partnership (GP-LP structure) is the most prevalent choice due to its simplicity, segregation of liabilities, and flexibility in managing funds and investments:

                                                                        • Most common structure 
                                                                        • Involves a General Partner (GP) that manages the fund
                                                                        • Limited Partners (LPs) directly invest in the fund
                                                                        • The GP receives a management fee (typically around 2%) from the LPs and the fund
                                                                        • Liabilities are segregated between the GPs and LPs

                                                                        Jurisdictions for VC Funds

                                                                        The most common jurisdictions for incorporating venture capital funds are Delaware (US), Luxembourg, the Cayman Islands, and the UK (including the British Virgin Islands). The choice of jurisdiction can vary based on factors like tax efficiency, regulatory requirements, and LP preferences.

                                                                        Luxembourg is heavily regulated and may be preferred by European investors for added comfort. Meanwhile, the Cayman Islands are known for their tax efficiency and quick incorporation process. On the other hand, Dubai International Financial Centre (DIFC) is emerging as a jurisdiction for fund incorporation.

                                                                        Inside Our FoFs Portfolio

                                                                        As of the date of publishing this blog, our portfolio consists of the following seven FoF investments:

                                                                        1. Outliers

                                                                        • An early-stage fund, covering the Seed to Series A stages
                                                                        • A Saudi-based fund operating within the UAE, concentrating on fintech, cybersecurity, and retail sectors. It is an emerging fund manager

                                                                        2. Byld Ventures

                                                                        • An emerging fund led by first-time fund managers, specializing in early-stage pre-Seed investments
                                                                        • Based in Dubai with operations in Africa
                                                                        • Focused exclusively on fintech innovations

                                                                        3. Shorooq Partners

                                                                        • An established fund investing in Seed to Series A stages
                                                                        • Engages in operations and investments across the Middle East, North Africa, and Pakistan
                                                                        • Concentrates on fintech platforms and software advancements

                                                                        4. COTU Ventures

                                                                        • An emerging fund manager initiated by a General Partner formerly at BECO Capital
                                                                        • Focuses on FinTech, tech software, and AgriTech ventures
                                                                        • Operates and invests across the Middle East, North Africa, Pakistan, and Turkey

                                                                        5. MEVP (Middle East Venture Partners)

                                                                        • Invests across the Seed to Series B stages
                                                                        • Focuses on diverse sectors within the Middle East and North Africa, with a prominent presence in Dubai
                                                                        • Boasts more than a decade of active engagement within the VC ecosystem

                                                                        6. NUWA Capital

                                                                        • Targets Pre-Seed to Series A investments, primarily in FinTech, HealthTech, and other software domains
                                                                        • Operations span across MENA, North Africa, Turkey, and Pakistan

                                                                        7. Arbor Ventures

                                                                        • An international fund specializing in Seed to Series A investments
                                                                        • Already established several investments in the region
                                                                        • Focused exclusively on FinTech companies

                                                                        Our Invitation to Aspiring Funds and Fund Managers

                                                                        We extend an invitation to all aspiring funds and visionary fund managers who share our passion for fostering innovation and driving the growth of groundbreaking startups. We are in search of those who dare to dream, those who are committed to supporting promising founders, and those who are dedicated to shaping the future of investment.

                                                                        Together, we have the remarkable opportunity to not only contribute to the flourishing venture capital landscape of the UAE but also to inspire the entire MEASA region. By joining forces, we can amplify the impact of our collective efforts, nurture entrepreneurial spirit, and usher in a new era of opportunity.

                                                                        As we embark on this journey together, we invite you to apply and be a part of shaping the dynamic future of investment in the UAE and beyond.

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                                                                          The df2 cover image for a blog called 'A Guide to Our Direct Investments Deal Lifecycle Process'

                                                                          A Guide to Our Direct Investments Deal Lifecycle Process

                                                                          Introduction — The Importance Of A Robust Deal Lifecycle

                                                                          The process by which a startup is considered for investment by a venture capital (“VC”) firm is called a deal lifecycle, with “deal” referring to a startup investment opportunity that makes its way to a VC’s portfolio. Having a robust deal lifecycle is paramount for venture capital funds to make well-informed decisions about which investment opportunities to pursue — and, effectively, where to deploy their capital.

                                                                          A deal lifecycle that is not well-defined can result in missed opportunities, ineffective screening, and uninformed investment choices for venture capitalists — all of which are missteps that can lead to unrealistic valuations, weaker portfolio performance, and limited value addition to portfolio companies. Not to mention, venture capitalists may encounter elevated risk exposure and difficulties aligning investments with their long-term strategies.

                                                                          At DFDF, we have put together what we believe is a well-defined deal lifecycle to help us make investment decisions and, thereby, deploy our capital as effectively and efficiently as possible. Our goal is that, in the long run, this will enable us to play a pivotal role in fostering innovation and growth within the regional venture capital ecosystem.

                                                                          In the subsequent blog post, we will take you through our deal lifecycle, led by our Managing Director Amer Fatayer, in an effort to provide transparency around what we believe it takes for startups to receive a direct investment from us and to share our thoughts on best practices when it comes to making investment decisions about VC deals. We hope that founders find this information helpful in preparing for discussions with VC firms when fundraising, as we also believe that investors will derive value from learning about our deal process and investment decision-making criteria.

                                                                          An infographic from the blog post entitled 'A Guide to Our Direct Investments Deal Lifecycle Process'

                                                                          Step 1: Our Initial Screening Process

                                                                          The start of any direct investment deal in our lifecycle begins as a lead at the very top of our funnel. We source leads from several channels, including:

                                                                          1. Our extensive network of founders and VC funds
                                                                          2. Ecosystem stakeholders, including accelerators
                                                                          3. Opportunities where corporate venture capital arms seek to participate in funding rounds
                                                                          4. Our target list that we compile based on industry news and our team’s insights
                                                                          5. Founders who complete the application form on our website

                                                                          To be considered further for investment, every lead, once captured in our funnel, is screened firstly for fit against our investment mandate and innovation in either the Future of Finance or Future Economies sectors. For the opportunities that are deemed suitable to our mandate, they then undergo further screening and evaluation.

                                                                          Step 2: Our Due Diligence Approach

                                                                          For promising opportunities that meet our investment mandate criteria, the investment team delves into deeper due diligence and evaluates the startup based on the following aspects:

                                                                          1. The idea: What problem is being tackled, and how does the product or service being developed address it?
                                                                          2. The business model: How can the idea be packaged into a viable business?
                                                                          3. The team: Do the people executing the idea have what it takes to make the business successful?
                                                                          4. Timing of the idea: Are the market conditions right for the business to become successful?
                                                                          5. Funding: What are the team’s capital efficiency and funding capabilities?
                                                                          6. Scalability: Can the product or service be sold at scale with the current tech stack?
                                                                          7. Defendability: How easy is it for competitors to replicate the idea?
                                                                          8. Differentiation: What’s unique about the idea compared to other solutions in the market?

                                                                          This initial due diligence aims to capture vital insights and nuances about the opportunity and its wider, positive impact on society. By exploring these key aspects, the team seeks to grasp the essence of the opportunity and whether it’s a must-have in the world.

                                                                          Step 3: Meeting Founders of Prospective Direct Investments

                                                                          If an opportunity proves intriguing and aligns with our investment thesis, once the due diligence has been completed, it gets discussed during one of our weekly team meetings.

                                                                          During these sessions, team members share their perspectives, experiences, and insights across various aspects of the funding request, problem statement, value proposition, team, and business model. Together, we answer out loud questions like:

                                                                          • Would we want to buy it if we were their customers?
                                                                          • What would we want to see to make it stickier?
                                                                          • Would we personally pay to address this pain point, if we feel it at all?
                                                                          • What do we believe is the true market size, based on our understanding of who really buys this product and how fast the penetration is?

                                                                          In addition to hashing out the above amongst our team members, we speak to industry experts to validate our due diligence findings. These experts could be acclaimed subject-matter-experts, other founders, or founders in adjacent business models. In some cases, we even speak with founders who failed to build this product, to understand their challenges at the time.

                                                                          If the team collectively deems an opportunity promising, it is further discussed in a partner meeting to decide whether the venture proposition requires further evaluation or can proceed to be presented to the Investment Committee (IC).

                                                                          Getting to this stage usually also entails arranging face-to-face meetings with the founders of the ventures being considered to gain a more thorough understanding of the opportunity at hand. During these meetings, we assess the founders’ abilities and readiness for execution.

                                                                          Step 4: Considering Opportunities With Our Investment Committee

                                                                          Once a deal has been cleared for consideration by our team, we prepare to present it to the final decision-makers — our Investment Committee (IC).

                                                                          We present these opportunities to the IC through an Investment Committee Memo, a comprehensive document reflecting the investment team’s analysis and evaluation, intended to guide the IC’s decision-making process. This document helps them make a go/no-go investment decision on the startups based on several factors, including the following:

                                                                          • Introduction: What product/service does the company offer, what problem does it solve, and what is its business model?
                                                                          • Thesis fit: What is the company’s sector, company stage, and geographical focus, and does it fit into our investment thesis?
                                                                          • Investment rationale: What excites us about the opportunity, the company’s potential to capture market trends, and its competitive edge?
                                                                          • Value proposition: What’s our understanding of the company’s offer and customers’ willingness to pay?
                                                                          • Product and business model evaluation: How is the company pricing its offering and how does it plan to generate revenue from its customers?
                                                                          • Core management assessment: What’s our assessment of whether the team is capable of delivering the company’s plans?
                                                                          • Go-to-market strategy examination: What’s our assessment of the company’s sales approach and predicted conversion ratios?
                                                                          • Traction review: What has the company achieved across various metrics?
                                                                          • Market evaluation: What’s our review of the industry trends that the company operates in, globally, regionally, and locally?
                                                                          • Competition analysis: What’s our review of local and global competition and how the company anticipates differentiating itself and maintaining this?
                                                                          • Valuation and deal terms: What is the company’s funding history, its current funding plans, its current ownership structure, and its current investment ask, along with our evaluation of its current valuation based on our understanding of the industry multiples?
                                                                          • Financial scrutiny: What has been the company’s recent financial performance, its future forecasts, and its financial model robustness, along with our evaluation of its forecasts based on our understanding of market trends?
                                                                          • Return analysis: What are the company’s potential returns and exit potential?
                                                                          • Technology assessment: What’s our technical evaluation of the company’s infrastructure and adaptability?
                                                                          • Risks: What are the issues that may concern the company, and how do they plan on mitigating them?
                                                                          • Appendix: Any other information that is important about the company.

                                                                          Step 5: Making It Past The Deal Finish Line

                                                                          Once the IC decides that an opportunity is suitable for direct investment, our team proceeds to close the deal with the startup — happy days for everyone involved! At least once all the paperwork is sorted, ofcourse. Note that each investor, institutional and otherwise, will have their own set of expectations when negotiating legal terms. With this regard, we focus on the balance of ensuring the business is not crippled or slowed down, whilst ensuring good governance.

                                                                          However, our involvement with the startups in our portfolio doesn’t end once we’ve deployed our capital. Similar to some of our peers, we prioritize building long-term relationships with our portfolio companies — our process includes in-depth discussions about mutual expectations and how we can support each other beyond just capital infusion. That is to say, we consider the potential for synergy and collaboration (e.g. government contracts or partnerships with our shareholders) as a key factor in our investment decisions, to make the business more successful. This forms part of our broader value creation strategy, which you can read more about here.

                                                                          We are able to determine areas of how we can contribute to our portfolio startups’ success and drive value creation where we ask our portfolio of startups to share their performance metrics. The same reporting process forms part of our broader governance and compliance process, which you can read more about here.

                                                                          Conclusion And Our Invitation To Innovative Startups

                                                                          In summary, the venture capital deal lifecycle entails a well-orchestrated journey combining data-driven analysis with thoughtful reflections. This process culminates in strategic investments with the power to shape the future of innovative businesses. Embracing this comprehensive approach empowers venture capitalists to make informed decisions, forge lasting partnerships with visionary founders, and contribute to the growth and success of startups that will define tomorrow’s industries.

                                                                          If you are the founder of a startup that is innovating in the Future of Finance or Future Economies, please apply to be considered for a direct investment or reach out to our investment team members.

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                                                                            The image cover for a DF2 blog called 'Unleashing Value Creation: Navigating Our Vision, Strategy, and Catalyst Behind the Mission'

                                                                            Unleashing Value Creation: Navigating Our Vision, Strategy, and Catalyst Behind the Mission

                                                                            Introduction to Our Approach on Value Creation

                                                                            In today’s fast-paced business landscape, the concept of value creation has taken on a new dimension – it’s not just a goal, but the very essence of progress and innovation. At DFDF, we’ve embedded the concept of value creation deep within our core strategy. Our mission is not just about financial returns; it’s about nurturing innovation, spurring job creation, and driving economic growth.

                                                                            In this post, we share with you what value creation means to us and how we plan on delivering on this ambition, as well as introduce you to our new Managing Director who’ll be the driving force behind our mission – Nader Albastaki.

                                                                            A Deeper Dive into Value Creation

                                                                            For us at DFDF, value creation goes beyond profit margins; it’s about creating an ecosystem where innovation thrives. Accordingly, our approach unfolds across four pillars:

                                                                            1. Strategic Portfolio Synergy: For the startups that fit our investment thesis and receive a direct investment from us, we plan to accelerate capital gains by facilitating cross synergies and opening the door to strategic and operational expertise for them. To achieve this, we identify the functional, sectoral, and thematic opportunities that cross paths with other private and government entities in Dubai and the wider United Arab Emirates and from there facilitate discussions around how our portfolio companies can tap into their expertise and potentially step in to implement these agendas.
                                                                            2. Infusion of Operational Excellence: Our commitment to extending expertise for our startups will also be served through our “Entrepreneur in Residence” program, where experienced founders and early-team members collaborate with our startups, ensuring that their strategic plans are not just well-formed but meticulously executed.
                                                                            3. Forging Meaningful Networks: We connect startups in our portfolio with potential partners who need their solutions, which we determine based on needs assessments that we aim to conduct with each one to understand their pain points (and therefore, how our startups can help). This creates valuable partnerships that benefit both parties.
                                                                            4. Advocating Regulation and Policy: For our direct investment startups that are truly pushing the boundaries of innovation, we plan to step in to help pioneer lasting change. In this regard, we identify opportunities to enhance existing regulatory and actively engage with our deep-rooted relationships with policymakers to advocate for our startups’ (and the portfolios of our funds) solutions. This, in turn, nurtures an environment for innovative thinking and growth, with potential wider impacts on the local ecosystem in areas such as attracting talent and capital flow into specific sectors and business stages.
                                                                            An infographic of DF2's Value Creation Pillars

                                                                            Defining Our Strategic Trajectory

                                                                            At DFDF, we don’t fit the mold of conventional venture capital firms — intentionally so. Think of us as a hybrid, marrying capital deployment with value-added services. This unique positioning allows us to offer institutional-level support to startups without being confined to institutional funding.

                                                                            Our strategic roadmap is built on collaboration, innovation, and a long-term vision. By forming alliances with key stakeholders such as government entities and strategic operators, we create an ecosystem that nurtures not just financial investment but innovation and sustainable growth.

                                                                            Lastly, as we are an evergreen fund, we look to build returns beyond a typical venture capital firm’s fund horizon — we strive to invest in companies who will pioneer change far out into the future.

                                                                            Nader Albastaki: Architect of Value Creation

                                                                            Central to our journey is Nader Albastaki – a visionary whose background spans strategy, startups, partnerships, and financial advisory. Nader’s professional experiences uniquely position him to drive innovation within DFDF and the broader ecosystem.

                                                                            With a career spanning strategic corridors, Nader Albastaki embodies visionary leadership. As the driving force behind DFDF’s value creation, Nader aims to fuse his strategic prowess with a passion for innovation. His journey, from startups to established institutions, positions him as the catalyst igniting transformation.

                                                                            Beginning his career in the financial industry with HSBC, Nader orchestrated fundraising efforts that went beyond transactions, nurturing alliances that fostered trust and growth. His tenure at Dubai Tourism saw him designing partnerships that redefined the sector’s landscape, collectively contributing to transforming Dubai into a global tourism hub. More recently, Nader led strategy at the Dubai Future Foundations, one of DFDF’s anchoring entities, where his inputs positioned Dubai as a visionary city of the future.

                                                                            Beyond his corporate engagements, Nader also aligns with startups, having been a serial entrepreneur himself. Over the years, he was a Founder/ Co-founder of 8 startups — some that succeeded and some that didn’t — all the while gaining an in-depth understanding of what startups need from an ecosystem for support.

                                                                            We are very excited to have Nader join our executive team as Managing Director and we look forward to the work that he’ll be undertaking in our efforts to create value in the local entrepreneurial ecosystem.

                                                                            Continuing the Journey: Where We're Headed

                                                                            In a world marked by change, we strive to stand as an innovation beacon. Nader Albastaki’s leadership propels not only our firm but a broader narrative of growth and transformation. With the strategic blueprint in place and Nader at the helm, DFDF is set to reshape industries, foster innovation, and drive the value creation that leads to a dynamic future.

                                                                            If you are part of a private or government organization that wants to work with startups and build an ecosystem that fosters innovation, please reach out to Nader.

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                                                                              The image cover for a blog post called 'Nurturing Startup Ecosystems: The Vital Symbiosis Between Venture Capital and Innovation'

                                                                              Nurturing Startup Ecosystems: The Vital Symbiosis Between Venture Capital and Innovation

                                                                              Introduction: Fostering Startups Is More Important Than Ever

                                                                              The venture capital (VC) industry in the Middle East and North Africa (MENA) region is undergoing rapid evolution. In 2022, startups in the region raised a record $3.94 billion across 795 deals, reflecting a 24% increase in investment value compared to the previous year and an almost four-fold growth rate over the past decade. Amidst this rapidly-evolving landscape, investors and founders find themselves at the crossroads of change and opportunity.

                                                                              In this blog we cover why this change is important and its impact on the venture capital industry. We also cover the role that VCs firms play in this growth, with an emphasis on how they can be more efficient at allocating capital and making a bigger impact through value creation.

                                                                              The 6 Pillars of Crafting a Thriving Ecosystem

                                                                              As innovation becomes the lifeblood of economies, the following six domains are to be considered in order to nurture and support startups and the entrepreneurs that play an integral role in fostering growth and prosperity: 

                                                                              1. Policy: Supportive regulations and frameworks promote entrepreneurship and have a trickle effect on other aspects of the economy such as financial, human, social, and intellectual capital.
                                                                              2. Markets: Networks to enable startups to connect with suppliers, potential clients, partners, and distribution channels.
                                                                              3. Talent: Access to a skilled workforce, mentors, advisors, and talented individuals who contribute to startup success.
                                                                              4. Infrastructure: Robust civil, legal, regulatory, macroeconomic, digital, and financial building blocks that attract innovators and investors.
                                                                              5. Culture: A culture that fosters risk-taking, innovation, and embraces failure as a learning experience.
                                                                              6. Finance: Diverse funding sources throughout the life cycle of innovation, from product development, to growth, scale and ultimately liquidity events in private and public capital markets.
                                                                              An infographic from a blog post called 'Nurturing Startup Ecosystems: The Vital Symbiosis Between Venture Capital and Innovation'

                                                                              It’s important to note that these domains are interdependent, and their impact collectively is far greater than any one of them on their own. For example, government policies that promote entrepreneurship, combined with a well-functioning market ecosystem, set the stage for startups to flourish. Additionally, a skilled workforce and supportive infrastructure can act as a magnet for startups. To state a third example, a robust infrastructure, including reliable digital connectivity and financial systems, makes it easier for startups to access diverse funding sources. 

                                                                              As such, understanding how they are interconnected and driving initiatives that foster all six areas collectively is essential for unlocking the full potential of startups and driving economic advancement.

                                                                              Where Do VC Firms Fit Into Driving Startup Innovation

                                                                              VC firms occupy a central position within the framework of the six pillars stated above that contribute to a thriving economic environment. Their influence is deeply interwoven with each element, fostering a symbiotic relationship that accelerates the growth of startups and drives economic advancement.

                                                                              To start, both favorable policies (such as tax incentives) and regulations (such as intellectual property protection) attract VC investments. These investments, in turn, stimulate economic growth by fueling the expansion of startups into new markets, effectively linking the domains of policy and markets. Further, this injection of funds at pivotal stages facilitates the development of products and positions startups for successful market entry.

                                                                              Beyond funding, VC firms provide mentorship, expertise, and strategic guidance. This enrichment of talent aligns seamlessly with the overall aim of cultivating a skilled workforce that contributes to startup success. Not to mention, VC firms are drawn to cultures that value risk-taking and innovation, mirroring their own appetite for investing in with manageable risks and high rewards.

                                                                              From Silicon Valley to MENA: The Venture Capital Evolution

                                                                              Traditionally, venture capital was accessible almost exclusively to affluent families with capital. However, the last six decades have witnessed significant changes. VC firms were chasing too many deals in the same location at the same time. Consequently, they expanded beyond the initial hotspots of Silicon Valley and Boston. Now, there’s ample access to capital in emerging regions, like MENA.

                                                                              Another shift in the evolution of venture capital has been in the way that deals are sourced. Whereas traditionally, the network trumped other methods of sourcing, with a preference for traditionally-acclaimed factors, VC investors are now relying more on outbound deal flow to generate more quality in pipeline. Knowing the founders well has gained prominence as a crucial aspect, and investment decision-making now incorporates new factors, such as perceived intellectual value-add.

                                                                              An infographic which presents the changing landscape of VC sourcing, from a blog post called ' Nurturing Startup Ecosystems: The Vital Symbiosis Between Venture Capital and Innovation ', by DF2.

                                                                              The Art of Opportunity Sourcing

                                                                              Whilst access to capital is crucial for startups to thrive and contribute to economic growth, as we’ve explained, the availability of said capital, including venture capital, is inherently limited. And so, establishing an efficient methodology for allocating this capital becomes pivotal to ensure that the most promising startups receive the necessary funds. By maximizing their potential for success, the trickle-down effectors of fostering innovation, creating jobs, and driving overall economic advancement becomes possible.

                                                                              But — this is all easier said than done. Quality deal sourcing is challenging for venture capital firms due to the high failure rate for startups (which Startup Genome anticipate to be 90%), intense competition for promising opportunities, and the need to build relationships with founders while adapting to rapidly changing market dynamics — akin to a strategic quest for opportunities. 

                                                                              Sourcing can come from both proprietary and nonproprietary channels. The former includes direct relationships of the investment team, management and shareholders and targeted industry outreach. On the other hand, the latter includes sponsor relationships, investment advisors/ intermediaries, and industry conferences.

                                                                              An infographic which present a VC Sourcing Model, from a blog post called 'Nurturing Startup Ecosystems: The Vital Symbiosis Between Venture Capital and Innovation' by DF2

                                                                              Upon identifying potential opportunities, a methodical evaluation and screening regimen ensue, culminating in a selection process aligned with the investment strategy of the firm. The process commences with the initial screening, which involves reviewing the startup’s addressed opportunity and assessing whether their team comprises the right individuals to lead the vision and execute the business plan. Subsequently, the due diligence phase follows, involving a deep dive into the startup’s industry and associated risks. This includes evaluating the product and analyzing the competitive landscape.

                                                                              Moving forward, partner meetings are conducted, during which in-depth discussions are accompanied by financial diligence, and negotiations concerning the investment terms take place. Finally, the closing and financing stage arrives, during which the capital allocation is secured through the completion of legal documentation.

                                                                              The Symbiotic Relationship: VCs and Startup Collaboration

                                                                              Once deals are sourced and capital is deployed, VCs then assume the role of lifeblood for startups — especially in their nascent stages — bridging the chasm between innovative ideas and financial resources.

                                                                              In the critical initial years, when startups encounter negative cash flows as they allocate substantial resources to product development, team building, and market penetration, venture capital emerges as a lifeline, ensuring operational continuity and growth.

                                                                              This collaborative dynamic assumes an orchestrated cadence. VC investments typically transpire between the product development phase and the cusp of product launch. This infusion of funds during these formative stages galvanizes startups to scale their operations, ultimately cementing their position in the market. Furthermore, as startups achieve a certain scale, the necessity for additional funding arises to propel aggressive expansion into new markets to capture market shares and grow the overall top line.

