Startups that will thrive in this evolving ecosystem will become the ecosystem, thus fuelling the two economies

In 2009, I visited the UAE for the first time on a family trip that was planned on a whim. I had little time to think about what to expect in the UAE. At the Dubai airport, I was surprised to find myself exchanging pleasantries in Hindi with the immigration officer. At that moment, the shared history of the UAE and India became obvious. Over the past many decades, the UAE and India got plenty of trading done between them. But it was in the last few years that the UAE-India synergy has reached its full potential.

I recently met a couple who had recently set up their own company in Dubai. They were filled with excitement about following their dreams. I also spoke to an entrepreneur who successfully incubated his startup in the UAE and was now looking at scaling it in India. This constant flow of talent, enterprise, and funding between the two nations has motivated so many entrepreneurs like me to take chances, seek new opportunities, dream bigger, adapt, and try harder. This means pooling of resources within industries such as food, technology, retail, which straddle both countries.

The movement of talent between India and the UAE has not been a one-way street. Indians have tended to move back and forth between the two countries, to take up jobs, conduct business and invest. When Covid normalized remote working, several large companies in the UAE, especially banks, set up their back offices and development centres in India. A virtuous talent bubble between India and the UAE has driven innovation for several years. This transnational bubble is now fostering a startup ecosystem, where funding could come from one country and talent from another; incubation could happen in one country, and growth in another.

Startup success stories spread across the two countries have diverse scripts. Sometimes the UAE serves as a petri dish for a new idea. At other times, entrepreneurs start out in India by tapping an abundant talent pool. They later extend to the UAE to get better access to capital and infrastructure. The UAE gives them an international presence and access to new markets. Sometimes such decisions are driven by regulation and policy. For example, uncertain regulation in India has prompted many Web3 startups to set up their headquarters in the UAE. Polygon, the Ethereum-based layer 2 aggregating platform moved to Dubai, while still nurturing talent in India.

Centuries ago, Arabs took advantage of the monsoon winds and sailed through the Suez Canal to trade with Indians. This commercial inter-dependence left an imprint on both cultures, to an extent that