                                                                              A Post-Profitability Landscape: The Journey Beyond

                                                                              Even in the aftermath of profitability, startups persist in their quest for further capitalization. This pursuit stems from the imperative to maintain their competitive edge, safeguard their early mover advantage, and continue pioneering innovation.

                                                                              The strategic acquisition of funds at this stage not only facilitates expansion but also bolsters startups in their ongoing quest for innovation. In instances where startups are trailblazing in uncharted territories, additional funds are imperative to preempt competition and assert market leadership. This strategic capital infusion reinforces the startup’s pivotal role in the broader ecosystem.

                                                                              The Paradigm of "Smart Capital"

                                                                              It’s not solely VC firms that exhibit selectivity in their investment choices. Increasingly, founders have the privilege of choosing their investors, often assessing who excels in offering “smart capital” as a pivotal criterion in their decision-making process.

                                                                              The notion of “smart capital” has garnered prominence as startups have underscored the requirement for strategic, value-enhancing investments that extend beyond mere financial infusion. Smart capital connotes an investment that encompasses multi-dimensional support, including strategic guidance, market access, regulatory expertise, human capital, and mentorship. Its features include the following:

                                                                              • Strategic Guidance: Investors offer industry knowledge and mentorship.
                                                                              • Industry Networks: Investors connect startups with potential stakeholders.
                                                                              • Operational Support: Investors assist in optimizing business processes.
                                                                              • Market Access: Investors open doors to new markets and distribution channels.

                                                                              We encourage VC firms to look to provide smart capital, beyond mere funding, to enhance the growth trajectory of more startups in the region — ultimately, fostering a mutually beneficial relationship that positions to ecosystem as a whole for long-term success.

                                                                              Why VCs are Uniquely Suited to Drive Startup Growth

                                                                              Venture capitalists, beyond their financial role, emerge as key catalysts for economic progression. Their distinctive risk appetite sets them apart from conventional funding avenues, positioning them as vanguards of nascent startups and novel ideas.

                                                                              • Backers of Future Titans: Venture capitalists substantiate startups at their inception, fostering the emergence of new industry leaders. Unlike conventional avenues, venture capital amplifies the impact of new entrants, fueling innovation.
                                                                              • Active Guardianship: Venture capital endows startups with active ownership, characterized by operational guidance and strategic direction. VC firms provide a robust support system while founders retain the reins of leadership.
                                                                              • Job Creation and Economic Upliftment: VC-backed startups burgeon into significant contributors to employment and Gross Domestic Product (GDP), driving economic vitality and job prospects.
                                                                              • Cultivating Novel Arenas: Ventures fostered by venture capital often spearhead uncharted sectors, catalyzing economic evolution by unlocking untapped markets.
                                                                              • Holistic Returns: The influence of VC investments reverberates beyond financial gains. Employees vested in Employee Stock Ownership Plans (ESOPs) reap outsized benefits, thus amplifying the spectrum of wealth distribution.

                                                                              This collective impact extends to future generations, shaping the contours of business landscapes, fostering entrepreneurial vigor, and recalibrating innovation paradigms. Venture capitalists materialize as architects of transformation, propelling economies towards greater resilience and dynamism.

                                                                              Conclusion: Why It’s Important for VC firms to Drive Change and How DFDF Can Support

                                                                              In conclusion, the realm of venture capital unfolds as an intricate tapestry woven into the broader fabric of the entrepreneurial ecosystem. This engagement, characterized by strategic navigation, symbiotic collaboration, and multifaceted impact, surges beyond financial transactions to effect profound economic transformations.

                                                                              The partnership between venture capitalists and startups stands as a testament to the collaborative potential for driving innovation, stimulating economic growth, and shaping the contours of future entrepreneurship.

                                                                              We, at DFDF, are focused on value creation, in addition to capital deployment, to drive growth within the region’s VC industry. If you are a part of a private or public organization that is committed to the same goals, please get in touch — we’d love to hear from you.

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                                                                                DFDF Blog Header Image for Halfway Through 2023 — What Are Founders’ Fundraising Options?

                                                                                Halfway Through 2023 — What Are Founders’ Fundraising Options?

                                                                                Introduction: The Numbers Behind The Tough Half-way Mark

                                                                                At the halfway mark, global VC funding reached $144 billion, representing a 51% decline compared to the same period last year when the total amounted to $293 billion. Additionally, there have been a few noteworthy setbacks this year, most notably the collapse of Silicon Valley Bank, which had a ripple effect on the VC industry worldwide. The industry was further shaken by numerous layoffs across tech firms, with 151,054 workers affected at US-based tech companies alone, according to Crunchbase.

                                                                                As a result, the VC industry may appear like it’s retracting as we enter into the second half of 2023. However, in today’s discussion, we will delve into what all of this means for founders seeking capital this year.

                                                                                Fundraising Will Be Easier Said Than Done

                                                                                Given the current economic climate, capital has become expensive, with the target range for the Federal Funds Rate being 5.25-5.50% at the time of this issue, compared to 2.25-2.50% at the same time last year. This doesn’t present an encouraging environment for founders looking to fundraising — on the surface of things, at least — and especially for founders who don’t have solid business fundamentals in place.

                                                                                This makes the fundraising process daunting for investors as well, as they hold back on capital deployment, fearing they won’t achieve the same returns on their investments if they wait until after the current bear market emerges from hibernation. Limited partners (LPs) and general partners (GPs) in VC firms are also likely to prefer participating in subsequent funds with longer time horizons.

                                                                                However, it’s worth noting that even if the year closes below $100 billion, as anticipated, it would still be higher than the levels seen in 2017-2020. This suggests that 2021 was fueled by hype, and 2022 was a period of normalization. Although year-on-year funding has significantly dropped, if pricing and expectations align, we are likely to witness robust VC deployment for the right startups towards the end of the year.

                                                                                All this to say that despite the overall year-on-year slowdown, investment rounds are still happening and VC firms are still investing in startups as mandated. In fact, James Ephrati of Lightspeed Venture Partners estimates that global VC dry powder has amassed to $580 billion (as reported by Crunchbase). Closer to home, Wamda reported that MENA startups have already raised $1.6 billion halfway into the year.

                                                                                Investors are also extending their runways and reserving rescue capital for their portfolio companies. During volatile and downward trending markets, capital allocators tend to prioritize capital preservation. However, in early-stage VC, down markets are believed to be the best time to deploy capital. The rationale behind this is that early-stage startups have lower burn rates and can manage their free cash flow more effectively. They are also less dependent on excessive VC funding, allowing them to align their traction with their valuations.

                                                                                Given the availability of capital, venture capital remains a viable option for founders seeking to fundraise in the second half of 2023. This is particularly true for founders based in emerging markets (Middle East, Africa, Pakistan, Turkey), where deals under $1 million accounted for the majority (51%) of all VC activity in 2022, according to MAGNiTT. However, it is crucial to have all your business fundamentals in check and ensure that your business model makes economic sense.

                                                                                A side note to founders: Some venture capital firms, such as DFDF, offer a unique advantage by focusing on creating value beyond capital deployment, such as access to mentorship and industry connections. You can read more about our approach to value creation here.

                                                                                Raising Capital From The Public Markets Is Not So Attractive Either

                                                                                As for late-stage “scale-ups” hoping to go public this year, their plans are likely to face further delays due to the sluggishness of the IPO markets in the past 12 months. CB Insights reported a 31% drop in global IPOs in 2022 compared to 2021. Consequently, investment activity in late-stage deals during Q4 2022 hit its lowest point since Q2 2018, as reported by PitchBook. As a result, growth startups will also be seeking ways to extend their capital within the private markets.

                                                                                In light of these circumstances, investors are now seeking solid fundamentals and sensible investment terms for both early and late-stage startups. They want to ensure that these companies have a clear path to profitability and are not overvalued. This cautious approach is evident in the significant decrease in valuations for growth-stage private startups observed last year. For instance, Klarna experienced an approximate 85% drop in valuation from $45.5 billion to $6.7 billion, while Instacart saw a decline of about 38% from $39 billion to $24 billion. In response, founders are implementing cost-cutting measures to extend their runway and avoid down rounds or structured rounds.

                                                                                Venture Debt As An Option For Mature Companies

                                                                                A funding method that is gaining traction is venture debt, as reported by Shuaa Capital and MAGNiTT. In 2022, venture debt reached a total of $260 million across 18 deals in the Middle East and North Africa. This figure has been steadily increasing since 2018, with a total of $500 million provided to startups in the region over the past five years.

                                                                                Venture Debt Funding in MENA

                                                                                Image of a Venture debt chart from a DF2 blog

                                                                                Source: MAGNiTT & Shuaa

                                                                                In contrast to traditional venture capital, where startups exchange a portion of their company for capital, venture debt involves receiving a loan from venture capital firms or specialized lending institutions. These loans are specifically tailored for early-stage, high-growth startups to finance working capital or capital expenditures such as machinery, equipment, or specific projects.

                                                                                Venture debt is commonly used by startups between funding rounds as a way to obtain liquidity without diluting equity. However, this option is only viable when a company’s financials are truly healthy.

                                                                                But why not borrow directly from a bank? While traditional banks may offer conventional loans, they may be hesitant to grant access to capital for tech startups that are often not profitable on paper. Additionally, the terms and conditions of venture debt typically favor the lender, considering the higher risk involved, compared to traditional bank loans offered to established financial institutions.

                                                                                The Emergence of Private Secondary Markets As An Option

                                                                                Another increasingly popular fundraising option is the utilization of private secondary markets. Just in Q1 this year, fundraising across secondaries crossed two-thirds of last year’s annual total (at $30.7 billion, according to Pitchbook).

                                                                                Secondaries Fundraising Globally

                                                                                An infographic from the blog post called ' Halfway Through 2023 — What Are Founders’ Fundraising Options?'

                                                                                * As of 12/31/2022

                                                                                Source: Pitchbook

                                                                                These markets allow founders and their shareholders, including investors and employees with ESOP (Employee Stock Ownership Plans), to sell their shares to other investors. This can be an attractive choice for startups that have already completed their initial fundraising rounds but want to avoid raising venture capital in the current economic climate, as it carries the risk of a down round. This can serve as a retention strategy, particularly during a time of industry-wide layoffs (read more about our take on what the layoffs mean for the wider industry here).

                                                                                Secondary markets are gaining popularity among startups, leading to the establishment of several platforms worldwide to facilitate secondaries. Some secondary market platforms that facilitate the trading of private secondaries globally include Forge Global and EquityZen. In the Middle East and North Africa (MENA) region, Zest Equity is developing the secondary market infrastructure. They recently launched their platform to the public, enabling startup founders and investors to list their equity for purchase on a secondary basis.

                                                                                It’s important to note that raising funds through secondaries differs from crowdfunding. Crowdfunding involves soliciting small investments from a large number of individuals through online platforms.

                                                                                Fundraising Will Continue In The Second Half Of 2023

                                                                                In conclusion, the fundraising landscape in 2023 presents challenges for founders seeking capital, but there are viable options available. Venture capital remains a valuable avenue, especially in emerging markets with smaller deals dominating the scene. Startups need to focus on solid fundamentals and sensible investment terms to attract investors looking for clear paths to profitability. Late-stage startups may face delays in going public due to sluggish IPO markets, leading growth startups to explore capital extension within the private markets. Investors are prioritizing companies with healthy financials and realistic valuations, and startups are implementing cost-cutting measures to preserve runway and avoid down rounds. Additionally, venture debt and private secondary markets are gaining traction as alternative fundraising methods, providing liquidity and opportunities for shareholders to sell shares to other investors.

                                                                                Overall, while fundraising in 2023 may be challenging, founders have various avenues to explore. It is crucial to have a strong business foundation, demonstrate profitability potential, and carefully assess the available options. Venture capital, venture debt, and private secondary markets can all play a role in helping founders secure the necessary funding and support for their startups.

                                                                                If we, at Dubai Future District Fund, can be of help to you as a founder, please get in touch with us — we’d love to hear from you.

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                                                                                  DFDF Report Today's Generative AI Investment Landscape

                                                                                  Today’s Generative AI Investment Landscape

                                                                                  Introduction — All Eyes on AI

                                                                                  So far, halfway through 2023, 18% of global funding has gone into the AI sector, according to Crunchbase. In fact, the total amount was clocked-in at $25 billion.

                                                                                  The most significant investment in the space was the $10 billion investment Microsoft made into OpenAI. Another notable startup in this regard is Inflection AI, which raised $1.3 billion earlier this year.

                                                                                  These are all very significant statistics in the funding ecosystem, for any sector around the world, and have pretty much changed the narrative for the year. This, therefore, indicates that Artificial Intelligence is all the rage in the VC industry at the moment — and people are actually putting their money where their mouth is.

                                                                                  In this report, we’re going to dig into the substance behind the hype to help you understand what AI really is and where we see the opportunity.

                                                                                  • Machine learning vs. artificial intelligence
                                                                                  • Generative AI does not only refer to large language models
                                                                                  • Creativity as a commodity — the future of entertainment
                                                                                  • The “must have” in investors’ portfolios
                                                                                  • The parallel opportunity in the chip and semiconductor industries
                                                                                  • Long-term open source as a landscape
                                                                                  • The world’s welcome mat for generative AI — who’s stepping up and who’s staying back

                                                                                  To download this report, please complete the form below

                                                                                    ​

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                                                                                    A photo of somebody reading a booklet from DF2 about Promoting Good Governance and Reporting in Venture Capital and Startups

                                                                                    Promoting Good Governance and Reporting in Venture Capital and Startups

                                                                                    Introduction

                                                                                    Governance plays a crucial role in companies, and its significance cannot be overstated. That is because it encompasses the processes and practices that ensure effective, ethical, and strategic management of a company’s operations. And so, strong governance practices are crucial for the growth, sustainability, and success of companies in our industry of startups and venture capital.

                                                                                    The consequences of not having good governance in place for venture capital and start-ups can be severe. It can lead to loss of investor confidence, inefficient operations, legal and regulatory issues, damage to reputation, difficulty in attracting talent, missed opportunities, increased risk exposure, and limited access to funding. 

                                                                                    Governance is not limited to large corporations or governments, though. Rather, it can be implemented at any scale, even in small businesses like startups. And so, its application is relevant to many of you reading this.

                                                                                    We recently wrote about why incorporating ESG principles (which you can read here) is imperative in the venture capital industry. Given that the “G” stands for governance, we believe that it deserved a dedicated deep-dive. In this post, we’re going to explore the importance of governance in venture capital and startups specifically, with a particular focus on promoting good governance through transparency and reporting.

                                                                                    Embracing Good Governance — What To Be Mindful Of

                                                                                    Good governance is vital for establishing trust with investors and stakeholders for all businesses in all industries. That is because it showcases transparency, accountability, and ethical conduct, which are essential for attracting investment and talent. 

                                                                                    However, effective governance in the venture capital industry in particular, can get quite complex as it requires managing various factors, including human resources, agreements, industry standards, and regulatory compliance. Coordinating these elements can be challenging, but by adopting a holistic approach and understanding their contributions to the overall objective, a comprehensive governance framework can be established.

                                                                                    To add another layer of complexity, governance practices are not one-size-fits-all and vary across industries, stages, and levels. Balancing the interests of those involved, such as the board, management, employees and investors, is crucial. In addition, negotiation and flexibility are key to finding a governance structure that aligns with the organization’s resources, capabilities, and stakeholder needs.

                                                                                    A photo of a booklet from DF2 about Promoting Good Governance and Reporting in Venture Capital and Startups

                                                                                    Applying Governance Principles at Any Scale

                                                                                    Here are our tips for both founders and investors looking to apply good governance in their startups and investment firms:

                                                                                    (1) Implement effective decision-making and information flow systems

                                                                                    • Control information flow and involvement in decision-making to manage diverse stakeholders.
                                                                                    • Define roles and responsibilities through an authority matrix to mitigate critical person risk.

                                                                                    (2) Establish clear policies and procedures

                                                                                    • Develop transparent policies and procedures for financial reporting, decision-making, and communication.
                                                                                    • Ensure accountability and transparency in company operations.

                                                                                    (3) Foster a culture of transparency and accountability

                                                                                    • Encourage transparency in financial reporting and decision-making processes.
                                                                                    • Establish processes for addressing concerns and holding individuals accountable.

                                                                                    (4) Seek input and feedback from stakeholders

                                                                                    • Regularly solicit input and feedback from investors, employees, customers, and the community.
                                                                                    • Consider diverse perspectives in decision-making processes.

                                                                                    (5) Communicate regularly and openly

                                                                                    • Clearly communicate reporting expectations upfront.
                                                                                    • Maintain open communication channels to keep stakeholders informed about company performance, plans, and changes.
                                                                                    • Provide regular reports, hold board meetings, and facilitate access to relevant information.

                                                                                    (6) Utilize technology

                                                                                    • Simplify tracking and reporting financial performance and metrics.
                                                                                    A photo of a booklet from DF2 about Promoting Good Governance and Reporting in Venture Capital and Startups

                                                                                    The Role of Reporting in Venture Capital

                                                                                    Reporting plays a vital role in communication and governance. It involves regularly communicating a company’s financial and operational performance to investors, stakeholders, and regulatory bodies. Reporting enables investors to make informed decisions and assess a company’s potential for success.

                                                                                    And so, the benefits of reporting in the VC context are as follows:

                                                                                    1. Improved decision-making: Reporting provides transparent and accurate information, enabling LPs to make informed investment decisions and gain a comprehensive understanding of the VC firm’s performance and portfolio companies.
                                                                                    2. Increased transparency: Reporting enhances transparency, fostering trust between LPs and GPs and promoting a strong and collaborative relationship.
                                                                                    3. Enhanced risk management: Reporting supplies LPs with crucial information about investment risks, facilitating effective risk mitigation and overall risk management.
                                                                                    4. Improved compliance: Reporting ensures adherence to applicable laws and regulations, reducing the risk of legal and regulatory issues.

                                                                                     

                                                                                    Conclusion

                                                                                    To sum up, establishing good governance involves defining objectives, assessing resources, negotiating with stakeholders, and continuously improving the governance structure. Governance is essential for venture capital and start-up firms, promoting transparency, accountability, and ethics.

                                                                                    Reporting, in specific, is a critical component of good governance that builds trust with stakeholders and identifies potential issues.

                                                                                    By adhering to good governance practices, these organizations can enhance their sustainability and success.

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                                                                                      DFDF Blog header image about ESG featuring a light bulb

                                                                                      Embracing ESG to Pioneer Change in the Middle East Venture Capital Industry

                                                                                      Introduction

                                                                                      Environmental, social, and governance (ESG) considerations have gained significant importance in recent years across various industries, including venture capital (VC). Beyond being an acronym that has been trending over the last few years, ESG has emerged as an essential item for leadership teams across the board.

                                                                                      Closer to home, VC firms in the Middle East are starting to adopt ESG practices as swiftly as their counterparts in other parts of the world. As a local VC ourselves, we would like to share our perspective on the significance of ESG in the VC industry, and the surrounding business and societal environment. We will discuss how it can impact both the companies receiving funding and the investors providing it, as well as its broader implications for the ecosystem. Additionally, we will explore the current state of the VC industry in the Middle East region and provide insights on how VC firms can develop an effective ESG strategy.

                                                                                      What is ESG?

                                                                                      Let’s begin by explaining what ESG means. In its entirety, the acronym refers to non-financial factors, specifically the impact on the environment, consideration of society, and fair leadership and decision-making processes. To break it down further, each letter in this abbreviation represents the following:

                                                                                      1. Environmental: Environmental considerations refer to a company’s impact on the natural world and its efforts to reduce greenhouse gas emissions and minimize its environmental footprint.
                                                                                      2. Social: Social considerations refer to a company’s impact on society, including its treatment of employees and its involvement in the local community.
                                                                                      3. Governance: Governance considerations refer to a company’s leadership and decision-making processes, including its transparency, accountability, and ethical practices.

                                                                                      Why Does ESG Matter in Venture Capital?

                                                                                      There are multiple compelling reasons why ESG holds significant importance in the field of venture capital. With its capacity to generate positive societal impact, enhance financial performance, attract conscious investors and top talent, differentiate firms, and bolster reputation, ESG has emerged as an integral and indispensable element of responsible and sustainable investing within the venture capital industry. The primary motives to embrace ESG can be summarized as follows:

                                                                                      1. Values that promote a positive influence on society: Generally speaking, the betterment of society matters to VC firms, and fostering a culture of innovation is often a top objective for them. By integrating ESG considerations into their investment decisions, VC firms can proactively contribute to and influence sustainable and socially responsible business practices that will ultimately benefit society as a whole.
                                                                                      2. Financial performance: In addition to helping VC firms ensure that their values are met, there is growing evidence that companies with strong ESG practices tend to outperform their peers financially. This is because ESG considerations can help companies reduce risks, improve efficiency, and increase innovation. For example, a company that invests in energy-efficient technologies may experience lower energy costs and a reduced carbon footprint, which can lead to improved financial performance. Numerous studies have shown that companies with robust ESG profiles tend to outperform their peers over the long term. A 2020 study by the Harvard Business Review found that companies with high ESG scores had a 5% higher return on equity and a 10% lower cost of capital than companies with low ESG scores. Another study conducted in 2020 by the Global Impact Investing Network found that ESG-focused investments generated a 12.2% annualized return over a 10-year period, compared to 9.6% for non-ESG investments.
                                                                                      3. Differentiation among peers: The third significant benefit of adopting ESG practices that VC firms stand to gain, in addition to value-driven operations and investments, is the ability to stand out and differentiate themselves in a crowded market.
                                                                                      4. Attracting conscious investors: With the increasing awareness of sustainability and corporate responsibility, having a strong ESG focus can make a VC firm more appealing to potential investors who are looking for ways to align their investments with their own values. In some cases, investors are even demanding ESG practices from VC firms. In fact, a 2021 survey by Morgan Stanley found that 70% of investors believe that ESG factors are important to their investment decisions.
                                                                                      5. Attracting conscious talent: Companies with strong ESG profiles are often more attractive to top talent. This is because employees, particularly younger generations, are increasingly seeking work that aligns with their values and purpose. A VC firm with a strong ESG strategy may be more appealing to talented employees who prioritize sustainability and corporate responsibility in their career choices, which can, in turn, further drive the innovation flywheel.
                                                                                      6. Enhanced reputation and trust: Companies with strong ESG profiles are often viewed as more trustworthy and responsible. This can lead to an enhanced reputation and trust among stakeholders, including customers, investors, and the general public. This is particularly important in the venture capital industry, where reputation and trust are critical to success.

                                                                                      That’s to say, ESG matters in venture capital due to its ability to promote positive societal influence, improve financial performance, differentiate firms in a crowded market, attract conscious investors and talent, and enhance reputation and trust among stakeholders.



                                                                                      ESG vs. Impact Investing

                                                                                      Impact investing and ESG are both investment strategies that consider environmental, social, and governance factors. However, there are some key differences between the two.

                                                                                      Impact investing refers to investments made with the intention of generating both financial return and positive social and environmental impact. It is a type of investment that seeks to generate a positive social or environmental impact alongside a financial return. Impact investors typically invest in companies or projects that work to address specific social or environmental challenges, such as climate change, poverty, or inequality. According to a report by the Global Impact Investing Network, the impact investing market reached $715 billion in assets under management in 2020 and is expected to continue growing in the coming years.

                                                                                      In contrast, ESG investing is a broader term that encompasses any investment strategy that takes ESG factors into account. ESG investors may choose to invest in companies with strong ESG practices or avoid investing in companies with poor ESG practices. They may also use ESG criteria to screen out certain industries or sectors, such as fossil fuels or tobacco.

                                                                                      In general, impact investing is a more focused and targeted approach compared to ESG investing. Impact investors are typically seeking to make a specific social or environmental impact, while ESG investors may be more focused on reducing risk or improving long-term returns.

                                                                                      The Opportunity to Improve ESG Adoption across MENA

                                                                                      Over the last decade, the MENA VC industry has experienced remarkable growth. The total amount of funding increased from $0.15 billion in 2010 to $3.94 billion in 2022, according to MAGNiTT. This growth can be attributed to increased entrepreneurship, supportive government initiatives, and a flourishing startup ecosystem. However, a report by Wamda and MAGNiTT highlights persistent challenges in the practice of ESG. The report presents the following facts:

                                                                                      • Gender gap: Female-founded startups in the Middle East receive only 1% of all venture capital funding. The average funding round for a female-founded startup in the Middle East is $1 million, compared to $2.5 million for a male-founded startup. Only 10% of venture capital investors in the Middle East are women.
                                                                                      • Lack of diversity: People of color receive only 1% of all venture capital funding in the Middle East. The average funding round for a startup founded by a person of color in the Middle East is $1 million, compared to $2.5 million for a startup founded by a white person.

                                                                                      In fact, despite 64% of VC firms in the Middle East having adopted a formal ESG strategy, this falls below the global average of 76% (according to Preqin). Therefore, the need for robust ESG practices is profound.

                                                                                      These challenges present unique opportunities for Middle East VC firms to lead by example, bridge gaps, and foster sustainable and inclusive investment practices. We, at DFDF, strive to pave this path.



                                                                                      How can VC firms develop an ESG Strategy?

                                                                                      Developing an ESG strategy is an important step for VC firms that want to attract top talent, differentiate themselves in the market, and drive positive change in the world. Here’s how venture capitalists can go about developing an ESG strategy:

                                                                                      1. Identify your ESG priorities: Start by identifying the ESG issues that are most important to your firm and your portfolio companies. This will help you focus your efforts and ensure that your strategy is aligned with your values and priorities.
                                                                                      2. Set ESG targets and goals: Once you have identified your priorities, consider setting targets and goals related to these issues. For example, you may set a goal to invest in a certain number of companies that are focused on reducing greenhouse gas emissions.
                                                                                      3. Engage with portfolio companies on ESG: Engage with your portfolio companies to understand their ESG efforts and challenges, and provide support as needed. This can include providing resources and expertise or connecting companies with external partners.
                                                                                      4. Monitor and report on ESG progress: Regularly monitor and report on your ESG efforts and progress, both internally and externally. This will help you track your progress, identify areas for improvement, and demonstrate your commitment to ESG issues.
                                                                                      5. Develop ESG policies and procedures: Develop ESG policies and procedures to guide your organization’s decision-making. This could include policies on environmental stewardship, social responsibility, and corporate governance.
                                                                                      6. Provide training on ESG: Provide training on ESG to your employees. This could include training on ESG concepts, ESG reporting, and ESG best practices.
                                                                                      7. Support ESG initiatives: Support ESG initiatives by donating to ESG organizations, volunteering time, or participating in ESG campaigns. This demonstrates your commitment to making a positive impact.

                                                                                      By following these steps, VC firms can develop a robust ESG strategy that aligns with their values and drives meaningful change in the industry and society as a whole.

                                                                                      How can Investors Incorporate ESG Into Their Investment Decisions?

                                                                                      Once a VC firm has established its ESG strategy, it is important to ensure that the strategy is reflected in its investments, extending beyond the firm’s own fund or firm-wide operations. Here are a few steps to consider:

                                                                                      1. ESG screens: Investors can utilize ESG screens to filter out companies that do not meet their ESG criteria. For instance, an investor might choose to exclude companies with poor environmental records or weak corporate governance practices.
                                                                                      2. Active ownership: Investors can actively engage in ownership to promote ESG practices within the companies they invest in. This can involve collaborating with company management to address ESG issues or voting against management proposals that do not align with ESG values.
                                                                                      3. Read company reports: Companies are increasingly disclosing information about their ESG practices in their annual reports and other filings. Investors can leverage this information to evaluate companies and make well-informed investment decisions.
                                                                                      4. Attend shareholder meetings: Investors can participate in shareholder meetings to gain insights into company ESG practices, pose questions to management, and encourage the adoption of ESG practices.

                                                                                      By incorporating these steps into their investment decision-making process, investors can effectively integrate ESG considerations, align their investments with their values, and contribute to sustainable and responsible business practices.

                                                                                      How We Aim to Build a More Conscious VC Ecosystem

                                                                                      In summary, developing an ESG strategy is essential in venture capital. By prioritizing ESG in the investment process and within their own internal operations, VC firms can drive positive change and contribute to a more sustainable and equitable future for all.

                                                                                      Closer to home, the Middle East VC industry is currently at a pivotal moment where embracing ESG principles is not only vital but also presents significant opportunities for growth and impact. At DFDF, we are deeply committed to advancing this movement and encourage readers to reach out to us to learn more about the transformative power of ESG in Middle East venture capital.

                                                                                      For conscious investors and founders seeking ESG-focused funds, we would be delighted to engage in a conversation with you about how we can assist you in investing in a fund that aligns with your values.

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                                                                                      DAOs, the OSS Corporations of the Future

                                                                                      When it comes to industry shifts and how they play out over time, it is essential to keep a pulse on both existing technology trends and emerging ones, such as Web3. Over the past year, we have considered several blockchain, metaverse, and crypto deals, and we would like to share with you a consolidation of ideas we have put together in this process about how these unique open-source software businesses will evolve over time.

                                                                                      The typical open-source software company is exactly that: a legal business association that produces open-source software. A DAO, or decentralized autonomous organization, is simply a software-defined business association that produces open-source software. When defined in this way, the parallels become clear, along with the possible issues. But before addressing the roadmap, we must start by understanding the dynamics of Web3 and ordinary SaaS businesses.

                                                                                      Laying the Groundwork Assumptions about Web3

                                                                                      To explain the mechanisms of the Web3/ethereum ecosystem, let’s consider a use case: smart contracts. Smart contracts are often made open source when published, although it’s not required. When a new smart contract (decentralized project) is published, developers often publish the source code as well to increase trust and transparency.

                                                                                      For example, anyone can look at the smart contract source code of projects like Uniswap or OpenSea. This aligns closely with what open-source software projects do—they publicly release their software, allowing others to fork it and deploy it to provide value as they see fit. This is similar to what open-source SaaS businesses do.

                                                                                      Do Open-Source SaaS Businesses Work?

                                                                                      For those who aren’t familiar, an open-source software business model can take different forms, but companies in this vertical typically develop unique technology and release it for free. The code is public and available to anyone, enabling others to build upon it and fostering innovation.

                                                                                      Although some venture capitalists are skeptical about open-source software businesses, several success stories prove that this model can be highly successful. Companies like MongoDB (MDB) and Elastic (ESTC) have reached massive valuations using this model. There are still others such as cockroachDB (valued at $270M) and MariaDB (valued at $200M). Docker (est. $2B) remains one of the most important infrastructure software companies ever created despite 90%+ of docker users potentially never paying to use the open-source software itself.

                                                                                      There are also derivative models built on top of existing open source software. GitHub and GitLab were built from the original open source git protocol. Companies like mlab (acquired for $70M) and scalegrid were built as hosted versions of existing databases. Travis CI leveraged container technology early to build one of the best continuous integration services in the industry. Cloud providers like Amazon Web Services have even created proprietary hosted versions of Redis (take a look at Amazon’s MemoryDB). 

                                                                                      So, is giving away your product a bad thing? The answer is: it depends. While there are risks involved, open-source software companies have found ways to create and capture value. Users find tremendous value in these projects, and communities keep them alive for long periods. Value can be created and captured even without venture-backed companies, as users donate to nonprofits that maintain open-source software. DAOs could potentially maintain evergreen funds as well.

                                                                                      What These Companies Do

                                                                                      At its root, consumers of any business trade the value they wish to accrue for money in return. The customer believes that the product or service being offered has more value than the money exchanged to receive it. The seller, of course, believes the inverse. If this were not the case, all things being equal, the exchange would never happen. To paraphrase Peter Thiel, a company’s goal is to create some value X and then capture Y% of X. 

                                                                                      More often than not, these open-source companies are simply raising the bar for themselves by having the software be totally available and opening themselves up to competitors. But very often what happens is a company builds a product. The company then invests in marketing to build a community around the technology. As businesses adopt the technology, the company benefits as it acquires some mix of consulting and enterprise revenue. Ideally, the company later uses that revenue to improve the product and therefore the business and the open source world. 

                                                                                      The key insight is these communities and accretive benefits have real value. There are many posts to be found on how users have found tremendous value in open source software projects. The users of these projects keep them alive for long periods of time. Not all of the Linux ecosystem projects are run by venture-backed companies, but they don’t need to be for value to be created and captured. Users donate to the nonprofits that maintain this open source software, and it stands to reason that evergreen funds could be maintained by DAOs. 

                                                                                      Even if there are investors involved, it’s worth recognizing that, of course, this doesn’t always work out. I highly recommend this fantastic blog post from the CEO of rethinkDB on why they failed to compete with open source company MongoDB. 

                                                                                      For posterity; let’s highlight the lifecycle we’ve defined so far: 

                                                                                      1. Software is developed, and some value is created
                                                                                      2. The code is given away for free and enters the market
                                                                                      3. A community develops around the project
                                                                                      4. The community gradually captures the value
                                                                                      5. Through a company maintaining it, the value created is gradually captured and compounded into improving the software product or service.

                                                                                      The Value Created by Open Source Companies

                                                                                      Interestingly, not only can community-driven open source projects grow, they grow and accrue value faster than many large cloud businesses. 

                                                                                      Here’s a comparison from bessemer venture partners of three top open source SaaS companies and their growth timelines, compared to similar cloud companies: 

                                                                                      A infographic from the blog entitled 'DAOs, the OSS Corporations of the Future', by DF2.

                                                                                      It makes sense that these services would grow quickly, indicating that developers like open source. As it’s given away for free, giving back can serve personal localized incentives for companies and developers looking to build a reputation. 

                                                                                      As a related side, Bessemer’s breakdown of open source SaaS investing is fantastic. We believe many of those lessons apply to open-source DAOs as well — more on that to follow. 

                                                                                      What is a DAO?

                                                                                      To understand DAOs, let’s first get familiar with NFTs (non-fungible tokens). NFTs are provable representations of digital ownership that cannot be modified by anyone other than the owner. When combined with the composability of software, interesting things can happen.

                                                                                      Once we have the notion of unique token ownership, we can write code to interact with users based on the tokens they hold. We can create and modify these relationships dynamically. A DAO is a decentralized, autonomous organization that can use software to automate investment decisions by token holders and manage the rights of different tokens. A DAO-owned gym, for example, could be launched using this approach.

                                                                                      DAOs offer an efficient means of verifying and auditing investment decisions, and the open-source software acts as the source of truth, eliminating disputes. The question then becomes, how can the funds be utilized by these organizations?

                                                                                      If you wanted to make a private club 50 years ago (for example, a gym), I could probably build the business like this: 

                                                                                      1. You start an LLC by filing articles of incorporation with your local secretary of state and get a reply in two weeks.
                                                                                      2. You’d make some membership cards.
                                                                                      3. You’d sell $100 memberships to gym members and investors for some fixed or ongoing fee.
                                                                                      4. Now you, the owner, would take this money and organize the purchase of a venue, get some equipment, and hire some staff to offer the service to the members.

                                                                                      Now, imagine you wanted make a private club today as a DAO, you could probably go about it like this: 

                                                                                      1. You’d write a smart contract and publish it online in 2 hours.
                                                                                      2. You’d make 1,000 NFTs and sell each one for $100 on the blockchain.
                                                                                      3. Everyone then buys this NFT and becomes part of this group.
                                                                                      4. Now the collective has $100,000, and the group can vote on how to use the pooled funds. 

                                                                                      This is a DAO — a decentralized, autonomous organization. A DAO can use software to mediate the automation of investment decisions by all the token holders and also use software to handle what rights different tokens have. I could also use a DAO to launch a gym using the stack I just described.

                                                                                      At the end of the day, the DAO is a much more efficient means of verifying and auditing investment decisions of capital, and because the open source software is the source of truth there is no means for disputes. All that remains is the question of what to use the money for in these “organizations.”

                                                                                      If all of this sounds a bit too theoretical for you, I’d encourage you to reconsider. According to data published by DeepDAO, the balance sheets of many DAOs have gotten above USD 2M which is more than most seed rounds!

                                                                                       
                                                                                      A infographic from the blog entitled 'DAOs, the OSS Corporations of the Future', by DF2.

                                                                                      Source: Underscore VC and their portfolio company Messari

                                                                                      So now that we understand that the technology can be built and trusted with millions under management (and the capital is ready to deploy), now the question remains to ask: What to use the funds for?What if the funds were used for the development of an open-source product? A scenario where not only the product itself is open-source, but the governing entity that creates it is also open-source as is the case with DAO.

                                                                                      Case Study: Browser-based blockchain wallets

                                                                                      Let’s use a good open-source example that’s incredibly simple — a chrome extension! 

                                                                                      To set some baseline definition — a “wallet” is a software tool that manages your private key and allows you to sign and submit transactions to the blockchain you’re interacting with. Metamask is an example that was built for the Ethereum ecosystem. 

                                                                                      If you’ve never heard of Metamask, I highly recommend you stop reading this and download a crypto wallet to learn more about the technology. Consensys, the owner of Metamask, is now valued at around $7B and shares the same founder as Ethereum. A similar company was built for the Solana blockchain, called Phantom. This venture-backed company also reached a $1B valuation quite quickly. 

                                                                                      The crypto-savvy perspective here, however, is that there’s no real reason that the ownership of these crucial software tools should be in private hands to begin with. The software could be made completely open-source, and only needs a community to be interested in using it, just like many other communities that use crypto products today. A DAO could be created with a majority of the tokens vested in the original creators. 

                                                                                      Enter, Tally Ho!. This tool is the first project to logically follow this trend. This organization has built a completely open-source version of Solana’s Phantom wallet. Given that both are SaaS tools available to anyone, they can compete on even footing. The biggest differences are that the code is freely available online, and the DAO tokens are the ones that appreciate in value instead of shares in the venture-backed private company. 

                                                                                      The benefits (or at least promises) of this model when compared with traditional venture backend SaaS are theoretically as follows: 

                                                                                      • The code is freely available.
                                                                                      • Anyone can invest in any stage open source products at any ticket size.
                                                                                      • Liquidity for any and all investors at all stages of product growth.
                                                                                      • Any token holder can vote in the direction of the product along with the DAO.
                                                                                      • More innovation happens in the ecosystem as software tools become more available and composable.
                                                                                      • The DAO has significant capital available to invest in product development.

                                                                                      While it will certainly happen in some software markets more than others; I see no reason that every software tool can’t be reorganized and funded using this approach.

                                                                                      To take the example further, there’s no reason a new database couldn’t be implemented tomorrow if there was a willing group of individuals to buy the tokens to fund the development and build the tools. If there is a group of people who believe that a better implementation of PostgreSQL could be developed, a DAO could be created, a repository linked to it, and a token sale issued. All funds supplied by project backers on the contract could be routed into things like stablecoin market-making on a decentralized protocol to fund development in perpetuity. With some improvements in infrastructure, the same could be done for things like a DAO-owned Salesforce, a DAO-owned fork of Redis, and many others. 

                                                                                      With this new tool for capital generation, not only could a motivated group fork an open-source project, which happens all the time, but entire software service businesses could be forked and taken in new directions. 

                                                                                      Could you imagine if someone could look at the source code for MongoDB Atlas, fork the entire codebase, and automatically deploy a helm chart for the entire product (with integrated crypto payments!) on another cloud provider? The possibilities could be incredible for developing new ideas and reducing costs. 

                                                                                      Dubai as a Launchpad for DAOs and Web3 Startups

                                                                                      The UAE has positioned itself as a welcoming home for crypto. Regulations have been introduced to provide a legal framework for crypto businesses to operate within, and supportive ecosystems have been established. The emergence of forkable capital structures around software projects is expected to be a significant shift in venture-backable open-source software. The MENA region has the potential to be at the forefront of this movement.

                                                                                      Note: Valuation numbers are sourced from PitchBook, but they are not essential to prove the argument.

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                                                                                        Unpacking the Term Sheet: A Comprehensive Guide for Founders

                                                                                        Introduction

                                                                                        When fundraising for a startup, it is crucial to ensure that founders and investors align on the investment terms. Establishing a long-term relationship based on trust from the start is essential. Negotiation plays a significant role in this process, as both sides can find a middle ground where they feel like winners rather than adversaries. The goal is to strike a balanced agreement that benefits both parties without overpowering either side.

                                                                                        “As a negotiator, it is important to cultivate a reputation for fairness. Your reputation should precede you in a way that paves the path to success.” — Christopher Voss, former FBI hostage negotiator

                                                                                        In this blog post, we aim to break down the key terms of an equity investment term sheet to help entrepreneurs and investors better understand the implications and impact of these terms. While the term sheet has become relatively standardized as an investment document, there are still some terms that can be extremely beneficial to investors in the short term but harm the company and other shareholders in the long term.

                                                                                        Valuation is not the only important term; other terms can hinder future financing rounds even more. Making changes to controls after signing investment agreements, which is typically when founders start considering engaging a lawyer, may be too late and more difficult.

                                                                                        Therefore, if you are a founder, it is advisable to work with a lawyer or seek professional advice to review the term sheet before signing it.

                                                                                         

                                                                                        What is a Term Sheet?

                                                                                        A term sheet is an initial agreement that summarizes the main terms of an investment between a company and prospective investors.

                                                                                        Founders and investors should be able to agree on the major terms relatively quickly, or realize that the investment relationship is not feasible.

                                                                                        Most term sheets can be divided into three parts:

                                                                                        1. Valuation and economic division of profits (key investment terms and rights attached to shares).
                                                                                        2. Control and decision making (protective provisions, board structure, etc.).
                                                                                        3. Investor protection terms (anti-dilution, warranties, etc.).
                                                                                         

                                                                                        Term Sheets are Non-Binding, but…

                                                                                        Before we delve deeper into the different parts of a term sheet, it is important to note that term sheets are non-binding. This means they have no legal or binding force. While this might sound irrelevant, it is actually very important! The term sheet is a document that lays out the key investment terms, but neither the founder nor the investor are legally or contractually bound. This means that if you are a founder and think you will receive the investment promised to you by an investor just because you have a term sheet, this is a wrong assumption. The term sheet is just the start of the fundraising process.

                                                                                        Rather, all obligations will be concluded in the final investment agreements, after the investor has conducted additional due diligence to their satisfaction.

                                                                                        This also means that there might be a significant deviation, and possibly even a complete change, of terms (predominantly driven from the investors’ side). However, as a founder, do not get frustrated and think “this was not included in the Term Sheet,” as it is just an outline of key terms and not the entirety of the investment agreement.

                                                                                        One more thing to be mindful of is a legally binding exclusivity period during the negotiation period, often referred to as a “no-shop” period. Some investors will spend a significant amount of time and effort diligencing the company, and would not like the founders to use their Term Sheet as leverage to find better terms from other investors. However, agreeing to this too early in your fundraising process, or agreeing to a very long exclusivity period, can rule out better opportunities from other investors.

                                                                                        A long exclusivity period could hurt the founder’s fundraising process if, for example, the lead investor that issued the term sheet spends months diligencing the company but does not end up investing. The founder will find themselves back to square one, having wasted precious time.

                                                                                        So, if you agree as a founder, make sure there is a reasonable timeline for the exclusivity. However, this is not to say that once you have a term sheet, you should shop it around and try to negotiate better terms from other investors on the market.

                                                                                         

                                                                                        Valuation and Deal Economics

                                                                                        This is where we discuss the investment amount, valuation, share structure, price per share, liquidation preference, vesting of founder shares, and employee stock options.

                                                                                        • Investment Amount

                                                                                        This is the total dollar amount that the investors are prepared to invest in the company. Most of the time, founders will also state the percentage of the company that the investors will be buying into, unless not all investors are identified and the round is “open” for finalization. The investors coming into the round will own a part of the company on a fully diluted basis, meaning that all convertible notes and any options or warrants should convert prior to the new investors coming in.

                                                                                        A capitalization table (shareholding of the company) is usually included as a schedule/exhibit at the end of the term sheet.

                                                                                        Note: Capitalization tables are extremely important, and there are often discrepancies (although small) between the shares and ownership, largely due to convertible note conversions. Lawyers can provide support, but it is the responsibility of the founder and investors to ensure it is calculated correctly.

                                                                                        • Share Structure

                                                                                        A company formed with its founders and employees will have issued Common Shares (Ordinary Shares) with equal rights. Investors coming in will typically require Preferred Shares.

                                                                                        Preferred shares have certain “preference” rights that rank ahead of the Common Shares and carry special preferential rights.

                                                                                        • Price Per Share and Valuation

                                                                                        Another important element of a term sheet is the pre-money valuation, which is the value of the company prior to the investment round. The total cash invested and pre-money valuation determine the post-money valuation of the business. Valuing a startup is a complex topic, but one thing to note is that while financials from the previous year are objective, valuations are subjective.

                                                                                        Founders sometimes spend a lot of time negotiating valuations, but a general rule of thumb in venture capital is that a founder should not dilute more than 10-25%.

                                                                                        The price per share is calculated by dividing the pre-money valuation by the outstanding number of shares in the company prior to the investment.

                                                                                        • Liquidation Preference

                                                                                        Liquidation Preference refers to the order in which the company’s proceeds are distributed to shareholders in the event of a liquidation event, such as a merger, sale, or wind-up. It is the most commonly negotiated downside protection provision in venture financing.

                                                                                        A liquidation preference gives the investor the right to receive their money back before holders of Common Shares (held by the company’s employees and founders). In the event of a liquidation event, the investor who provided the most recent funding to the company has the first opportunity to recover their investment.

                                                                                        A liquidation preference is usually a multiple of the investment made by the investor to purchase the shares in the company.

                                                                                        A 1x liquidation preference means that, in the event of a liquidation, the preferred shareholders have the right to receive their full investment back before any distribution is made to the common shareholders. In some cases, if the total proceeds are insufficient to cover the liquidation preference, the proceeds will be distributed among the preferred shareholders of the same class on a pro rata basis.

                                                                                        It is important to note that larger multiples on the liquidation preference can significantly impact founders and employees, as they may be left with little to nothing unless there is a substantial exit or liquidation event.

                                                                                        Furthermore, it is important to consider whether the liquidation preference is participating or non-participating. A non-participating liquidation preference (most common) means that once the capital has been distributed to the investors according to the liquidation preference (e.g., 1x), the remaining shareholders receive the rest of the funds.

                                                                                        If the common shareholders would receive more per share than the preferred shareholders upon a sale or liquidation, the preferred shareholders can convert their shares into common shares and give up their preference in exchange for the right to share pro rata in the full liquidation proceeds.

                                                                                        On the other hand, a participating liquidation preference allows preferred shareholders to receive their investment back and also participate in the distribution of the remaining proceeds along with other shareholders, essentially “double dipping.”

                                                                                        For example, if an investor invests $1M for 25% of the company (valuing the company at $4M) and the company sells to an acquiring company for $2M with a 1x participating liquidation preference, the investor would receive $1M first and then 25% of the remaining amount, totaling $1.25M, leaving $750k for everyone else.

                                                                                        Understanding these nuances is important for founders to ensure they negotiate liquidation preferences appropriately.

                                                                                        • Vesting of Founder Shares

                                                                                        Investors typically require that the founders’ shares be subject to vesting, even if they have been purchased for value or have already vested. The aim is to create an incentive for the founders to remain committed to the company. Investors back the founder and would like to see their continued dedication.

                                                                                        • Employee Stock Ownership Plan

                                                                                        Employee stock ownership can take the form of Stock Options (such as ESOP) or Restricted Stock Units (RSUs). Key hires and sometimes all employees are awarded these incentives, which go beyond a salary and bonus, to foster a sense of ownership and encourage long-term commitment.

                                                                                        Both stock options and RSUs have vesting periods, meaning it takes time for an employee to gain ownership of the option or stock. The industry standard is a 1-year cliff (where the person doesn’t receive anything until completing 1 year at the company) and then vesting either annually, quarterly, or monthly over an additional 3-5 year period.

                                                                                        Stock options grant employees the right, but not the obligation, to purchase shares typically at a strike price (which can be the same as the share price of the last investment round, but is typically lower or equal to zero USD).

                                                                                        RSUs typically do not have a strike price; after vesting, the employee owns the shares. In addition to time vesting, key deliverables (specific KPIs assigned by managers) may need to be achieved to obtain the stock or options.

                                                                                        It is good practice to have a sufficiently large ESOP to hire key talent in the present while saving some for future hiring. Although ESOPs can be created with each funding round, having a sizable pool from the start is advisable.

                                                                                         

                                                                                        Control and Decision Making

                                                                                        This section of the term sheet covers voting rights, protective provisions, board representation, and reserved matters.

                                                                                        • Board Representation

                                                                                        With each funding round, there is usually a new composition of the board of directors. The board may start small and grow over time. Typically, a lead investor takes a board seat, co-founders take seats, and smaller investors may nominate a director. It is also common to have independent directors, which can be beneficial, particularly if they possess industry knowledge or extensive experience that adds value to the board.

                                                                                        Board compositions are complex and do not adhere to a one-size-fits-all rule. Here is a sample board structure per stage of the company:

                                                                                        Founders should strive for a balanced board with the right investor representation. Investors should add value and bring additional support beyond capital. Board composition should be a well-thought-out process that serves the best interests of the whole company and all shareholders.

                                                                                        • Reserved Matters

                                                                                        Investors often request special approval rights concerning significant matters that affect their investment. These rights and controls are usually referred to as Reserved Board Matters.

                                                                                        Certain key decisions with a significant impact on the company, such as a sale of the company, change in control (including the removal of the founder/CEO), issuing additional shares, amending key investment documents, or changing the main line of business, require approval by a certain number of shareholders and board members.

                                                                                        Reserved Matters are typically detailed in the final investment documents, with only a brief mention of the rights and approval thresholds in the term sheet.

                                                                                        Investor Protective Terms

                                                                                        In addition to the above, there are several investor protection terms to consider in term sheets:

                                                                                        • Anti-dilution

                                                                                        Anti-dilution provisions protect investors from the value of their investment decreasing if the company issues shares at a price per share lower than what the investors paid.

                                                                                        The two most common types of anti-dilution provisions are broad-based weighted average and full ratchet. Broad-based weighted average, the most commonly used in venture capital, recalculates the share price the investors paid by averaging out all previously issued and currently issuing securities. Full ratchet provisions automatically decrease the conversion price of existing preferred shares if the company sells shares at a lower price, ensuring the investors’ price per share is protected. Full ratchet provisions are not typically used as they can be costly for founders and future investors.

                                                                                        • Closing Conditions

                                                                                        Investors may require certain conditions to be completed before investing (Conditions Precedent) or within a specified timeframe after the investment is finalized (Conditions Subsequent). These conditions can include restructuring the legal entity, organizing the organizational structure, or executing remaining legal documents.

                                                                                        • Pre-Emptive Rights

                                                                                        Pre-emptive rights allow shareholders to exercise the option to purchase additional shares in any future issuance of the company’s stock. However, they are under no obligation to do so. Pre-emptive rights are particularly valuable for early-stage investors who enter the company at lower valuations. With subsequent funding rounds, they may wish to participate and maintain their percentage ownership in the company. Pre-emptive rights grant these early investors the “first look” opportunity to decide if they want to exercise their rights.

                                                                                        • Drag-Along and Tag-Along Rights

                                                                                        A Drag-Along provision protects the interests of majority shareholders, enabling them to “drag” other shareholders into a joint sale of the entire company. This provision ensures that if the controlling shareholders find a buyer for the company, the smaller shareholders cannot block the sale and are compelled to participate, even if they would prefer not to.

                                                                                        Conversely, a Tag-Along provision protects minority shareholders, allowing them to “tag along” if a major shareholder decides to sell their shares. This provision ensures that minority shareholders are not left behind in the event of a major shareholder’s exit.

                                                                                        Conclusion

                                                                                        While there are several other provisions such as warrants, dividends, redemption, and information rights that can be part of term sheets, we have covered the most important ones in this article.

                                                                                        As standardization of term sheets becomes more prevalent in the MENA region, founders should be aware that each funding round may introduce more aggressive investment terms. It is crucial to understand that less entrepreneur-friendly term sheets can have negative consequences in subsequent rounds. Investors will not want to invest in a company and receive worse terms than previous investors.

                                                                                        Founders should aim to make term sheet negotiations a relatively quick process, as most of the time will be spent on the long-form investment documents. It always takes longer to close a round than one assumes.

                                                                                        In conclusion, if you are a founder and receive a term sheet, remember that it is just the beginning of the investment process, and nothing is guaranteed. Seek professional advice, work with a lawyer to review the term sheet before signing, and make sure you fully understand the implications. The investment you make in reviewing the term sheet will be worth it in the long run.

                                                                                        To support you on your journey as a founder, we have compiled a list of resources in the Toolkit section of our website. There, you can find a term sheet template and other investment documents to assist you.

                                                                                        Remember, a well-negotiated and carefully considered term sheet can set the foundation for a successful investment relationship between founders and investors.

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                                                                                          A photo of business men and women on stage at the DFDF AGM 2023.

                                                                                          Fueling Tech Innovation in Dubai — Insights from Local VC Investors

                                                                                          The following blog post summarizes key insights shared by panelists during a discussion at our AGM event last month. The discussion was moderated by Mohammad Alblooshi, Head of DIFC Innovation Hub and FinTech Hive, and the panel participants included:

                                                                                          The Ripple Effects of SVB’s Collapse on the Middle East Venture Ecosystem

                                                                                          At the time of the AGM event, the recent collapse of Silicon Valley Bank was still a fresh topic of discussion. While it was not a venture capital firm itself, it held significant importance as a prominent lender and bank for numerous tech companies in the United States, making it a crucial component of the ecosystem. 

                                                                                          With that said, the consequences of its collapse are not insignificant, particularly here in the Middle East. Many venture capital firms in our region engage in business with SVB, either directly through deposits or indirectly through their startup portfolios. Moreover, it’s important to note that any disruptions to the VC ecosystem in the US as a whole will inevitably have implications for our industry closer to home, creating a ripple effect of consequences.

                                                                                          In light of these circumstances, the panel shared an optimistic perspective amid the crisis: an opportunity to bring regional capital back within our own borders. In the past, many investors allocated their capital abroad into more mature international VC ecosystems, as they seemed more promising. However, with the slowdown experienced by the VC ecosystem since mid-2022, a significant portion of this allocated capital remains idle. Redirecting this capital back to the Middle East, where considerable growth has been observed in recent years, would contribute to strengthening the local system even further.

                                                                                          This presents a tremendous opportunity for ecosystem builders in our region to acquire the necessary resources to sustain their endeavors, and potentially at an accelerated pace, without relying heavily on external capital to support their visions. Furthermore, one of the key takeaways from managing the crisis during SVB’s collapse was the importance of agility and continuous communication. Constantly being present for portfolio founders and making data-driven decisions emerged as crucial factors. With the anticipation of potential similar crises throughout the year, these experiences will act as determining factors, revealing which players are committed to long-term ecosystem building and exposing those who are inclined to exit during challenging times.

                                                                                          A photo of business men on stage at the DFDF AGM 2023.

                                                                                          The Two Sides of the "Capital Drought"

                                                                                          The panel highlighted an important perspective amidst the media headlines about the VC ecosystem slowing down in recent years. They stressed that it’s crucial to consider the bigger picture, as the current levels of VC activity are still higher than they were just three years ago. Therefore, when assessing VC trends, it’s important to look beyond year-on-year comparisons, especially now that the Middle East’s regional ecosystem has surpassed its early stages. 

                                                                                          During their discussion, they debated the implications of this trend for startup valuations. Ultimately, they concluded that a founder’s long-term plans and their current perspective on their company serve as a filter for evaluating alignment with investors. For instance, if a founder prioritizes short-term, rapid growth, it may indicate a divergence in objectives. The panelists believed that instead, short-term market fluctuations can be endured if the founder’s vision focuses on creating long-term value.

                                                                                          They also delved into the recent decline in investment activity, viewing it as an opportunity for investors to enter the market and capitalize on the reduced competition for promising startups. While acknowledging the potential challenges that arise when startups have to compete for capital, the panelists emphasized that the ecosystem is far from depleted. In fact, with the right approach, the current market conditions could offer an ideal environment for both astute investors and ambitious startups to thrive.

                                                                                          A photo of a man holding a microphone

                                                                                          How to Assess Startups, According to the Experts

                                                                                          The panel addressed a common phenomenon where founders create startups primarily with the intention of raising capital, rather than building a solution to a problem. This was particularly prevalent during 2020 and 2021, a period marked by significant venture capital activity. In light of this, they emphasized the importance of evaluating investment opportunities based on fundamentals and distinguishing between substance and noise. 

                                                                                          The panelists shared how they each uniquely equate startup investment opportunities. Some common factors included closely evaluating talent, capital utilization, and execution capabilities when assessing investment opportunities.

                                                                                          When it comes to talent, some consider the team’s responsiveness to feedback and their ability to iterate on their product. Furthermore, they underscored the importance of critical thinking when evaluating startups. One panelist suggested examining the team’s skills and expertise, as well as the specific problem they are addressing and the market opportunity it represents. Lastly, they stressed the team’s ability to translate their vision into reality, whether during favorable or challenging times.

                                                                                          Aside from talent, some also highlighted that a single technology may not be sufficient to address a complete opportunity; rather, startups may require multiple technologies. Additionally, they emphasized the replicability of the technology and the competitive advantage of the startups to stay ahead of the competition.

                                                                                          ChatGPT – The New Kid on the Block

                                                                                          The panel moved on to discuss the sub-verticals of tech and venture that they believe were trending, sustainability, the metaverse, and gaming being a few. However, they quickly took to discussing the talk of the town since the start of the year — ChatGPT. 

                                                                                          They likened the generative AI platform to the combustion engine and the Internet — both technological advancements were interesting and important innovations when they were invented, but after the initial “oohs” and “aahs” were over and the novelty ran off, people started to ask how the underlying technology could be used — whether they would better society overall, or worsen it. Similarly, ChatGPT may stand to face the same questions pretty soon.

                                                                                          In predicting some of ChatGPT’s most impactful use cases locally, the panel reckoned that since it has the power to be predictive, one area of high value is that it could speed up the prototyping phase across the tech industry. It would do this by running new and different scenarios to help figure out what will sink or swim early on with more data and variables, at a scale magnitudes greater than current simulation software.

                                                                                          A photo of a woman speaking into a microphone, while in discussion with some business men

                                                                                          Healthcare as a High-impact Opportunity

                                                                                          The panel reached a consensus that, in addition to generative AI, the healthcare industry presents significant potential for disruption by technology startups. They expressed the view that the necessary technology to propel the regional healthcare industry forward has already emerged, and the next step is to bring this technology to the market. However, they emphasized the importance of using trending buzzwords like Artificial Intelligence, Virtual Reality, and 3D printing in applications that genuinely aim to enhance the patient experience and improve the healthcare system as a whole. By doing so, they believe there is an opportunity to make the industry more cost-effective and efficient. 

                                                                                          Moreover, the panel expressed their belief that enhancing healthcare involves increasing productivity, which means achieving exponentially greater output in the future without requiring a proportional increase in human inputs. They specifically highlighted healthcare inclusion as an area of opportunity within the industry that they find particularly promising. By focusing on improving accessibility, they see the potential to create a more inclusive healthcare system.

                                                                                          A photo of a woman holding a microphone

                                                                                          Closing Advice to Founders

                                                                                          The event concluded with the following closing advice from each panelist:

                                                                                          • Mahmood suggested to founders that they should target addressing large markets, and large opportunities.
                                                                                          • Sarah recommends that founders build their startups bottoms-up and surround themselves with others who are aligned with their vision.
                                                                                          • Sara offered founders the advice to never give up, and to build resilience in the process.

                                                                                          Our mission at DFDF is to facilitate the collaboration between government and private entities, enabling a thriving venture ecosystem that generates benefits for local and regional communities. We are convinced that this partnership is fundamental to creating an environment that fosters innovation, triggers economic growth, and opens up new avenues for entrepreneurs and investors. By pooling our resources and expertise and working closely with relevant stakeholders, we strive to achieve our goals and make a positive impact on the venture landscape.

                                                                                          If you share our passion and would like to contribute to our cause, please do not hesitate to reach out to us. We are always seeking out individuals and organizations that share our vision and are eager to help shape the future of the venture ecosystem.

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                                                                                            A photo of Jessica Smith, talking under a spotlight.

                                                                                            Lessons from Jessica Smith about what (wo)man and machine can achieve together

                                                                                            About Jessica Smith

                                                                                            Jessica Smith, ex-Paralympian, retired from the field at 22 after seven years as a competitive swimmer for the Australian team. These days, she’s a children’s book author and motivational public speaker who advocates for a more inclusive environment for people of determination around the world through TOUCH Dubai. Throughout her career, she has won multiple awards, the most recent being the Medal of the Order of Australia, one of Australia’s highest honors.

                                                                                            The following blog post covers lessons learned from Jessica’s keynote at our Annual General Meeting held in March 2023.

                                                                                            Navigating the cards you’re dealt with

                                                                                            Born without a left arm, Jessica is no stranger to discrimination and feeling like the odd one out. Throughout her childhood, she felt that the people around her thought of her as inferior to able-bodied individuals, which made her feel less capable and incomplete. This is not uncommon to what the majority of disabled individuals face and feel. In fact, Jessica truly believes that an unfriendly social environment and discrimination from others are more disabling than a person’s actual disability. This guided her future career to strive to empower equality amongst disabled people around on a societal level and not just medical.

                                                                                            Despite the strife, Jessica was able to power through life and work harder, landing on Australia’s national Paralympic team. But even then, she says, there was still a lot of discrimination in sports for people with disabilities at the time. 

                                                                                            Her family encouraged her feats, but offered her a balance of realism and tough love, telling her that sometimes she’d have to work more to achieve the same as her abled peers, as society was not built for someone like her. The pressure was on — juggling balance sports, academics, and the development of social skills. Still, she didn’t want to settle for mediocrity, she wanted to be the best. 

                                                                                            Jessica’s early experience with machine

                                                                                            Despite the cards that Jessica was dealt, she did not opt for disability aid. While aids may not always be necessary or desired, sometimes, they are an important facet of the disabled community. For Jessica, not using a prosthetic was a choice, albeit one based on a formative childhood experience. 

                                                                                            At age one, she was fitted with a traditional prosthetic arm. Not only did it take multiple months for her to get used to it, but its basic design caused her to accidentally spill a kettle of boiling water without realizing it in time, resulting in third-degree burns. For the next couple of years, she was in and out of the hospital, and this experience swore her off prosthetics for decades.

                                                                                            While disability aids can be life-changing for many individuals, limited innovation can prevent many individuals from benefiting from disability aids. Jessica was traumatized by the event, such that she was unsure of using a prosthetic well into adulthood. It was only when she was approached by Covvi, a prosthetics manufacturer, to participate in a patient advocacy program that she could finally overcome her trauma.

                                                                                            “For me, the time was right, but so too was the technology.” Jessica Smith 

                                                                                            This could be the case for many people of determination, who do not have other options to their aid except for the primitive ones widely available. While not always a problem, the lack of choice can be a hindrance after a bad experience, especially if the aid could be a contributing factor to their standard of living.

                                                                                            Embracing machine technology in healthcare

                                                                                            Jessica is currently a patient advocate, and her prosthetic (or shall we say bionic, arm) is much more flexible and adaptable. It transmits neural signals into physical movements more or less directly. Technically, the human body works by transmitting neural signals to different parts of the body through the nervous system. Her bionic arm functions similarly — she has to think of a movement, sending signals to the muscles connected to her bionic arm, which are read by the computer at the base of the bionic hand that turns that thought into a movement. On the more futuristic side, an app on her phone allows her to control different gestures and groups of gestures, along with their speed and force.

                                                                                            This is revolutionary in the prosthetic sphere. It’s almost like the bionic prosthetics seen in science fiction, where the bionic limb acts as just another extension of the human body, controlled via a single thought.

                                                                                            Prosthetics and society

                                                                                            From a societal perspective, Jessica’s experience with the bionic arm has been positive as well. It promotes her in a different light than a regular prosthetic or without one. Having suffered ignorance and ableist rhetoric from society firsthand, and secondhand via her children as they experience teasing and bullying from their peers, it was empowering for her to feel something positive with regard to her disability. She has been called “cool” and “half robot” (positively) by children. In her own words, people are “no longer afraid… they are intrigued”.

                                                                                            Jessica witnessed what a difference her bionic arm could have on societal expectations. It has shifted the lens through which society sees her. This intrigue and positivity represent a much-needed shift in society. While differences exist and cannot always be ignored, they can be taken in stride without fear and negativity. All this to say: her bionic prosthetic shows that technology could be the answer. 

                                                                                            The need for acceleration in healthcare

                                                                                            The field of prosthetics and disability aid is a slow-moving one. There is potential for both users and creators to profit, since the disability community has a disposable income of eight to thirteen trillion dollars untapped due to a lack of resources and advancement on the technology side. At DFDF, we believe in the Future of Health as one of our Future Economies thematic pillars, and invest directly in startups that are driving change in this field and funds that are providing the capital for others to make these strides.

                                                                                            From Jessica, we can learn about the power that specific technologies can bring about the joy each innovation and advancement can have on humanity about the importance of having an industry that’s just as adaptable to change and innovation as any other.

                                                                                            Lessons learned from Jessica on how man can embrace machine

                                                                                            We can also learn about our own biases and how to overcome them. Jessica stated that when she was younger, she came about expecting others to tolerate her and her biases before she was willing to accept others for theirs. While this was probably a natural side effect of her young age at the time, some people may still not have grown out of that mindset and come about expecting to think of themselves in an entirely different boat instead of, say, one boat where everyone is not equipped with all the same items. 

                                                                                            We can learn that we can become advocates for change at any point in our lives. Jessica, understandably, refused to opt for prosthetics for most of her life. While that was her valid opinion, she cannot refute her responsibility as one of the most popular and outspoken people in the disabled community. It’s not a stretch to say that this might have discouraged some people from asking for disability accommodation due to the “If she can do it, so can I” mentality. 

                                                                                            There is no blame on Jessica, but it is a natural psychological response. So it is even more beautiful seeing her decide to try out something that, while she has never needed herself, could do wonders for at least one person in the disabled community. And her changing her, unofficial, stance encourages those who did not need aid previously, to seek it out with confidence.  

                                                                                            It doesn’t matter if we were of a different opinion before. Human beings are constantly evolving, “the only constant… is change”. There is no shame or guilt associated with a change in mindset or opinion. Life happens and new facts arise or feelings change. While we try not to become slaves to the status quo, we must not forget that we can just as easily become slaves to past ideas and opinions, ours or someone else’s… but we are no longer in the past. We are not the same person. We are new people, we know more, have learned different things, we are different now.

                                                                                            Insights

                                                                                            A photo of a business woman who is using her computer in an office.

                                                                                            Technical Due Diligence Basics for VCs

                                                                                            When we look at deals involving technical due diligence, we often get questions on what we’re looking for in a company. Technical due diligence is a nuanced and difficult subject, and there are many ways to do it well. This post will shed some light on how we do technical due diligence and why. 

                                                                                             

                                                                                            Before we dive in, let’s zoom out — software engineering is hard. It’s hard to build complex software, test it, ensure it works and manage a change-to-deployment pipeline. Anyone who has done software engineering on a high-quality team knows this. Unfortunately, seldom do those people become venture capitalists! This results in low-fidelity communications, confusion about things that seem simple, and misunderstandings about what kinds of engineering problems really matter when running a business. 

                                                                                             

                                                                                            There will always be bugs, ideas yet implemented, and technical debt. This is all perfectly fine.

                                                                                             

                                                                                            Our approach to technical due diligence

                                                                                             

                                                                                            Fortunately, there are no secrets here. We don’t have some obscure proprietary method of analyzing your technology or anything like that. Still, we want to find companies that are capable of using technology to meet business goals. 

                                                                                             

                                                                                            When we do technical due diligence on a deal we’re primarily looking to answer the following questions: 

                                                                                             

                                                                                            • Are the crucial technical decisions reasonable? 

                                                                                            • Is the team capable of building the technology?

                                                                                            • How long should it take to build this product?

                                                                                             

                                                                                            Let’s define these criteria on your deals to make sure that you’re getting a well-rounded understanding of the product being built and what still has to happen. 

                                                                                             

                                                                                            What are “reasonable” tech decisions? 

                                                                                             

                                                                                            Generally speaking, reasonable technical decisions are decisions that an ordinary engineer of average intelligence would make in similar circumstances. That said, this is a startup, not the courtroom. If you’re going to beat the market, you have to make not just reasonable decisions but good decisions.

                                                                                             

                                                                                            For example, if a startup is not using Git for version control; that would warrant an explanation. If a company is building data analysis tools using the COBOL programming language; that would warrant an explanation. That does not mean these are wrong, but that there is a practical reality of the expectations most engineers have when joining a team, so I must learn from founders on why these strange choices are the right choices. 

                                                                                             

                                                                                            There are statistical realities about these choices too such as talent market and developer familiarity with programming languages. The TIOBE index measures how the popularity of programming languages changes with time. It may surprise you to find that the second most popular programming language is C, with JavaScript falling down at under 2%. 


                                                                                             

                                                                                            Source: TIOBE index

                                                                                             

                                                                                            Similarly to building a house, we can learn a lot about the quality of the final product by looking at the foundation and the initial choices of materials being made. Often these choices are reversible, but technical debt can linger for long periods of time, where these problems simply become larger down the road.  

                                                                                             

                                                                                            Here’s a good example of a metric to look at in this direction, what is the cost of the entire technical infrastructure per month? 

                                                                                             

                                                                                            If a startup is running a microservices architecture with a kubernetes cluster in google’s EKS, that alone can easily run up to $300 / month just for the cluster management itself, not including the containers! Furthermore, these costs go straight to operating expenditures and can’t be easily modified as they are integral to the product. 


                                                                                            Source: google kubernetes pricing 

                                                                                            What is a “capable” team?

                                                                                             

                                                                                            Capability could be loosely defined as the technical feasibility for the team available to build the technology required to accomplish the business goals. We assess these as by attempting to answer the following questions:

                                                                                             

                                                                                            (1) Can it be built? 

                                                                                            The first question to ask is, how difficult is it to build? A frontend tool using ReactJS is very different from generalized machine learning tooling. The next question to ask is, if it can be built, is this team able to build it? A team of mechanical engineers can’t build quantum computers.

                                                                                            It’s important to remember that from the outset, the only thing that separates hard-tech companies from ordinary tech companies is questions of feasibility. The best thing for grants and patient capital should be developing new research and technology until it’s ready for commercialization. Quantum computing is a great example of a field where venture capital has gotten ahead of its skis and has been funding research and development for the last decade with little to show for it outside of highly specialized use cases. 

                                                                                            If you have deals where feasibility is a question (for example cold fusion), you should absolutely talk to someone who has worked with nuclear fusion and can outline the pros and cons of the approach. 

                                                                                            (2) Can this team build it? 

                                                                                            Engineers can come from a wide variety of places and we would be wise to remember that a diversity of experience can be useful in the software engineering context where there are a lot of different ways to solve a problem. 

                                                                                             

                                                                                            Typically you can get a sense of what an engineer is capable of by looking at three things.

                                                                                             

                                                                                            (A) Experience. Unsurprisingly this is the most important thing. You want to look specifically if these engineers have experience working with:

                                                                                             

                                                                                            • The stack the company is using for their current project (MEAN / JAM / Kubernetes / etc.)
                                                                                            • Startup environments 
                                                                                            • Loosely defined projects with little direction 

                                                                                             

                                                                                            (B) Blog posts and portfolio projects. Blog posts speak for themselves but engineers also share portfolio projects on places like GitHub. Look specifically if they have opensource projects in the languages that you know they’ll be writing in for that role. You can filter search results with the user:filter and then by language in the user interface.

                                                                                             

                                                                                            Some portfolio projects are proprietary yet you can still learn a lot from the achievements of the project and the evidence presented. On the other side, engineers reading this should be careful to make sure to link your github to your other resume and other public profiles, and highlight why certain projects are interesting and what you’re sharing them for.

                                                                                             

                                                                                             

                                                                                            (C) Interview process. This is something VCs don’t think much about, but it’s important to be aware of the current “standard” interview process for software engineers across the industry. Typical engineering interviews vary across the space but generally have a few components:

                                                                                             

                                                                                            • A self-paced programming screen through something like leetcode  for example, the TwoSum problem. 
                                                                                            • An initial technical interview with an engineer on something like google docs or https://coderpad.io/. 
                                                                                            • A pair-programming interview to see how a candidate thinks through more complicated questions for examples see places like interviewing.io/ and pramp.com/
                                                                                            • A culture and behavioral interview that we’re all familiar with. 
                                                                                            •  
                                                                                             

                                                                                            (3) How is technical competence distributed throughout the team? 

                                                                                            Some technical teams tend to have a single person who “knows how everything works” and other engineers go to them when they have questions on what to do. This is often called the bus factor, and it’s inversely correlated with engineering productivity for intuitive reasons. 

                                                                                            This is why a good thing to measure on an initial call is how good the CTO is at explaining technical concepts, and how much patience they have going through the ideas at length if needed. You should be thinking in your mind ‘would I work for this person?’

                                                                                            This is the only way that a larger team will want to work with them as well. If there is a small number of team members who highlight specialized knowledge (for example a Ph.D.) then you want to just make sure to double check that those individuals are sufficiently incentivized to stick around and build the business. 

                                                                                             

                                                                                            (4) What is a “good timeframe”?

                                                                                            This depends entirely on the product, but similarly to the above, we want to be thinking about what the timelines actually are for building out the product at hand. 

                                                                                            There’s not a lot of metrics on this that I’m aware of, but building out a polished minimum viable product for a single feature or use case can often take around 6-8 months to build. Technology choices and other constraints can impact this timeline as well (using virtual machines instead of containers for a web app backend for example). Delays always happen, but you want to make sure that the team is being realistic about what can be achieved with the resources available.

                                                                                            With these core concerns in mind, I then look to establish some other small details along the way in my technical due diligence process.

                                                                                             

                                                                                            Our process

                                                                                             

                                                                                            With most companies that come on our radar, we start with the obvious things: look at the site, look at what technical roles they’re hiring for (to learn about the development stack, skills they want, etc.), and then look at the employees on LinkedIn to understand more what the interpersonal dynamics on the team might look like. These will give you a strong enough sense of what to expect on your first call.

                                                                                             

                                                                                            With most companies, spend about an hour on a call talking with them about their product, how it works internally, how hard it is to build, and how strong they are at communicating the technical details of how the product works. Asking neobanks how payment processing works is a great way to get a sense of this. 

                                                                                             

                                                                                            One thing that you can often do (that we’re surprised a lot of VCs don’t do) is use the product yourself. Often the team has a development environment, a sample you can borrow, or a test account that you can use. As a new user of a product you’re in the perfect position to see it from the point of view of the customer’s eyes. 

                                                                                             

                                                                                            When all this is said and done, write up a memo of your notes and screenshots for the investment team, highlighting any warning signs or notable information with a verdict similar to the following: “The technical infrastructure is reasonable, and the team is capable.” 

                                                                                             

                                                                                            This can take more or less time depending on the complexity of the deal, but usually one call and access to the product is enough. 

                                                                                             

                                                                                            Managing the information relationship 

                                                                                             

                                                                                            Before sharing our template, we want to emphasize some important details about how to think about the information being shared with investors. 

                                                                                             

                                                                                            Information about infrastructure, languages or code examples can often feel uncomfortable to share. Founders are often reasonably wary because of intellectual property concerns, competition, and even malicious investors looking to leverage this information to compete against the business. Intellectual property ownership is great to ask about during your call, if anyone has standing to file an intellectual property claim down the road, you want to know about it. 

                                                                                             

                                                                                            The Dubai Future District Fund is looking to enable the next wave of innovation in Dubai and grow the region as a whole. We’re only interested in using the information given to us for building a diverse economy and a better UAE. As a potential investor, you are obligated not to disclose this information as it poses a risk to their business and your reputation as an investor. 

                                                                                             

                                                                                            The aforementioned risk often tempts founders to ask for non-disclosure agreements (NDAs). At DFDF, like most venture capital firms, we don’t sign NDAs for liability reasons. These agreements can often be vague and the language is often overly broad which could subject the fund to unnecessary liability. The best way to solve all of these issues is to not share sensitive information in the first place.

                                                                                             

                                                                                            A company should not be compelled to share anything they aren’t comfortable with. No investor needs access to source code to understand how a product works.

                                                                                             

                                                                                            What comes next

                                                                                             

                                                                                            After technical due diligence, you should find that you have a really good handle on whether the team can build what they want to achieve, and hopefully a good outcome for everyone in a few years.

                                                                                             

                                                                                            We end this blog post as we began, technical due diligence is a nuanced and difficult subject and there are many ways to do it well. We want to thank you for taking the time to read through our thoughts on the matter.

                                                                                             

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                                                                                            How Can the UAE’s Private and Public Sectors Contribute Towards the Evolution of the Local VC Ecosystem

                                                                                            How Can the UAE’s Private and Public Sectors Contribute Towards the Evolution of the Local VC Ecosystem

                                                                                            The following blog post summarizes key insights shared by panelists during a discussion at our AGM event last month. The discussion was moderated by our Investment Director Amer Fatayer and the panel participants included: 

                                                                                            • Mohammed Shael Alsaadi, CEO of Dubai Corporation for Fair Trade and Consumer Protection
                                                                                            • Fadi Ghandour, Co-founder of Aramex and Executive Chairman of Wamda
                                                                                            • Christian Kuntz, Chief Strategy, Innovation & Ventures Officer at DIFC Authority

                                                                                            The need for regulation

                                                                                            Mohammed Shael Alsaadi opined that every city comes to a point where it stagnates and is in need of government intervention in the form of business and policy regulations — an inevitable factor of growth in order to have consumer protection and order. This is where the private sector needs to be assisted and is where the relationship between the private and public sectors needs to be looked at. 

                                                                                            Here, effective policies will enrich this relationship, making it better for everyone in the long run. Dubai’s IP Law, for example, was set in place by the Dubai Future Foundation in the hopes of it driving intellectual property registrations.

                                                                                            Consumer protection, one of Mohammed’s organization’s specializations, is another area that regulators must focus on, since good consumer protection builds trust between the consumer and their city. 

                                                                                             

                                                                                            Encouraging competition across industries

                                                                                            Mohammed believes that the B2B sphere is the essence of fair trade. If an economy wants to sustain itself, Mohammed says, it must control the power balance, which means smaller companies must be protected from larger ones. In addition to protecting small businesses, corporations must also make it a point to encourage other larger companies to work with SMEs.

                                                                                            Mohammed concludes that it’s the governmental entities’ responsibility to be the glue in forming the bond between these all companies, regardless of sector or size.

                                                                                            Further, policies formed by the private sector should be formed with the needs of businesses in mind. While some may be more tangibly beneficial than others, the government needs to look at benefits that impact all businesses in order to form a truly strong economy. Mohammed encouraged the public sector to listen to the private sector and modify its policies over time.

                                                                                            “Listen more than talk.” Mohammed Shael Alsaadi, CEO of Dubai Corporation for Fair Trade and Consumer Protection

                                                                                            Consider founders’ needs

                                                                                            Fadi Ghandour shares his opinions on what he believes are the startup community’s needs, being an active investor and former startup founder himself:

                                                                                            1. The need for access to capital, 
                                                                                            2. The need for access to markets, 
                                                                                            3. The need for a regulatory environment that enables founders to hit the ground running with the minimum amount of friction.

                                                                                            Unfortunately, the last part hasn’t been solved yet, Fadi says. While significant improvements have been made over the years, the environment is far from smooth sailing and there is still perceived friction that does not allow startups to achieve the serious fast growth they have the potential for. Fadi believes that the solution to this is to encourage better dialogue amongst the ecosystem — between venture investors, government regulators, and startups. 

                                                                                            According to him, startups are ready with money but cannot achieve the growth required because of this friction. Fadi gives an example of the business licensing process being one area of common friction.

                                                                                            In his opinion, there needs to be an institutional framework where there is a seat at the table for everyone to address their issues, and the people are this table must be empowered to drive solutions to the biggest issues brought forward, while making sure to keep clear expectations and realistic timelines in mind.

                                                                                             

                                                                                            The tech vertices driving the ecosystem at present

                                                                                            Christian Kuntz shared that venture capital investment in the UAE has reached remarkable milestones to date — crossing the USD 1 billion mark. In the DIFC alone, the number of startups grew from 200 in 2020 to 700 in 2023, with the total number of startup employees increasing from 400 to 2,200 people during this time frame.

                                                                                            As for the startup sub-sectors that are fueling this growth, Christian expects that 60% of future growth amongst startups in DIFC will come from the Future of Finance or Future Economies space. That being said, Christian also called for more investment in companies that are non-global, don’t have much traction, are financially risky, but are, nevertheless, extremely important for the wider ecosystem in the long-term.

                                                                                            The government’s role in empowering risk-taking

                                                                                            In addition, Christian emphasized the need for a change in risk appetite in the startup community, and that it is not enough to only view risk in terms of financial risk. That is to say, a business can fail due to its lack of connection and community with the entities it works with. So, the DIFC has evolved its definition of risk to include enterprise risk, and tries to work together closely with every single one of them for maximum benefit.

                                                                                            Christian shared that he believes the main role of governmental authorities should be to empower, enable, listen, and create initiatives and regulations that balance opportunity with other considerations that private profit-motivated investors won’t always look at. He also stresses the need for the government to be a role model in setting good government standards. In his opinion, the key to this is to bring everyone together, drive awareness and understanding, educate, and, of course, funnel the funding and the right policies to make it happen. 

                                                                                            “We need to change our view of risk — the risk is much bigger to not build fast enough.” Christian Kunz, Chief Strategy, Innovation, and Ventures Officer at DIFC

                                                                                             

                                                                                            Top 3 takeaways

                                                                                            In conclusion, the panel agreed that the government and private sector need to unite to serve the wider venture community and: 

                                                                                            • Increase and widen the risk appetite towards startups across all stages, from ideation through to growth,
                                                                                            • Create a space to have an open dialogue with regulators and authorities to help improve the ecosystem,
                                                                                            • Be able to make a larger impact by continuing to drive growth in the VC ecosystem.

                                                                                            At DFDF, we strive to be a driving factor in the unification of government and private sector towards a prosperous venture ecosystem locally and regionally. We firmly believe that the unification of government and the private sector is essential to creating a vibrant venture ecosystem that benefits both local and regional communities. By collaborating closely with key stakeholders and leveraging our expertise and resources, we aim to drive innovation, stimulate economic growth, and create new opportunities for entrepreneurs and investors alike.

                                                                                            If you share our vision and would like to be a part of the journey, please get in touch — we’d love to hear from you. We are always looking for like-minded individuals and organizations to join forces with and help us shape the future of the venture landscape. 

                                                                                            Insights

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                                                                                            Price-Setting at Pre-seed Rounds

                                                                                            Moving on from a founders’ market

                                                                                            The year 2021 can be looked back as a “founders’ market” where founders had the luxury of practically being able to price their startups themselves from the get-go. Subsequently, the market saw Pre-seed rounds and valuations soar drastically. In addition, given record-level valuations in 2021, there was exceedingly more capital chasing limited opportunities; and so, investors became price-takers in the market. As a result, the markets saw an unprecedented injection of capital, and unfortunately, the price-setting process became a lost art.

                                                                                            Price-Setting at Pre-seed Rounds Graph

                                                                                            In 2023, we’re entering a year where round sizes and values are moving back to their pre-2020 levels, where Pre-seed valuations would not only be products of sound business fundamentals but also result in meaningful round sizes that are based on well-thought-out fund requirements that aim to shed light on retaining the process of pricing a company when it’s yet to take flight — or in other words, when revenue multiples cannot be applied in the pre-revenue stage of a venture.

                                                                                            Before we dive in, it’s imperative to remind founders that Pre-seed valuations do not have much bearing on the company’s exit valuations in the following 5-7 years. Rather, the only impact the price has is to the extent founders give up their ownership for a reasonable amount of capital that can propel the business forward. To think of it differently, if you’re looking to raise $2 million for your Pre-seed round at a $10 million post-money valuation, there’s a possibility that a $1 million round at $5 million post-money value makes more economic sense for all stakeholders involved

                                                                                            Price-Setting at Pre-seed Rounds Graph

                                                                                            How to value Pre-seed companies

                                                                                            We see price-setting of Pre-seed ventures as a two-fold process run in parallel by founders and investors:

                                                                                            (1) A quantitative and founder-led process of estimating and optimizing the fund requirements, reflecting the business requirements of capital to reach the next stage of business but also leaving sufficient equity with founders for dilution to come in at the growth phase,

                                                                                            (2) A qualitative and investor-led process of assessing business fundamentals in the venture to achieve rapid scale.

                                                                                            If diligently followed, we expect the outlined process to bring in a balanced price outcome — one that compliments the founder’s interests by supporting optimal dilution and gives enough upside to investors factoring in for business fundamentals.

                                                                                            1. Estimating and optimizing fund requirements

                                                                                            Post-money valuation = Round size / Dilution

                                                                                            The above equation is perhaps the single most important objective for founders and investors to optimize at the Pre-seed stage. While it is a collective process, the onus lies on founders as they have control over the most scientific input in this equation — i.e. round size or fund requirement. Hence, we highly recommend that founders present a dynamic business plan at this stage, as it really serves as the basis to optimize the equation.

                                                                                            Without getting into the details of a strong business plan, it’s always helpful for founders to focus on the key cost inputs to the business that are critical to build the product as compared to “nice to haves” that can be focused upon later. In comparison, the “need to haves” should be based on independent assumptions, whereas the “nice to haves” can perhaps be derived as an output of the final round size that transpires.

                                                                                            The resultant summary of the business plan would be a 3-5 year forecast with a clearly visible fund requirement for operational burn and capex (if any). Ideally, you should be able to come up at least two scenarios with different fund requirements and corresponding growth forecasts, each of which covers at least:

                                                                                            · 18-24 months’ runway with planned operating expenses without any revenues accruing,

                                                                                            · 24-30 months’ runway with planned operating expenses in the business plan and assuming revenue accrues as per plan.

                                                                                            At this stage, both investors and founders are in a good position to run two simultaneous sanity checks to further optimize the equation.

                                                                                            For investors, it’s worth digging into the financial model to assess the founder’s likelihood of achieving medium term targets, and then proceed to apply reasonable exit multiples to come up with an exit valuation. If a $15 million entry valuation will lend only a 3x value appreciation in 5 years in the best case, it’s not an attractive return potential for a VC given the risk.

                                                                                            For founders, it’s worth focusing on their target dilution by managing the fund requirements. If your base case forecast requires $2 million, how do you prioritize where to spend the cash in the next stage and only take $1 million instead of $2 million? For a standard ~20% dilution, the post-money valuation automatically drops from $10 million to $5 million — that is more likely to bring in a lot more investor interest. Another recommended exercise is to assess if the round size can lead you to a position of revenues and product developments that enables your next funding round to be a ~3x appreciation in value for investors based on standard industry benchmarks.

                                                                                            It’s a worthwhile exercise to really think about what it is that the customer wants — adding another feature to the product might make it cooler, but is it really going to drive sales and justify the expense?

                                                                                            2. Assessing business fundamentals

                                                                                            Before we really understand the business fundamentals that go into the price setting process, it’s worth emphasizing what goes into the decision making from investors to arrive at the point of wanting to price the business. At the risk of being too simplistic, there are 3 broad questions we, as investors, seek answers to at the pre-seed stage:

                                                                                            · Is there a need in the market for such a product? (i.e. pain point and value proposition)

                                                                                            · How big is the market for you to capture and the corresponding dollar potential? (i.e. market size, revenue model, and target customers)

                                                                                            · How well-suited are you to capture that opportunity in the market? (i.e. Founding team, product/tech, and the competitive landscape)

                                                                                            Once these questions are answered and there is enough comfort around an opportunity, it really comes down to assessing what sort of premium or discount do we attach to the price in order to make it an attractive investment opportunity from an ROI perspective.

                                                                                            Below we discuss a few fundamentals that we as investors would associate a premium:

                                                                                            a. Founding team

                                                                                            There really is no substitute for a strong and well balanced founding team today. Every other process in a company can be imported or outsourced except for the founding team’s vision, experience, and ability to execute. For example, if you are a team of three founders that cover operations, management, and product/tech, the use of funds is likely to be subsidized to a certain extent as founders’ salaries would be lower than market salaries. Hence, it’s justifiable to expect a premium in this case which is often reflected through a lower dilution.

                                                                                            Along similar lines, if you are a solo founder, it’s always worth considering the extra dilution to employees through ESOPs to give them more skin in the game.

                                                                                            It also comes down to the industry or vertical of the venture. If the founders are building a venture that requires deep domain knowledge (deeper tech verticals like quantum computing, energy management, biopharma), investors are likely to add a premium to the price. This is primarily a demand/supply factor, since there is simply a limited set of founders that can execute in the vertical. However, if you are a founder building a more generic venture that requires more of execution capabilities rather than technical know-how, investors might discount the price and seek to acquire a larger share of the company to assist in execution.

                                                                                            b. Defensibility of the technology

                                                                                            An early-stage company with internally-developed architecture that sits within the premise is always going to be more valuable than a one with its mesh created by an external vendor.

                                                                                            At a deeper level, we also look for underlying architectures that make a product difficult to replicate, or in other words give founders a 12-18 month head start over their competitors. Take, for instance, a product that relies on AI as a core functionality. Until and unless there is a meaningful and substantial proprietary dataset that has been generated or acquired over the years that can train the models, it’s very likely that competitors with access to datasets could build it faster and better. Similarly, keeping everything else constant, there is a significant premium for a product with true machine learning functionality (self learning ability) as compared to a workflow automation tool built (static ability).

                                                                                            c. Scalability of the business model

                                                                                            Business models designed for product-led growth through minimal sales and marketing effort, rapid customer adoption and network effects (Calendly and Canva are great examples of this), are much likely to see a premium over business models that need a sales-led approach with some level of customisation for each customer. If the product is designed to rapidly scale in a capital efficient manner, it’s justifiable to pay higher since we can expect the delta to be recovered sooner than later.

                                                                                            The second thing worth mentioning is a business’ ability to use non-dilutive capital for scaling. If you are able to build a highly predictable revenue cycle by pinpointing certain expenditure or working capital requirements that will bring in revenue, it opens up the possibility to continuously use debt facilities for scale.

                                                                                            d. Economic feasibility

                                                                                            While it is perfectly likely that ventures would be pre-revenue or yet to achieve consistent revenues at the time of Pre-seed rounds, it’s important to show a sustainable business supported by positive unit economics. A business with very thin unit economics cannot warrant a high range of valuation as compared to a capital efficient business with high gross margins. Simply put, the net amount retained on each amount of revenue after cost of sales must be factored in the price setting process. This is reflected in listed trading multiples where SaaS businesses trade at a premium to low margin trading businesses with respect to EV Revenue multiples, particularly ones with a stickier customer base and higher probability of long term agreements vs one off purchases.

                                                                                            For consumer companies that are building futuristic hardware, subscription models bring in a sense of predictability. A business with one time or one off sales requires a process of continuously acquiring new customers — i.e. more sales and marketing spend ahead.

                                                                                            The path forward for founders raising their Pre-seed round

                                                                                            As closing thoughts, price setting at the early stage is not just about arriving at a mutually agreeable price, but also establishing a deeply ingrained relationship between founders and investors. Pre-seed investments are equally about founders deciding the most suited investors on their cap table, and that requires time and continuous conversations. Each Pre-seed business is likely to undergo some sort of pivot or evolution; and hence, the more involved your lead investor is the better it is to navigate through the business model changes.

                                                                                            Insights

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                                                                                            Investing in the Future of Finance in MENA

                                                                                            What’s driving FinTech innovation?

                                                                                            When it comes to financial services, the world saw a shifting in customer needs worldwide that outpaced global banking systems’ ability to adapt to these demands. This acted as a fertile field for the rise of FinTech.

                                                                                            Since, new customer-centric entrants have emerged outside of the traditional banking system, determined to improve the user experience, transparency, and value-for-money. These players were able to innovate at a rapid pace by mainly focusing on single product offerings. However, as the FinTech industry matures, we are witnessing a new wave of innovation, led by two mega trends:

                                                                                            1.  Financial services and insurance are offering products and services that are tailored to the demands of their target market. This allows single-product companies to create even more targeted offerings, enabling them to improve their share of wallet and diversify their income sources.
                                                                                            2. Fundamental banking infrastructure and supporting technologies are enabling non-financial enterprises to introduce financial products to complement their current offers. This also allows established financial service providers to redesign their back-ends.

                                                                                            As a sector, FinTech is an investor magnet

                                                                                            FinTechs have received over $350 billion in venture capital funding globally over the last 5 years across nearly 21,000 deals (according to CB Insights), covering the whole financial services industry, from money transfers to banking, lending to payments, and insurance to financial business tools. As a result, several FinTechs Unicorns have been created.

                                                                                            According to CB Insights, though investments in the sector dropped in 2021 compared to the year-before, the amount invested that year exceeding all prior years’ funding volume. Therefore, venture activity in the sector has seen an overall upwards trends globally, when you factor out the global slowdown in startup activity and valuations in 2021 (which we’ve previously written about here). In fact, FinTech was the most invested sector of tech in 2022, making it the most attractive sector for investors — implying a strong premise for future opportunity.

                                                                                            Investing in the Future of Finance in MENA Diagram

                                                                                            When looking at FinTech investment activity in the MENAPT region, it’s the most invested-in sector in venture capital, by both deal volume and count, at $2,256 million invested across 351 deals (according to MAGNiTT). When zooming in on the Middle East, the UAE saw the most VC activity in the FinTech sector in 2022, also across both deal volume and count.

                                                                                            The need for innovation across the financial industry

                                                                                            Wherever they may be located, people need access to financial services in order to grow their enterprises and prepare for life’s ups and downs. Up until recently, obtaining these services typically required onerous red tape and expensive expenses, not to mention leaving entire populations of people behind to be unbanked.

                                                                                            As a result, this age of digitization and decentralized technology makes it possible to readily offer communities around the world banking services in ways that weren’t previously possible. They may accomplish this while providing a noticeably better service at a lower cost of execution (when compared to conventional financial providers), or in many circumstances, where there are no established competitors.

                                                                                            As Andreessen Horowitz often stated, every business will eventually turn into a FinTech company. The world is only beginning. We at DFDF will be ready to seize this upcoming new wave, building up on the experience we are constructing while investing in the UAE.

                                                                                            Our Future of Finance thesis

                                                                                            FinTech is largely viewed narrowly to include banking services, payments, lending, and insurance. However, there are numerous structural factors driving FinTech ahead, including the advent of Stripe, Plaid, and other infrastructure-defining decacorns that enabled business models and applications that were not really thinkable a few years ago — think only to the general API-ification of the typical tech stack.

                                                                                            We believe that holding FinTech as a fresh business model for online businesses is a more comprehensive perspective. We also believe that the global opportunity is significantly greater in that environment. For example, considering the characteristics of the GCC region, cross-border and worldwide enablers are, therefore, a major focus, and wealth management is something we will be putting a lot of attention into.

                                                                                            However, this topic now has entirely new implications from what it did in the past. It entails fresh clientele that can be reached as well as asset classes like cryptocurrency that you could not have previously associated with wealth management.

                                                                                            Our view on Future of Finance verticals

                                                                                            In light of this, we have outlined a handful of crucial applications that FinTechs are currently tackling. All around the world, we are witnessing the emergence of numerous innovative and alternative business models, and we are dedicated to funding those that will revolutionize the way that businesses access and offer financial services.

                                                                                            Specifically, when looking at the broad FinTech landscape, DFDF aims at covering the following verticals:

                                                                                            A. Digital banking

                                                                                            B. Bill management and payments

                                                                                            C. InsurTech

                                                                                            D. Lending

                                                                                            E. Remittances

                                                                                            F. Trading & Capital Markets

                                                                                            G. Wealth Management

                                                                                            H. Mortgage and Real Estate

                                                                                            I. Blockchain and its B2B applications

                                                                                            J. RegTech / LegalTech

                                                                                            K. Enterprise Solutions and Infrastructure

                                                                                            Investing in the Future of Finance in MENA Diagram

                                                                                            Within these verticals, we distinguish between the three macro categories of vertical application, namely:

                                                                                            1. Front End Applications: Final products and solutions used by businesses to manage the finances or the transactions.

                                                                                            2. Mid Tier: Final products and solutions used by business to eliminate the need for integration with legacy tech infrastructure and subsequent front-end applications.

                                                                                            3. Infrastructure: Underlying products and solutions used by businesses to provide their core services to other businesses, e.g. BaaS (banking as a service), security, AML and KYC.

                                                                                            Investing in the Future of Finance in MENA Diagram

                                                                                            The FinTech business models in our thesis

                                                                                            We describe FinTech as those products that are customer-focused, mobile-first, and disruptive to risk-averse sectors. However, the industry’s scope is far wider, encompassing the accounting departments and financial records of banks, insurance companies, property management companies, governmental agencies, and more — payments, insurance underwriting, claims processing, lending disbursement, RegTech, risk management, accounting are all examples of financial services that may be supported by FinTech companies. Broadly speaking, all the actors who are integrating technology into financial services are FinTech businesses. They are demonstrating how to use technology to raise the bar for finance.

                                                                                            Future developments in FinTech will be characterized by data and access, with ubiquitous mobility enabling fast access to the customer and instant access to consumer data. Concerns about environmental, social, and governance regulations are also becoming more and more important in the context of FinTech, especially as millennials and Generation Z take the head of businesses. Moreover, in order to tackle the industry’s more challenging issues, such as cybersecurity, specifically anti-cyber-fraud, and egTech, the FinTech movement is moving somewhat away from customer-facing apps as it matures – aiming to digitize and streamline the strict regulatory landscape that financial services companies must face.

                                                                                            Now that we have defined the industry and have laid down the cornerstones of our investment manifesto, the following is a deep-dive on what we have witnessed so far as the most compelling models in MENAPT FinTech, where we have also allocated some resources already.

                                                                                            FinTech technology and infrastructure enablers

                                                                                            APIs generally — and more specifically, financial infrastructure APIs — have attracted a lot of interest as a result of the growth of open banking over the past three to four years. According to Research and Markets, the open banking market will expand at a compound annual growth rate of 24.4% from 2019 to 2026. However, if FinTech companies and banks can gain the confidence and business from a growing global client base, the market might expand much more quickly. In particular, APIs have spared FinTech companies, and even larger corporations, the headache of having to construct complete stacks from scratch. Smaller businesses can compete with larger organizations by using APIs to address problems that were overlooked or postponed because to inability.

                                                                                            Amongst API infrastructure players, we identify BaaS as a segment particularly worthy of close attention. A BaaS product is one that combines all of the components a business may require to launch financial services and makes them accessible via API. These BaaS providers typically charge a platform fee to clients and/or split the profits from interchange or other fees brought in by the client’s final good or service. Hooking into an API or group of APIs can be a low-cost, hassle-free approach to create, test, and deploy for FinTech startups or vertical SaaS firms looking to deliver financial services without assembling a brand-new fintech workforce.

                                                                                            BaaS businesses have raised money this year, including NY-based Unit, which raised $51 million in a Series B round in June to advance its objective of enabling businesses and FinTechs to create banking solutions “in minutes.” Additionally, a Berlin startup called Solarisbank raised $224 million at a $1.65 billion value in July. Solarisbank offers a variety of financial services via 180 APIs that other companies may use to create end-user-facing solutions. In the UAE, we’ve identified Nymcard as our pick in the Banking-as-a-Service (BaaS) category.

                                                                                            Founded in 2018 by Omar Onsi, NymCard is a MENA-based BaaS provider of embedded finance infrastructure. It offers a cloud-based modern payment issuing and processing platform allowing FinTechs, large enterprises, and banks with legacy platforms in the MENA region to instantly create, control, and distribute virtual or physical payment cards. NymCard works in a flexible and locally relevant approach in each country by partnering with local financial institutions and providing operational support for running the service locally while leveraging a common product for agility and economies of scale. Through strategic partnerships, they offer clients fast tracking card issuance in 6 countries – UAE, Jordan, Iraq, Bahrain, Malaysia, and the Philippines. With NymCard, FinTechs can integrate with the payments ecosystem through a simple plug and play framework, without worrying about back-end complexities.

                                                                                            The future of consumer finance is more personalized

                                                                                            In our opinion, consumer FinTech will essentially resemble traditional banking, with broad, large-scale platforms but with services for fundamental consumer needs and focused, vertical services for niche markets with particular requirements and value propositions. Additionally, vertically-focused FinTechs are now able to gather segmented audiences across geographies in ways that were previously impossible thanks to the internet.

                                                                                            The development of traditional banking contributes to the explanation of why consumer FinTech firms that initially seem competitive are actually offering distinct services. Consumer FinTechs serve diverse customers with various value propositions, similar to how community banks and credit unions have prospered by concentrating on small vertical audiences. However, consumer FinTechs may utilize the internet to more readily aggregate a customer segment — for example, Islamic finance or Gen Z students — and the UAE is witnessing this trend as well.

                                                                                            While products may initially find a niche by innovating on one primitive (savings, spending, lending, or investing), what will distinguish these products in the long-run will be the features that are specifically designed for a particular community or audience. As consumer FinTech continues to grow, we expect to see the rise of many winners.

                                                                                            We’ve identified Zywa as the startup that is at the forefront of this trend in the UAE. Founded in 2020 by Alok Kumar and Nuha Hashem, Zywa is a FinTech company offering a neobank for kids. We got to know Zywa through its affiliate DIFC FinTech Hive. Through Zywa, teens are able to spend, receive and manage money without the need for cash. They can also earn rewards and interact with their friends on the platform. Using the app, parents can send money to their kids, which they can spend securely in the safe environment of their parents’ oversight. Serving a $13B market opportunity in the MENA region, Zywa was admitted to Y Combinator (YC) in their Winter 2022 batch and aims to be the payments and financial platform of choice for older teenagers, focused on personality and customization, and is the first to launch in the region.

                                                                                            Processing employee benefits will be streamlined

                                                                                            While money is unquestionably the primary attraction in a company’s compensation package, additional “perks” can help sweeten the deal for current or potential employees. These could range from pension schemes to gym subsidies or support for mental health. We see a rising demand for technology that requires talent to be hired and retained, though the world is currently going through a “great resignation” where attracting this talent is challenging. Players in this space include Peakon, which was acquired by Workday for $700 million last year, JobandTalent, which reached a valuation of $2.35 in December, and Gympass, which most recently reached a valuation of $2.2 billion.

                                                                                            When looking at the employee benefits world in the UAE, we’ve identified FinFlx as one of the startups ready to seize the opportunity in employee benefits. Founded in 2019 by Amr Yussif and Matthieu Capelle, FinFlx is a cloud-based B2B2C employee financial wellbeing platform that was part of Y Combinator batch of Winter 2022 and FinTech Hive affiliated. The company’s core product offering is a portable 401k plan, supplemented by a financial literacy and micro-lending platform, built to integrate seamlessly with other tech providers (e.g. brokers, custodian, payroll, accounting and reporting). Serving a $12 billion gratuity contribution market in the UAE alone, FinFlx aims to be the pension-provider and investment platform of choice charging only 50bps on invested capital.

                                                                                            The intersection of finance and real estate will be disrupted

                                                                                            We are all aware that the housing market has cycles. More purchases and refinances result from low interest rates. Due to historically low interest rates in 2020, both rates and purchases increased. Aspiring home buyers took advantage of the cheap rates to buy homes, while existing home purchasers rushed to change the terms of their loans. Home took on a new meaning when you consider that more individuals were spending more time at home than ever before as a result of COVID shelter-in-place orders. Many people now require extra space. Others relocated to new residences by taking advantage of new remote work regulations and being hampered by commutes.

                                                                                            In this current environment of liquidity tightening coupled with a scarcity in housing supply, we’re particularly attentive to startups that can facilitate and enable seamless transactions and refinances while ensuring purchasers’ peace of mind, especially in the thriving market for real estate of Dubai. Therefore, we are looking for solutions able to support the growth and the liquidity of the market in the region.

                                                                                            Founded in 2020 by Arran Summerhill and Michael Hunter, Holo is a Dubai-based PropTech brokerage company that is digitizing the traditional mortgage and subsequently home-buying process. The company seeks to simplify the home buying process and capture the $57 billion under-penetrated property market in the UAE. It has built a platform that connects all stages of the mortgage buying process onto one centralized platform, allowing buyers to track, monitor and manage the process digitally. Holo enables customers to secure home loans through its web and mobile app, without any paperwork. The platform essentially finds the mortgage plans that match users’ needs, obtain pre-approvals from the banks and help to close the deals.

                                                                                            Finance will be decentralized at large

                                                                                            Decentralized Finance (a.k.a. “DeFi”) is made up of a growing number of systems that support financial applications for lending, trading, and other activities. Even though only a small portion of financial services transactions are currently conducted using cryptocurrencies (coins or tokens) as opposed to those conducted using fiat (government-issued) currencies like the U.S. Dollar, that number is rapidly increasing. Just between January 2021 and December 2021, these transactions increased by 400%, according to CB Insights. Notwithstanding the “crypto winter” (that we talked about in a previous blog post here), 2022 was still say investments in the space — particularly at the early stage level. In fact, DeFi-specialized VC Polychain Capital remained the most active Fintech investor by amount of deals in 2022 (according to CB insights).

                                                                                            We believe that DeFi has enormous potential to penetrate traditional finance as well as crypto trading, especially in:

                                                                                            1. Lending and borrowing: DeFi services connect lenders and borrowers, uphold loan terms, and disburse interest automatically. Yield farming, or leasing cryptocurrency assets in return for transaction costs or interest, has recently become a well-liked method for generating passive income.

                                                                                            2. Decentralized insurance: In the crypto ecosystem, users can buy insurance to cover losses of digital assets. Without utilizing a traditional insurance broker or agent, a DeFi platform connects customers looking for coverage with those ready to insure them in exchange for payment of premiums.

                                                                                            3. Decentralized exchanges: Users can purchase, sell, or trade cryptocurrencies on decentralized exchanges (DEXs). There is no exchange operator, no need to verify your identity, and no withdrawal fees when users trade on a DEX. Instead, through automated market-maker protocols, the smart contracts enforce the rules, carry out deals, and securely handle cash. Derivative exchanges (DEXs) sometimes do not demand money be deposited into an exchange account prior to performing a trade, eliminating the main risk.

                                                                                            Moreover, when taking a broader MENA perspective, many unbanked or underbanked people have the option to engage in the global financial system on an inexpensive basis because to DeFi’s decentralized and open-platform design. For a large portion of the population, the traditional financial system made it impossible to interact at a low cost (through payments or remittances), invest in or hedge market or currency risks (by purchasing stocks or holding stablecoins versus local unstable currencies), or be inclusive. There is a chance for nations to advance beyond traditional technologies and take the lead, as has happened in markets like MENA, given the unique advantages that DeFi has in Emerging Markets versus established markets. As a consequence, we are particularly attentive to the applications of DeFi for FinTech that are arising in the MENA region.

                                                                                            If you are a founder who’s building a FinTech venture, please reach out to us, we’d love to hear from you.

                                                                                            Insights

                                                                                            Man Looking at papers

                                                                                            Cashflow tips to keep founders calm during a bear market

                                                                                            Your purse strings may need some tightening

                                                                                            Fundraising for startups in current market conditions (which we’ve recapped in a recent post here) may not be a smooth ride. Investors are nervous, given falling company valuations worldwide. Subsequently, their decision-making processes are stretched while they gain comfort in your business fundamentals. So what can you, as a founder, do in the meantime?

                                                                                            Early-stage startups can take a queue from distressed assets as they exhibit similar characteristics. Both face the challenge of growing while being efficient with resources that are often limited. As such, there are lessons and principles that can be extracted and applied in navigating your startup.

                                                                                            Let’s mull on this for a minute and explore how to manage a startup as a distressed business. The core issue of a distressed asset is often its ability to manage its cash flow in a healthy way. In this post, we’ll explore managing cash flow in a startup on a 13-week rolling basis and how to create a financially lean organization.

                                                                                            Keep it lean, keep it clean

                                                                                            It is a common misconception that VC investors are only interested in top-line growth, and perhaps there was a time and place when this was indeed a true reflection of the industry. However, as investors’ knowledge and collective experiences evolve, as does the ecosystem, they tend to expand their focus to assess the founders’ ability to extract top-line growth and manage bottom-line economics effectively. Capital efficiency (i.e., cash in vs. cash out or value appreciation per dollar spent) is as important of a metric as top-line growth. As a founder, ensuring lean financial controls increases your chance of funding, as it provides a sign of confidence to investors. This holds truer in a down market situation like we’re in now.

                                                                                            Back to the topic, the first unique characteristic of an early-stage startup is the negative cash flow expectations. Early-stage startups don’t typically have a sustainable inflow of liquidity (cash) to work with and are, therefore, operationally and strategically inefficient with limited economies of scale. So, when things go wrong (which they tend to happen, right?), it can be tough to get through these tough times without appropriate planning and cash flow management. Our first disclaimer: sometimes even proper contingency planning cannot get a business out of a hole.

                                                                                            To be clear, though, this hole is indifferent to business growth metrics; startups with strong adoption and user growth metrics can still find themselves in a cash crunch that can kill the business when burn is up. So, it is better to preempt and build a lean organization upfront.

                                                                                            Make data a currency

                                                                                            Nonetheless, most founders’ default mitigation approach is raising additional capital. But what if this option is not a viable one? What if it leads to unnecessary dilution of founders’ equity? What if it reduces stakeholders’ confidence in the founders’ or their ability to execute their plans? Some of those issues may have nothing to do with the business’s overall attractiveness, defendability, or scalability, so why risk sending the wrong signal to the market? And more importantly, what can you do to avoid the pitfalls of this situation?

                                                                                            Cashflow tips to keep founders calm during a bear market

                                                                                            The first piece of advice that I tend to share with founders from my experiences is a relatively common one in the business world: data is key. Showing what you know and what you plan to do thoroughly helps set the base case for investors and as a reference point for unplanned anomalies. From a cash flow perspective, the 13-week rolling cash flow model (See this fantastic online template from Wallstreet Prep) is typically adopted in turnaround situations to provide visibility of the company’s short-term options (the period is short enough to rely on data). It allows practitioners to step back and identify ways of revising their short-term cash position and runway (clarify cash pressure points and determine the financing needs) to allow them time to replan their long-term position. Subsequently, practitioners may renegotiate contract terms, prioritize receivable collections, and defer ‘non-business critical’ spending. More importantly, it is a tool for open discussion with shareholders (transparency is key) who want to see capital discipline or alignment towards the objective of being capital efficient. Nothing prevents an investor from investing more time/money in a founder than cash-burn indifference.

                                                                                            The rolling 13-week cash flow forecast is not only a down-market tool; instead, it provides insight into your business’s cash standing regardless of the economic climate. For example, it allows you to identify excess cash and help fund further expansions or extend your runway through lean management; subsequently reducing your dilution and increasing the shareholders’ value capture of your business. Managing cash flow is an ongoing mindset and not a tool to adopt purely in critical business moments. Rather, businesses need to focus on growth fundamentals that will make them successful. In the short term, thriving and maximizing value extract is of the essence.

                                                                                            Our 8 Tips to build an effective cash flow model

                                                                                            Here are our top tips for building a 13-week cash flow model that will keep your business weathering the bear market:

                                                                                            1. Include one week of actuals, the next 2-4 weeks on a daily basis, and the final 9-11 weeks on a weekly basis.

                                                                                            2. If your business has a high number of inflow and outflow nodes, apply the 80/20 rule to visibility over essential receipts and payments by contract value.

                                                                                            3. For each supplier, vendor, or customer, consider historical patterns (not relying blindly on contractual dates) for inflow and outflow dates. In addition, assess whether any of your business-critical vendors offer favorable discounts for early payment(s) to optimize ongoing margins.

                                                                                            It is, however, important to remember that if you find yourself in a position of distress through macroeconomic factors, your external stakeholders would be experiencing the same environment (i.e., consider contingency on historical patterns in-line with macro drivers). In short, apply assumptions with the latest information and consider external factors (we’re all in the same boat!).

                                                                                            4. Model downside scenarios for the next 3-6 months and develop mitigation actions for key trigger points. Prioritize mitigating measures that will not affect the longevity or the survivability of the business and remain agile as the situation is highly dynamic and may constantly evolve. You’re better off avoiding long-term commitments in turbulent conditions.

                                                                                            Here are some additional actions you can take if survivorship is at stake:

                                                                                            5. Stop discretionary spending. This entails extracting ideas (your team knows best — someone may surprise you with an innovative idea!) to prevent halting business-critical activities to overcome cash shortage.

                                                                                            6. Postpone growth CAPEX and renegotiate payment terms on all outstanding contractual agreements.

                                                                                            7. Build an early payment offer to your customers — the aim is to focus on your cash position and later refocus on short-term profit. Also, accessing cash sooner avails more capital for growth and subsequently appreciates the shareholders’ and founders’ equity value. For e-commerce businesses, negotiate to extend the payables period or consider consignment in the short term.

                                                                                            8. Ensure your cost base is flexible as follows:

                                                                                            a. Apply the lean-sigma approach to “must-have” vs. “nice-to-have” agreements (including tech-enablement and other supplier agreements), cancel nice-to-have agreements, and renegotiate must-have agreements.

                                                                                            b. Defer hiring and leverage freelancers/ fractional services for business-critical tasks (always have someone on standby and keep them engaged through smaller pieces of work throughout the year to ensure rapid onboarding and full context on day 1).

                                                                                            c. Lengthen payment terms on large leases (e.g., property) and assess whether any of your vendors give you favorable discounts for early payment (apply the 80/20 rule again by reaching out to key vendors and requesting an early payment discount). It goes without saying, do not sign new long-term agreements when in distress, even if highly discounted, since your aim is to ensure at least six months of liquidity).

                                                                                            Deploy a Sheriff to town

                                                                                            Notwithstanding the above, to ensure the accuracy of forecasts and plans, founders must ensure only one person is authorizing payments. Where the business cannot hire a full-time CFO due to cash requirements or limitations, leverage a fractional CFO. A fractional CFO may give your business the experience and /or knowledge set of an FTSE 500 CFO at a fraction of the cost. Some may even accept stock options as compensation.

                                                                                            In addition, full traceability of payment and cash flow logs must be adopted by founders, again on a “live” basis (e.g., Google Docs: Online Document Editor | Google Workspace), to avoid version issues. Further, we suggest that founders create a communication channel (e.g., through Slack or Teams) to discuss and align on what payments to make and to prioritize business-critical expenses.

                                                                                            Ensuring quality and depth of controls on business financials does play a big part in giving investors confidence in your ability to handle their capital. It is vital to bring knowledge and experience from day 1. However, the founders must, in parallel, implement an appropriate “out of office” or /”unavailability” plan to avoid slowing down critical business operations.

                                                                                            Keep communication channels open

                                                                                            As the saying goes, “cash is king” — and so founders stand to benefit from controlling cash and identifying short-term action plans, which they’d need to monitor, reforecast, monitor, reforecast, and repeat. Communicate these actions regularly with key stakeholders (both internally and externally) to show traceability of planning and thinking to minimize them challenging your business decision-making or cash-burn discipline. Instead, these efforts will help you refocus discussions on key mitigations to overcome the trying year ahead in VC and reach a consensus on a business direction.

                                                                                            When the time is ready for your business to fundraise and you feel that the Dubai Future District Fund can support your startup, please get in touch — we’d love to hear from you.

                                                                                            Insights

                                                                                            DFDF Press Release image

                                                                                            Investments by DFDF advance economic contribution from future-focused start-ups

                                                                                            DUBAI, 17th January, 2023 (WAM) — Omar Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, chaired the Dubai Future District Fund (DFDF) Oversight Committee upon completion of its first year of investment operations.

                                                                                            The meeting reviewed DFDF’s first full year of operations and highlighted the rapid progress being made, with the completion of more than a dozen fund and start-up investments from the initial funding commitment of AED1 billion.

                                                                                            Al Olama, who is the Chairman of DFDF Oversight Committee, stated that Dubai and the UAE is keen to provide the best ecosystem to create the newest generation of start-ups and global unicorns, reflecting the visions and directives of the UAE leadership in driving a robust growth in the economy and enhancing the country’s global competitiveness.

                                                                                            He added that Dubai has built technological infrastructure and cutting-edge systems resulting in promoting its reputation around the world as a leading economy empowering start-ups to achieve their potential and enhancing their position as the backbone of many economies and their positive effect on the national and global economy.

                                                                                            Al Olama commended the committee’s efforts in attracting global businesses, supporting start-ups to establish them in Dubai and providing them with state-of-the-art solutions in easing their journey to success. In turn, the impact of these companies will be apparent in the years to come – in supporting sustainable economic growth and enhancing prosperity.

                                                                                            The Minister of State, along with other members of the Oversight Committee – Essa Kazim, Governor of Dubai International Financial Centre (DIFC); Khalfan Belhoul, CEO of Dubai Future Foundation (DFF); and Arif Amiri, CEO of DIFC Authority, congratulated the wider Board and the Investment Committee for helping to catalyse the start-up sector, which is increasing its contribution to Dubai and the UAE’s economy.

                                                                                            DFDF is the region’s first evergreen venture capital fund to specialise in early-stage, high-growth technology start-ups for emerging markets, anchored by leading institutions. More than 1,000 requests have been received from local, regional and global start-ups and other funds looking to expand their capital base.

                                                                                            The Fund, launched in an effort to centralise the Government of Dubai and quasi-government’s participation in the digital economy, is anchored by DIFC, the leading global financial centre in the Middle East, Africa and South Asia (MEASA) region, and DFF, whose vision is to make Dubai a leading city of the future and the guiding force behind the Museum of the Future. The Fund has made 13 investments since its establishment.

                                                                                            The Fund focuses primarily on supporting start-up programmes with seed capital and building a scalable tech innovation ecosystem for them to operate in. It also works to attract leading venture capital funds to Dubai as well as already established tech start-ups that would flourish in the environment created by DFDF, the Dubai Future District and the wider emirate.

                                                                                            Essa Kazim said, “The results of our first full year of operations are promising. As an anchor investor in the Dubai Future District Fund, we will continue to shape the emirate’s reputation as a global hub for technology and innovation and support start-ups through our comprehensive, world-class ecosystem. In line with our vision to drive the future of finance, which is also an important pillar of the Fund, our efforts are attracting innovative and emerging technology companies and talent from around the world. We now look forward to capitalising on this through 2023 and attracting even more start-ups and positively impacting the economy.”

                                                                                            Khalfan Belhoul commented, “The Dubai Future Foundation aims to help make Dubai one of the world’s leading cities of the future. The Dubai Future District Fund demonstrates how we are reimagining, inspiring and designing Dubai’s future in collaboration with public and private sector partners. The Fund is a key driver of the start-up ecosystem as it enables local and global talent to embrace the Fourth Industrial Revolution’s solutions. The Fund acts as a catalyst, empowering entrepreneurs to build a more sustainable future based on innovation.”

                                                                                            Belhoul added, “We look forward to supporting more start-ups that have the potential and foresight to drive Dubai’s economy and contribute to enhancing the emirate’s position as a global destination for partnerships, research and development, and designing the future.”

                                                                                            Arif Amiri remarked, “The global economy is expected to more than double by 2050, enabled by the rise in innovative technologies. The Dubai Future District Fund and DIFC are ensuring Dubai captures a significant share of this growth by providing start-ups, investors, the public sector and private firms with a new opportunity to work together. Funding future-focused start-ups will help shape sustainable economic growth in Dubai and the region. Additionally, the investments made by the fund will result in a broader positive impact on millions of people and economies globally. As the fund’s investment portfolio grows, we look forward to seeing more start-ups prosper while cementing Dubai’s reputation as a leading global hub for innovation and technology.”

                                                                                            The Fund is mandated to support future economy companies who will operate out of the Dubai Future District. They will have the potential and foresight to drive Dubai’s economy and contribute to enhancing the emirate’s position as a preferred destination for global talent and entrepreneurship through initiatives and projects that are aimed at turning Dubai into a nexus for business and an integrated investment environment that offers exceptional facilities. In addition, the Fund will look to back Series A+ start-ups, tackling a wider regional mandate in the development of the future economy and venture capital funds that have presence and investments in Dubai.

                                                                                            Muhammad Aamir / Amjad Saleh

                                                                                            Press Releases

                                                                                            Tall Buildings

                                                                                            The implications of layoffs across the tech industry

                                                                                            Why have so many tech companies been laying off staff?

                                                                                            We’ve previously written about the sharp drop in valuations across both public and private companies that have been taking place since the second quarter of 2022 (see previous blog post here). As a result, lowered expectations of business earnings coupled with more conservative business risk assessments continue to be the lethal duo that clouds the venture capital industry going into 2023.

                                                                                            Across publicly-listed company valuations, when stock prices tank across the board this indicates that the value of equities is taking a beating overall. Take, for example, three of the most referenced stock market indices’ drop in 2022 — the Dow Jones Industrial Average fell ~8.7%, the S&P 500 lost ~19.4%, and the Nasdaq Composite dropped ~33.1%.

                                                                                            Stock Performance graph

                                                                                            Under pressure from the media and shareholders to bump up stock prices, public company CEOs are looking to their P&L statements to find areas of opportunity. Often, cutting costs is a first measure, and as staff payroll is an expense category that is quick to cut off, people’s jobs are fast to take a hit.

                                                                                            Now, as public market companies are seen as “seniors” to private companies, coupled with pressure from their existing and prospective investors, Founder-CEOs of startups (usually private companies), are taking caution to extend their runway. And so, over the last 6 months, we can see that they’ve been hesitant to raise capital at the expense of bringing their companies’ valuations down (in “down rounds”) along with the public market trends. As these companies are likely founder-run as well, they’d be less inclined to sell their businesses altogether in the anticipation of cashing out at a higher exit. In turn, this has left them to restructure their business expenses to extend their operating runways. And, as often people constitute a large portion of operating expenses (whether it’s full-time employees or even part-time consultants in the age of the Gig Economy), layoffs are inevitable.

                                                                                            Which industry is being affected the most?

                                                                                            According to Reuters, growth stocks (a.k.a. Tech companies) saw the sharpest drop in value. This indicates that companies within this sector that IPO-ed in the last few years likely went public at over-inflated valuations — and hence, their stock valuations are being corrected the most amongst more traditional industries (e.g. Energy companies). After all, their gains had been historically unparalleled, meaning something had to give.

                                                                                            Sector Performance graph

                                                                                            Many of the companies that have made headlines recently by announcing layoffs have, in fact, been public tech/ growth companies. These include Meta (11,000 jobs), Amazon (18,000 jobs), Salesforce (9,090 jobs), Twitter (3,700 jobs), Robinhood (1,013 jobs), Shopify (1,000 jobs), and Peloton (4,084 jobs). Closer to home in MENA, SWVL also laid off 50% of its workforce in November 2022 (400 jobs).

                                                                                            Will the layoffs impact growth in 2023?

                                                                                            When taking a top-down approach, without a driving force to push revenues upwards, you can anticipate the rate of growth of companies that announce layoffs to be impacted. After all, new product launches take time and capital. However, that doesn’t mean that given the current economic circumstances, companies can not take the opportunity to look at their profitability metrics.

                                                                                            Now, in some cases, CEOs can argue that the staff expenses being trimmed are just excess “fat” being cut off — meaning the company is over-staffed and can continue to produce the same output (i.e. hit the same revenue levels) with fewer people. Take, for example, Twitter’s new CEO, Elon Musk, cutting 60% of staff when he took over the company towards the end of 2022 — the company is arguably still operating the same. Though the company’s revenues are hindered by other factors not relating to staff (for example, fewer ad investments by companies who are not aligned with the new company direction), which would impact profitability overall, the fact remains that you can still log on to your account and post a tweet, just the same.

                                                                                            Will we continue to see more layoffs?

                                                                                            Given the bear state of the market at present, CEOs can anticipate the same investor sentiment going into 2023 that last year ended with. This means that we’re likely to see more layoffs across the growth economy, probably even companies that appear to be doing well financially and are growing.

                                                                                            In the unprecedented age of growth that we’ve seen since the financial crisis in 2008, the Founder-CEOs that would have started their companies during this era would not have experienced making business decisions during a downturn… yet. Assuming many powered through denial by the end of 2022, the time has now come for these CEOs to make tough decisions regarding staffing. On the surface, it may seem like there are two paths they can choose to trek down: either freeze hiring or lay off staff. However, we wonder if the path of freezing hires will inevitably meet along the path of laying off staff. If so, then leaders can go straight down the path of letting people go in an effort to find their new operating model faster (and thereby get on their toes quicker). This choice also allows companies to be more generous with the people they lay off.

                                                                                            Should you be worried amidst all the layoff news?

                                                                                            Though many tech companies announced layoffs last year, the job market overall is not in a dire state. Take job market indicators in the United States, for example, where many of the tech companies that have announced layoffs are headquartered. According to Crunchbase, more than 91,000 people were laid off across the tech industry in the U.S. However, as of December 2022, the country’s unemployment rate was at 3.5%, which is lower compared to the long-term average of 5.73% and is at a 10-year low.

                                                                                            US Unemployment graph

                                                                                            In fact, according to Revelio Labs, 70% of people in the U.S. who’ve been laid off across the tech industry since March 2022 were able to find another job within three months. In fact, Revelio Labs also reports that 52% of these people have been able to find new jobs at higher salaries, meaning that the growth in tech industry salaries that has been steadily on the rise (up 42.6% on average from 2006 to 2021, according to Dice) is not slowing down any time soon.

                                                                                            Average Salary graph

                                                                                            This, coupled with the historically-low unemployment rate across the country, means that in spite of the layoffs, talent is not being left redundant from work — instead, they’re being shuffled to other employment opportunities. As the skillsets required to work in tech are often white-collar in nature, this reshuffling brings with it an opportunity to sprinkle some innovation magic in traditional industries that may not have been disrupted so heavily yet.

                                                                                            Overall, strong employment metrics also indicate that people are able to meet their personal financial plans and obligations, leading to strong consumer sentiment — and it’s this strong consumer demand that tech companies will rely on to ensure that this season of layoffs will be more constructive than detrimental to their businesses. Further, amidst looming recession talks, this also indicates that a true economic slowdown may in fact just be speculation.

                                                                                            What’s the path forward for startups in MENA?

                                                                                            If you’re the founder of, or investor in, a startup in the Middle East that is well-capitalized, the layoffs that are taking place worldwide are a ripe opportunity to attract global talent. If you’re based in the U.A.E., you’d be attracting job candidates with the existing appeal that the country has built to attract talent from abroad, being recently ranked the most attractive country for talent in the Arab region by IMD World Talent Ranking.

                                                                                            In addition to seizing the opportunity to build out your team, we suggest that you take the time to identify other risks you may be facing or could be vulnerable to in an unpredictable economic environment, and be prepared for a worst-case scenario. Then, identify what changes you can make to your financials to improve cash flow as a bracing cushion.

                                                                                            Meanwhile, take the time to address what this global trend means to your existing employees. Be transparent about your business trajectory and communicate with them clearly about what your staffing plans are during this time. And should the case be that you are taking on a hiring freeze or planning for a layoff round, then put together a plan to ensure that staff morale is not clouded with seeds of demotivation. Further, for staff that hold company ESOP (and, therefore, have an interest in the company’s valuation), share with them what your short and medium-term growth plans are so that they don’t jump ship to another company that is simultaneously seeking to hire talent during this time.

                                                                                            The truth is that bull markets follow bear markets; and so, the future of your company is not fated for doom and gloom if business fundamentals are carefully considered in the meanwhile.

                                                                                            Insights

                                                                                            DFDF Graphic

                                                                                            A look back at VC in 2022 and predictions for 2023

                                                                                            A reckoning year for tech companies

                                                                                            The drop in tech valuations that we first started to see globally in the first half of 2022, driven by an increase in interest rates and inflation around the world (as recapped in a previous post), continued throughout the year.

                                                                                            According to Crunchbase, global venture funding totaled $81 billion in Q3 2022, which was down by 53% year-on-year and by 33% quarter-on-quarter. Further, CB Insights reported that the total number of deals fell by approximately 10% from Q2 to Q3 this year.

                                                                                            According to CB Insights, this quarter-on-quarter drop is seen across most stages of the startup lifecycle, globally — particularly in late-stage rounds.

                                                                                            A look back at VC in 2022 and predictions for 2023

                                                                                            The drop in valuations is a result of a reduction in VC deal count and deal size as investors continue to limit their risk exposure given the economic circumstances of high inflation and interest rates.

                                                                                            Accordingly, the count of new companies crossing the billion-dollar-plus valuation mark (aka “Unicorns”) has also dropped significantly worldwide to almost early Covid-19 pandemic levels (i.e. Q1 and Q2, 2020), in line with figures reported by Crunchbase.

                                                                                            A look back at VC in 2022 and predictions for 2023

                                                                                            Et tu, MENA?

                                                                                            This downward trend across venture capital activity at large has, albeit slightly delayed, become present in the Middle East and North Africa (MENA) region as well. MAGNiTT reported that both the count and size of VC deals had been steadily dropping in the first three quarters of 2022. Last year’s Q3 funding (totaling $512 million — approximately 0.6% of global funding in the same quarter) was down approximately 46.7% from $961 million in Q1 earlier in the year.

                                                                                            A look back at VC in 2022 and predictions for 2023

                                                                                            This indicates that, while the situation has been somewhat masked by the positive regional economic trajectory, the MENA private markets are prone to the same factors driving the global economy at large; namely volatile public markets, rising inflation levels, and mounting interest rates.

                                                                                            Not all of 2022 has been gloomy

                                                                                            The overall drop in VC activity last year isn’t to say that the sector has seen no successes at all. In spite of this, Crunchbase reports that more than 80 companies around the world doubled their valuations between Q2 and Q3 in 2022. These companies span across a variety of Future Economies sectors including Future of Work, Future of Health, Future of Logistics, and Future of Security.

                                                                                            This gives room for hope that high returns can still be achieved in venture capital. There is also additional room for founders to take note of what has worked well for these companies in these trying times, in order to create somewhat of a playbook for startups during bear markets.

                                                                                            Predictions for 2023

                                                                                            1. Dry powder will compel VC activity

                                                                                            Venture capital firms raised record funds in 2021 and 2022 (according to Crunchbase); and while the rate of deployment of this capital was pulled back in 2022, the amount of dry powder has been building up and is currently at its highest levels (according to Pitchbook). This will, therefore, put pressure on fund managers to deploy capital as we head into 2023. Needless to say, there is a lineup of founders across early and late-stage startups who are ready to accept capital on the demand side.

                                                                                            However, growth expectations will adjust. Moving forward, expectations of private company earnings (including startups) will shift to adjust for the risks that were otherwise buried amidst the hype. This conservative approach by investors can lead to higher discounts and cap rates, when considering venture investments, giving LPs more favorable positions.

                                                                                            2. FinTech will continue to attract investors

                                                                                            Even with a slowdown in venture capital around the world, investments in the FinTech sector continue to outpace other sub-sectors of Tech, both globally (according to TechCrunch) and across emerging markets (according to MAGNiTT). This means that founders who are innovating in the Future of Finance space will continue to see interest from investors next year, provided that their business fundamentals are as solid as their growth plans.

                                                                                            That being said, an emphasis on regulation will come into play in the Future of Finance, given the severe drop in valuations that the crypto markets have suffered in 2022 (the price of Bitcoin alone has dropped approximately 63% in 2022 to a two-year low), spurred by the fall of the Terra-based stablecoin USDT and the collapse of crypto exchange FTX. Therefore, investors’ and the market’s trust in crypto-focused startups will be tested next year.

                                                                                            Bitcoin to USD 2022

                                                                                            3. A recession may come into play

                                                                                            As the Fed aggressively raised interest rates in 2022 and prices soared across the world (many countries saw their highest inflation levels in decades), the yield on 10-year treasuries climbed, though the yield on 2-year treasuries rose even faster, causing a yield-curve inversion that’s currently at its deepest level in 40 years. This inverted curve shows that the yield on short-term government bonds exceeds that of long-term bonds (expressing more risk in the short-term), which has been a historical indicator of economic recession.

                                                                                            The impending recession that founders and investors alike have been worried about since the onset of the industry downturn in 2022 may well become a reality in 2023. This will impact investors’ expectations of private company earnings, as individuals and institutions become more cautious about spending with no end in sight for inflation (including rising oil & gas prices, spiked by the Ukraine-Russia conflict) or interest rates coming back down to “normal” levels. Though, in its latest move in December 2022, the Fed increased interest rates at a level less than expected, giving the market somewhat of a breather.

                                                                                            In spite of all this, the slowdown in the stock market throughout 2022 has not been as sharp as other downturns in our lifetime (e.g. the S&P 500 has dropped approximately 15% so far this year from its record high on January 1, 2022, whereas it dropped approximately 52% during the 2008 financial crisis), the recession may be short and result in few casualties.

                                                                                            S and P 500 graph

                                                                                            The USD had one of its strongest years ever in 2022, in the first 9 months of the year it rallied 20% — reaching a 20-year high. Additionally, in 2022 the US Dollar beat the British Pound and Euro for the first time in history. It’s since given up some of these gains, but USD-backed currencies such as the UAE Dirham and the Saudi Riyal in the Middle East will continue to ride on the back the strong performance of USD, shielding investors and businesses in the region from the sovereign debt crisis in some emerging markets (such as Sri Lanka), including countries in Europe that utilize the Euro.

                                                                                            USD to Euro 2022

                                                                                            We’re looking forward to seeing what 2023 will bring

                                                                                            As DFDF completes its first year of investments, we look forward to growing our portfolio and presence in 2023. As the year progresses we also look forward to seeing how many of our predictions for the year will hold true, and how that will change the landscape of venture capital in the MENA region and beyond.

                                                                                            If you are a VC fund looking for capital partners, or a founder looking for direct investment, we look forward to hearing about your plans for 2023.

                                                                                            Are you an Emirati citizen looking to learn about the inner workings of venture capital firsthand from experts? Don’t miss the opportunity to be a part of DFDF’s first Venture Fellows cohort kicking off in February 2023. Apply to the fellowship program at fellows.dfdf.vc before January 20th, 2023.

                                                                                            Insights

                                                                                            DFDF Team

                                                                                            DFDF Launches Inaugural Venture Fellows Program

                                                                                            DFDF Launches Inaugural Venture Fellows Program Aimed at Fostering the Next Generation of Emirati Investors

                                                                                            Dubai, UAE, 13 December 2022: The Dubai Future District Fund (DFDF) announces the launch of its Venture Fellows program and invites eligible aspiring Emirati venture capitalists and entrepreneurs to apply. The objective of the program is to empower the next generation of Emiratis in venture capital by sharing with them the knowledge and practical skills required to drive innovation or become tech investors and entrepreneurs. This is the first venture capital-focused program of its kind in the UAE that focuses on empowering the local community, with a curriculum that is tailored to the region.

                                                                                            The program will commence on February 1, 2023, and consists of four modules spread over 12 months with digital and in-person touchpoints. The workshops will be delivered by experienced venture capital investors that are committed to empowering the next generation of Emirati investors and entrepreneurs.

                                                                                            “Our fellows will gain the knowledge, skills and network needed to thrive in the venture capital ecosystem.” says, Sharif El Badawi, CEO of the Dubai Future District Fund

                                                                                            Emiratis between the ages of 25 and 40 with an interest in venture capital investment and technology entrepreneurship are encouraged to apply to DFDF’s Venture Fellows 2023 program by submitting an application online at DFDF Venture Fellows by January 20, 2023.

                                                                                             

                                                                                            About the Dubai Future District Fund

                                                                                            The Dubai Future District Fund (DFDF) is the evergreen venture fund of Dubai, anchored by the Dubai International Finance Center and the Dubai Future Foundation. The company’s mission is to foster a thriving venture ecosystem in the region and boost venture capital availability to innovative funds and startups in Dubai and the region.

                                                                                            The fund deploys capital into Fund of Funds and makes direct investments into startups across two thematic pillars, Future of Finance and Future Economies. The company is headquartered in the United Arab Emirates with offices in Dubai International Financial Centre. Learn more about DFDF on our website at HOME – Dubai Future District Fund.

                                                                                            For inquiries, please email us at [email protected]

                                                                                            Press Releases

                                                                                            People walking in busy stairwell

                                                                                            The promising prospects of FinTech in MENAPT

                                                                                            FinTech funding across MENATP powers through the global VC slowdown

                                                                                            Venture capital has softened its foot on the accelerator pedal last quarter. Globally, Q2 2022 venture captivity has declined more than 20% for a second straight quarter, according to CB Insights, across all sectors. In the same quarter, for the first time since Q4 2021, FinTech startup investments accounted for less than 20% of all funding, whereas in Q1 one out of every 5 dollars of funding went towards FinTech deals.

                                                                                            This comes after FinTech funding started to cool off in Q1 earlier this year, with global funding for the sector closing in at $28.8 billion in Q1 — down 18% compared to Q4 last year. Of this, $999 million was invested in FinTechs across the Middle East, Africa, Pakistan, and Turkey (according to MAGNiTT), accounting for about 3.4% of total global FinTech funding.

                                                                                            Though VC FinTech deals in the region are a small portion of global funding into the sector, the prospects of FinTech startups shine brighter than the other sub-sectors of tech. That’s because, in the region, the financial industry is an industry that is more familiar than others. Familiarity breeds understanding, which — in turn — brings comfort to people looking to enter into the space, whether they’re founders or investors. Therefore, the opportunity to fundraise as a FinTech startup in the region is ripe, as evidenced by the numbers.

                                                                                            Across the Middle East, Africa, Pakistan, and Turkey, FinTech funding remained strong in the first half of 2022, accounting for the majority of venture capital deal count and volume raised. A total of $1.6 billion was raised by startups in this sector across the region, across 210 deals, according to MAGNiTT, which is a 40% increase in deal count and a 223% increase in deal volume compared to H1 2021. These deals accounted for 68% of all $2 billion of VC deals in Africa during this time period — 34% of all $1.8 billion deals in MENA, 3% of all $249 million deals in Pakistan, and 1.5% of all $1.4 billion deals in Turkey.

                                                                                            Further, UAE-based lender Mashreq anticipated in February this year that by the end of the year, more than 800 Middle East FinTech startups will raise a total of $2 billion in venture capital (as cited by The National). Therefore, the FinTech opportunity remains attractive to investors looking to close deals with startups doing business in the region.

                                                                                            International FinTech valuations get lean for the summer

                                                                                            After a very active 2021 when it came to venture capital activity across all sectors, as venture funding reached its annual peak of $630 billion last year (according to CB Insights), valuations have come under the spotlight in 2022 given the trying economic circumstances of high inflation and interest rates worldwide.

                                                                                            Shining the spotlight on FinTech private market valuations — take Klarna, for example, a Sweden-based FinTech company in the buy-now-pay-later consumer payments space that closed a funding round at a $15 billion valuation in July of this year, an 85% drop from its previous fundraising round last year at a valuation of $45.6 (according to TechCrunch).

                                                                                            This drop in valuations can be seen for late-stage FinTech companies globally, across all sub-sectors, however. CB Insights reports that the median post-money valuation for late-stage companies has dropped from $1.6 billion to $1.4 billion YTD in 2022. In contrast, mid-stage FinTech companies are seeing so change in this metric so far this year (from $0.5 billion to $0.5 billion across the same time period comparison), while early-stage FinTech startups are actually seeing an increase (from $38 million to $46 million across the same time period comparison).

                                                                                            And now to move the spotlight over to FinTech public market valuations — stock prices picked by Pitchbook to represent high-growth companies in this sector have fallen 59% in Q2 2022 from their peak. Moreover, data from CapIQ shows that forward revenue multiples for public software companies in the FinTech categories have dropped from 15x in May 2021 to just under 5x in May 2022. In fact, FinTech has seen the largest drop in this metric than any other industry.

                                                                                            Combined with declining public markets overall, this means that valuations in the private markets, going forward, will be drawn closer to business fundamentals as opposed to market hype, funneling investments into startups with more sustainable business models.

                                                                                            Implications of reduced FinTech valuations globally to investors and founders

                                                                                            With over $1.4 trillion sitting in VC portfolios as unrealized value, billions stand to be wiped away if sizable drops in valuation multiples continue, according to CB Insights. However, the correction of over-inflated valuations will be a good thing for venture funding, as it will ensure a more balanced focus on growth as well as profitability when it comes to steering startup direction.

                                                                                            This is in contrast to the commonly-accepted state of venture capital in the last few years, which was mostly focused on a grow-at-all-costs mantra. This will also prompt late-stage FinTechs that were considering going public to likely refrain from doing so until the public markets recover, and instead, remain private for longer. Ultimately, when they do decide it’s time to go public, their financial statements would be in a better position to achieve positive returns for those future shareholders.

                                                                                            After all, as we’ve seen repeatedly in venture funding history, higher valuations and high burn rates, at the expense of sound bottom-line metrics, are not always good for founders. When markets shift, these high-flying companies are reliant on external capital infusions that may not be available anymore, causing them to incur further dilution (if they’re able to raise) or even worse, trigger layoffs or die. In addition, a venture market that is disciplined helps separate the signal from the noise and encourages founders to focus on unit economics and sensible business fundamentals.

                                                                                            Advice to FinTech founders is to focus on core profitability in order to reduce the perception of your startup as risky in the eyes of investors (they’ll want to reduce their exposure to risky assets during a time of high-interest rates and talks of economic recession). You would have to drive profitability by increasing revenues (looking at maximizing existing revenue streams and exploring new ones) and decreasing costs. Essentially, back to business basics.

                                                                                            The MENAPT region swipes right on FinTech

                                                                                            Though venture capital overall is cooling off in MENAPT halfway through 2022, the case for FinTech in the region remains strong, as we’ve evidenced through funding volume and count numbers reported for H1, unlike declined investor appetite in other parts of the world. Notable FinTech funding rounds in the Middle East so far this year include Tabby’s $54 million Series B in March, Foodics’ $170 million Series C in April 2022, and most recently Tamara’s $100 million Series B in August — albeit these types of rounds are often inclusive of debt.

                                                                                            This means that capital availability for MENAPT’s FinTech startups will remain consistent for the second through Q3, 2022, in spite of other region-specific challenges such as tighter consumer finance regulations that restrict direct-to-consumer opportunities across certain vertices such as lending, payments, and cryptocurrency trading.

                                                                                            As these investments will be made in parallel to global correction in over-inflated private and public market tech valuations, it’s more likely that the capital that is being deployed will be done on more fundamentals-based valuations into startups with more sustainable burn rates. It can be anticipated that this refocusing on investment due diligence would, in turn, lead to higher returns for venture capital firms and their LPs; subsequently driving more LP investments into VCs.

                                                                                            Insights

                                                                                            Museum of the Future monument in Dubai

                                                                                            The Dubai Future District Fund Investment Strategy

                                                                                            About DFDF

                                                                                            The Dubai Future District Fund was established by the visionary leadership of Dubai to support innovative technology startups with additional funding and to foster a thriving venture ecosystem in the region. Dubai has long been the leading startup tech hub and has consistently ranked first in terms of number of deals and amount of capital. That said, the emirate has not historically had a concerted effort to invest capital directly into startups or the venture capital funds that support them, though supporting the private VC community is a significant part of the role of government and an effective way to catalyze economic growth. At the same time, there are areas of opportunity in startups (at the Pre-seed to Seed stages, for example), or in key sector-relevant innovations that are strategic and warrant a direct investment.
                                                                                            Our mandate is to invest 50% of the capital into venture capital funds (Fund of Funds) and 50% directly into startups in our thesis. Given we’re new on the scene, we thought we would introduce our investment strategy and how we think about the funds and startups we support, which we’ll elaborate on further below.

                                                                                            Evergreen Structure

                                                                                            Patient Capital

                                                                                            One key innovation to note in the way that we’re structured is that we are an evergreen fund, meaning we aren’t beholden to the 10 year lifespan of a typical VC fund. This allows us to focus on investing in technologies with various return horizons and take a longer-term view on returns. The open-ended nature of the fund aligns with our government-backed roots and desire to invest in truly innovative technologies of the future. Understandably, private VCs that have an LP-GP structure, especially in emerging markets, tend to seek out startup investments that they believe will exit with a 7-10 year horizon so that they can meet their target returns to LPs by the end of the fund’s life. For us, our return horizon is theoretically forever, and we’re keen on pushing the envelope on investments with deeper innovation than the typical low hanging fruit. Our structure allows us to support the efforts of the VC community, while allocating more patient capital into the innovative technologies of the future.

                                                                                            Performance Driven

                                                                                            What’s more is that the fund is designed to incentive the team akin to a private VC fund, through carried interest. In the fast-moving Dubai spirit, we are innovating on the fund model in a way we feel best aligns to the interests of our shareholders, while addressing the needs of the founder and investor communities, with a mission-driven team that believes that: if you solve a problem for millions of people or fix a problem for thousands of enterprises then you create value that will generate outsized returns.

                                                                                            Forging Next Generation Innovation

                                                                                            We expect that as we build out our funds portfolio, about half of our direct investments will be co-investments with our fund managers and the other half will target areas where there are still gaps in private VC funding, specifically in deeper tech companies that may require longer R&D cycles or higher CapEx. The private VC fund landscape in the region still mostly invests agnostically across sectors given the nascence of the region and into companies that have a 7-10 year return horizon. Our aim is to start shifting more capital attention towards deep(er) tech — the more meaningful innovations solving issues facing millions of people now and in the future — that require capital to be invested beyond a 10 year horizon.

                                                                                            Conscious Portfolio Construction

                                                                                            We’re aware of the longer gestation periods that will be needed (especially in our markets) for investing in deeper technologies. Investing in DeepTech requires significantly more dry powder, patient capital and a nurturing environment in terms of regulation, infrastructure and customers. As such, we plan to start with software-based B2B solutions that address areas such as the Future of Work, HR, finance, real estate, logistics, entertainment or education with an eye on good governance, financial prudency, impact on society and the environment. These types of businesses may still harness the meaningful change that new innovations can bring, impacting humanity in a positive way and building their companies in a sustainable way. Yet, they importantly have a similar 7-10 year return horizon, as most of the deal flow currently in the region being invested in by local and regional VCs. As we build out the initial short-term return horizon curve (and we have more funds in our portfolio covering agnostic investing), we’ll begin focusing on our direct investments more towards the gap-filling areas that are relevant to the future economy solutions that address the needs of tomorrow. These ‘stage 2’ startups may have a 10-15 year return horizon, or just slightly longer than the typical VC investment horizon. Eventually, and as our ecosystem continues to mature, we’ll continue to stretch our reach to a point where our direct investments are solely focused on areas where there are funding gaps, pushing the envelope further along the way.

                                                                                            Geographic Focus

                                                                                            We view our geographic scope in terms of several concentric circles, starting with Dubai at the center, followed by the UAE, the Middle East, North Africa, Pakistan and Turkey (MENAPT), and Middle East, Africa and South Asia (MEASA) and then global, with more specific criteria as we move further outward from Dubai. We believe it is important to be thoughtful about how we’re building, to ensure a healthy foundation for the future. For example, for local and regional funds, we understand that they have wider theses around sector foci, while perhaps narrower on geography and stage. So, when we look at international funds or startups, we are keen to work with sector-specific funds/startups to add more capital, subject-matter expertise and talent in verticals that align with our thematic pillars. It’s vital that we’re considerate of the complementarity of our efforts in order to not cannibalize efforts on the ground locally, fueling a strong, sustainable ecosystem for the long-run. For now, given we’re still in our first year of operations, we’re centering our attention on the core of our geographic coverage and evaluating startups with a presence in Dubai and the UAE.

                                                                                            Stages of Funding

                                                                                            (1) Direct Investments

                                                                                            For direct investments, we invest across two main strategies, Build and Catalyze, which cover approximately five stages of early-stage venture capital funding rounds from Pre-seed to Series C. The Build strategy is focused on Pre-seed and Seed stage investments, primarily meant to support startups within the Dubai Future District in their earliest phases of growth and support them through value-added support of our shareholders and stakeholders of Dubai, whether they be from the public or private sector. Our ticket sizes for these companies range between $250,000 and $1,000,000. The Catalyze strategy is focused on Series A to Series C investments with ticket sizes between $1-3 million for Series A, $3-5 million for Series B and $5-7 million for Series C, inclusive of follow-on investments.

                                                                                            (2) Fund of Funds

                                                                                            For Fund of Funds investments, what we call our Anchor strategy, our aim is to support the investors who are fueling the next wave of innovative companies through investments at all stages of a startup’s lifecycle, across all key sectors and focused on the relevant geographies of the MENA region and beyond.
                                                                                            We’re currently allocating across 3 types of venture capital funds:
                                                                                            (a) Incumbent regional VCs who have been investing in Dubai, typically on their second, third or fourth funds;
                                                                                            (b) New and emerging fund managers who may be starting new types of niche funds, which could be solo GPs starting new firms and usually come in the form of microfunds that target Pre-seed investments;
                                                                                            (c) International funds that demonstrate a presence and investments in Dubai and bring sector-focused VC expertise, particularly within our Future Economies and Future of Finance themes.

                                                                                            Thematic Pillars

                                                                                            The fund will invest directly across two thematic pillars, which we call the Future of Finance and Future Economies.
                                                                                            (1) Future of Finance

                                                                                            The Future of Finance pillar, which we’ll dive deeper into in subsequent posts, comprises the 15-20 sub-sectors of FinTech, the horizontal themes of financial inclusion and embedded finance, LegalTech, RegTech and the finance side of web3. We see a lot of potential in these sectors as they challenge larger industries, create new opportunities and empower users of all types to have access to safe, well-governed financial services.

                                                                                            (2) Future Economies

                                                                                            Our Future Economies thesis is defined less by which sectors may or may not fall within it, but rather by how we see the world economy evolving between now and 2050 and the issues it’s expected to face over the course of these 30 years. It is through this lense that we look for technological innovations that are providing meaningful solutions to the problems that will face millions of people, in our own backyard and the wider region. Aligned with the UN’s Social Development Goals, we look to support founders that are building unique technologies across the Future of Food, the Future of Health, the Future of Security, the Future of Work, the Future of Logistics, the Future of Education and the Future of Entertainment.

                                                                                            Stewards of the Ecosystem

                                                                                            Apart from allocating capital to funds and startups building the innovative companies of the future, we take our role of ensuring a healthy development of the local and regional ecosystem seriously, notably in terms of governance, societal impact and the Sustainable Development Goals of the UN. To do this, we value our partnerships with fellow LPs, VCs and founders to implement best practices and global standards to investing and company building.
                                                                                            As we’ve seen in the recent bull market, growth at all costs is not a sustainable strategy for startups, particularly when it comes at the cost of good governance. Furthermore, we try to be thoughtful about building the ecosystem in a balanced way. Our portfolio model aims to address the needs of the VC community, the startups they back and a variety of technologies across markets that are relevant to our region. In addition, we think a lot about complimenting the local ecosystem with international funds or startups that can bring unique talent, know-how and businesses that aren’t already being addressed by the startups on the ground.

                                                                                            Stay tuned for our next posts as we examine our two thematic pillars in more detail.

                                                                                            If you think you’re a fit for DFDF, we would love to hear from you.

                                                                                            Insights

                                                                                            Men working on laptops

                                                                                            What the looming recession means for the venture capital globally

                                                                                            What the looming recession means for venture capital globally and in the MENAPT region

                                                                                             

                                                                                            How does the impending recession affect VC?

                                                                                            Scrolling through virtually any business news or media outlet these days is a bit of a downer for most individual and institutional investors. The headlines reflect the pessimistic market sentiments and have readers speculating the worst — the possibility of a major recession.

                                                                                            The Econ 101 definition of a recession is two consecutive quarters of reduced trade and industrial activity. Economists at leading banks like Morgan Stanley and Citigroup predict that a recession, by definition, is probable, and in fact already well underway since the beginning of the year.

                                                                                            Venture Capital has had a record-breaking year in 2021 with $630 billion invested globally (according to CB Insights). Not to mention, new unicorn births accelerated — there were 62% more unicorns by Q1 2022 year-on-year compared to Q1 2021, at a total of 1,070 globally.

                                                                                            Now, we all know what’s on the other side of the top of a hill, and in a similar fashion, economic cycles have periods of “uphill” movements called booms followed by “downhill” runs called busts. More of Econ 101 should be coming back to you now.

                                                                                            In Q1 this year with $143.9 billion of capital raised across 8,835 deals, venture funding dropped by 21% compared to Q1 last year, and by 19% compared to Q4 last year. Further, in Q2, $108.5 billion of capital was raised across 7,651 deals, according to CB Insights, which is a 27% drop compared to Q2 last year, and by 26% compared to Q1 this year. This brings the total funding for the first half of 2022 to $252.4 billion, which is not even half of 2021’s full-year count of $630 billion, despite us being halfway through the year.

                                                                                            What went wrong globally?

                                                                                            In 2020, when the world was hit with a not-so-little pandemic stirred by the Covid-19 virus, the world went into panic and governments around the world stepped in to support people by offering various types of stimuli. However, as the economic downturn was short-lived (it lasted2 months), people found themselves with higher disposable income, which in turn increased spending.

                                                                                            Meanwhile, due to lockdowns around the world, the supply of goods was, well, tight — to put it mildly. Brands were simply not able to keep up with the demand by increasing supplies, causing the prices of goods to go up — aka inflation. In fact, inflation is currently the highest it’s been in over 40 years in countries like the United States and the United Kingdom, at 8.6% and 9.1% respectively. Similarly, inflation across Arab countries is expected to average around 7.5% this year (according to Arabian Business).

                                                                                            Now, some inflation – usually around 2% – is not a bad thing, as it indicates economic growth. But, there is a line at which it becomes unhealthy for the economy — and this year, it crossed that line. In the US, this drove the Fed to issue interest rate hikes in an effort to curb this inflation —- the largest interest rate hike since 1994, with more on the way. In the UAE, the federal government has also raised interest rates in line with the US.

                                                                                            During this time, venture capital will not come to a halt. The reduction in investment activity will, however, make the cost of this category of capital more expensive across the market in general. This is important to ensure correction in the market when company valuations seem to be “over”-inflated.

                                                                                            How does the drop in global VC activity affect startups?

                                                                                            This slowdown seems to be in the number of deals, though, as opposed to the funding levels raised, particularly for early-stage startups. In reality, Crunchbase reports that the average startup rounds raised so far in 2022 are not dramatically down compared to 2021 in the US across Series A, B, and C funding rounds. Moreover, CB Insights reports that the average deal size globally so far this year is $21 million, which is just 16% lower than the global average of $25 million last year. That being said, early-stage deals comprise the majority of deals so far this year — at 62% globally compared to mid-stage, late-stage, and others (according to CB Insights). The way this can be interpreted is that investors are being more selective about which companies they invest in, those startups that do get funded will raise at valuations centered around business fundamentals over hype.

                                                                                            As for late-stage companies, they’re being propped up on many of their investors’ coffers as existing portfolio companies, since additions to the collection are now fewer (yet another dynamic in the drop of funding as deals vs dollars). A bit of a double-edged sword for being on top of the pyramid, late-stage companies will also be hit the hardest as prices come down and are compressed, since their pricing delta is higher (given that later-stage companies are “bigger” by definition).

                                                                                            Effectively, during a period of economic downturn, startups that are early-stage (particularly rising their Pre-seed and Seed rounds) will see a lower delta of change, since they don’t have high burn rates (yet) and, therefore, are closer to running efficient capital with a nearer line of sight to breakeven.

                                                                                            How has this impacted VC in the Middle East, Africa, Pakistan, and Turkey?

                                                                                            Though venture capital at a global level seems to be slowing down so far in 2022 compared to the halfway mark last year, the same may not be true in the Middle East, Africa, Pakistan, and Turkey (MENAPT) region. According to MAGNiTT, the number of deals across the region has gone up in the first half of 2022, compared to the first half of 2021, to a total of 856 deals. Additionally, the total value of funding across these deals has gone up across the board, comparing the same time periods, except for Turkey, to a total of $5.45 billion. This is just 2% of the expected global VC funding for the first half of the year, but the opportunity is strong and growing, based on the reported stats.

                                                                                            To shine a spotlight on two of the most active countries in the region, based on VC activity — in the first half of 2022, UAE-based startups raised a total of $645 million, whilst Saudi-based startups raised a total of $561 million (according to MENA Digital News).

                                                                                            Is the MENAPT region unfazed?

                                                                                            In spite of the MENAPT region seeing the same shakeup in inflation and central bank interest rates as the rest of the world, the VC numbers don’t resemble the same slowdown in economic activity. The rest of the year will allow us to conclude whether the region is lagging behind the global slowdown in VC activity, or whether it’s just immune.
                                                                                            This insulation is largely driven by the following:
                                                                                            (1) Boom in regional economies — The same rise in oil prices that’s hurting other regions (particularly Europe and the UK) is proving to be a shield protecting investor confidence in the Middle East, given the region is one of the world’s largest oil producers.
                                                                                            (2) Flush venture environment — Though the region’s VC industry contributed to just 2% of global activity, there is a substantial push from the region’s private and public sector entities (particularly existing VC coffers reserving capital to “save” their existing portfolio companies) to build on the moment of growth that the region’s startup ecosystem has built up over the past decade.
                                                                                            (3) Nascent ecosystem — The region’s investors, entrepreneurs, and ecosystem enablers have not experienced a market downturn like this yet and this lack of historical context is somewhat of a mask on venture capital’s ability to see what’s down the road clearly.
                                                                                            However, the world’s finance system is very connected — take all the institutions and consumers in the Middle East who’ve made investments in the public and private markets in the US. Eventually, as investor pullback starts, everyone across the board will be affected, beyond institutions’ balance sheets, through to consumers’ purchasing power.

                                                                                            A positive way to look at an economic recession is forward and into the future where there will eventually be an upturn again. And so, founders and investors across MENAPT should not ignore the global signs — but for now, it’s best to brace for impact.

                                                                                            Our recommendations for funds during this time

                                                                                            As companies in the public markets are currently taking a hit as both the number of deals and proceeds have dropped in 2022. According to Ernst & Young, the global IPO market saw a 54% decrease in the number of deals and a 65% decrease in proceeds in Q2 2022 year-on-year.

                                                                                            In contrast, 2021 had a record number of IPOs in 2021 across most major markets. This, combined with falling growth stocks, implies that equities are in a bear market and a steep recovery is not likely. This gives good reason and precedent for investors to diversify away from public markets and growth-stage startups, and start investing in early-stage startups instead. And the truth is, for investors, it’s actually a better time to invest. As capital drops, so will the return on capital that goes in now, compared to capital that went in last year. In emerging markets, this may be even more the case as there is more untapped opportunity

                                                                                            Meanwhile, as the consumer market sentiment is not as healthy as it used to be given the high Consumer Price Index currently in play, startups will have to revisit their revenue forecasts and make more conservative assumptions. Keep this in mind when asking for hypergrowth at all costs from the startups you’ve invested in.
                                                                                            Our recommendations for startups during this time
                                                                                            As valuations are conservative at the moment for private fundraising, you’d want to preserve the capital you have available to you at the moment as much as you can. Starting with your costs, re-evaluate your burn rate, especially if it’s higher than your revenues. In times when the economic situation is out of your control, focus on steering what’s within your control in your favor — your costs. Costs are required for your business to operate, simply put, but you can be smarter about how you spend.

                                                                                            You need to finance payroll to have the headcount to execute your strategy, fund marketing spending to acquire new customers, and continuously improve your customer-product interface. But, beware of spending too much to meet the promises of hyper-growth made to investors. In short, be more conservative in the way that you spend your money and focus on building rather than scaling

                                                                                            Further, plan for the worst when it comes to sales. Revisit your revenue forecasts and make more conservative growth assumptions, and don’t assume a quick recovery. Your refreshed estimates should reflect your revised costs.

                                                                                            Lastly, keep in mind that fundraising will be more difficult, and even more so if you are still cash flow negative because investors will want to invest in business models that are more proven (i.e. profitable). Demonstrating an ability to refocus on fundamentals and unit economics will prove favorable when pitching to investors for funding — and are, in fact, a safer path to growth. If you do need the capital meanwhile, consider financing options aside from traditional VC, such as crowdfunding, micro-VCs, or revenue-based lending options.

                                                                                            Insights

                                                                                            Museum of the Future monument in Dubai

                                                                                            H.H. Sheikh Maktoum bin Mohammed launches AED1 Billion DFDF Fund

                                                                                            H.H. Sheikh Maktoum bin Mohammed launches AED1 Billion Dubai Future District Fund to support seed- to growth-stage startups

                                                                                            Under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance and Chairman of the Dubai Securities and Exchange Higher Committee, today launched the Dubai Future District Fund, with an initial purse of AED1 billion, along with the Fund’s website, www.futuredistrictfund.com. The move is part of the Dubai Future District’s (DFD) ongoing efforts to support startups in the field of technology and encourage them to list in the Dubai Financial Markets and stock exchange.

                                                                                            The Fund, an initiative of the Dubai Securities and Exchange Higher Committee, will focus on supporting efforts to implement the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum to establish 1,000 tech companies in the country within five years and increase startup investments from AED1.5 billion to AED4 billion.

                                                                                            His Highness Sheikh Maktoum bin Mohammed said: “Under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum and His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum to support the digital economic sector, we launched today the AED1 billion Dubai Future District Fund to invest in startups.”

                                                                                            He added: “The Fund aims to realise the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum to establish 1,000 tech companies in the next five years, by supporting Dubai’s digital economy and companies that adopt future technologies and develop new economic sectors of the future.”

                                                                                            His Highness Sheikh Maktoum bin Mohammed stressed that the Dubai Future District Fund supports national efforts and strategies aimed at enabling entrepreneurs to reach new horizons, realise Dubai’s aspirations for the new economy, and contribute to enhancing the emirate’s status as a preferred destination for global talent that offers an integrated investment environment and exceptional facilities.

                                                                                            His Highness Sheikh Maktoum also approved the appointment of Sharif El-Badawi as CEO of the Dubai Future District Fund. In this role, the new CEO will drive efforts to support Dubai’s development into a destination for regional and global technology startups and boost its position as a hub for talent and game-changing ideas.

                                                                                            As an enabler of Dubai Future District’s other initiatives, the Fund seeks to fill a funding gap in the MENA venture capital (VC) market by investing in technology startups in the early stages of growth. It aims to invest in local and regional funds, as well as attract leading international VC funds to establish a presence in Dubai.

                                                                                            The Dubai Future District Fund seeks to build an innovation-driven startup ecosystem to enhance the global competitiveness of Dubai’s future economy. As part of its mandate, it will invest in a range of key initiatives, including Dubai Future Accelerators, DIFC FinTech Hive and Venture Builder Studios.

                                                                                            The Fund is ideally positioned to attract startups from the MENA region and beyond that can develop innovative solutions for future local, regional and global challenges. It will also support the scale-up of top-performing startups through growth capital and follow-on rounds of investment and attract VC firms to Dubai through a fund of funds programme.

                                                                                            To achieve its objectives, the Fund will leverage emerging technologies, such as AI, cybersecurity, blockchain, data analytics, software-as-a-service (SaaS)/platform-as-a-service (PaaS), cloud solutions, 5G, IoT, augmented reality and robotics.

                                                                                            The Dubai Future District Fund has named Sharif El-Badawi as its CEO, who will play a pivotal role in quickly ramping up the team and executing the Fund’s strategy of contributing to the economy of the future. He will oversee the provision of financing for DFD’s innovation ecosystem, support promising projects and build partnerships with investment capital funds from around the world, in addition to supervising the implementation of the short- and long-term strategic objectives of the Fund. These include developing Dubai’s startup ecosystem, catalysing its growth by direct investment in startups, and encouraging local, regional and global funds to invest in the ecosystem.

                                                                                            Sharif El-Badawi was a founding Managing Partner of Plus Venture Capital (+VC), one of the leading seed stage investment firms in the Middle East and North Africa region. Previously, he co-founded and managed the first US-based venture capital firm with a dedicated fund for the MENA region. In his role, he managed the startup MENA fund, 500 Falcons, which has invested in over 180 startups across 15 countries.

                                                                                            In addition, Sharif serves on the board of San Francisco Bay Area-based non-profit firm TechWadi, where he was the chairman of the board from 2015 to 2019, helping to build meaningful bridges between MENA startups and Silicon Valley. He also serves on several advisory boards for startups, organisations and governments in the MENA region and Silicon Valley.

                                                                                            Prior to his career in investing, Sharif was the Partner Lead to VCs and startups at Google where he worked with top tier VCs and their most promising startups on strategies that bring Google’s capabilities to their businesses. Sharif earned his Master of Business Administration from University of California, Irvine, Merage School of Business and his Bachelor of Science in Neuroscience from the University of California, Los Angeles.

                                                                                            His Excellency Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, noted that the launch of the Dubai Future District Fund constitutes a new step in consolidating the UAE’s leadership in digital economy while boosting Dubai’s attractiveness as a global destination for innovators and startups specialised in future technology. It also contributed to the success of many VCs and tech-driven startups such as: Careem, Mumzworld, Souq and others.

                                                                                            He added that investing in the development of the entrepreneurial ecosystem is a major pillar of national efforts to diversify the economy, support local talent and attract global expertise. He also highlighted the importance of providing appropriate financing options for emerging companies to develop and implement their ideas and expand their businesses.

                                                                                            His Excellency Essa Kazim, Governor of DIFC, said: “Innovation has always been a cornerstone of DIFC’s strategy, delivering on the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.”

                                                                                            He added: “DIFC continues to be the business destination of choice in the region for businesses focused on innovation and the new economy. They will benefit from the Dubai Future District Fund and in turn contribute to Dubai’s economic growth. The fund and other key initiatives emanating from the Dubai Future District will allow us to continue elevating Dubai’s status as one of the world’s most advanced cities and leading financial centres.”

                                                                                            His Excellency Helal Saeed Al Marri, Director General of Dubai’s Department of Economy and Tourism, said: “The formation of the Dubai Future District Fund is a significant milestone in the emirate’s journey to become a global entrepreneurship hub, fast-tracking our new economy development agenda ahead of most other nations in today’s new normal. Providing capital for startups and scale-ups across the innovation and technology ecosystem positions Dubai as a magnet not only for top talent but also for the international investor community. Reflecting the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Fund testifies to our commitment to delivering the most conducive value proposition for sector-agnostic business growth.”

                                                                                            His Excellency Khalfan Belhoul, CEO of DFF, said that His Highness Sheikh Mohammed bin Rashid Al Maktoum’s vision for the future of Dubai resulted in the development of a unique ecosystem to design the future through testing and adoption of the latest innovative technologies. He also highlighted the importance of public-private partnerships in achieving this vision.

                                                                                            He added: “The Dubai Future District Fund will help accelerate Dubai’s journey towards the future, as well as the positive outcomes of investing in the tech sector to support fields such as health, education, finance and government services, and the practical implementation of specialised projects in the economy of the future.”

                                                                                            His Excellency Khalfan Belhoul noted that the Fund provides an interactive platform that brings together government and investment agencies with innovators, startups and entrepreneurs with the aim of enabling them to leverage the Fund’s facilities, initiatives and financing options to enhance their contribution to developing the most promising emerging sectors.

                                                                                            Arif Amiri, CEO of DIFC Authority, said: “DIFC is playing a crucial role in helping Dubai become a leading global start-up hub and developing its innovation proposition. We have already built the largest and most comprehensive FinTech and innovation ecosystem in the region which has resulted in over 60 per cent of start-ups in the GCC making the DIFC Innovation Hub their home. We will work with these start-ups to leverage the Dubai Future District Fund whilst applying our expertise to drive both the future of finance and future economies more broadly. In turn, we will be supporting efforts to realise Dubai’s ambitions for the digital era.”

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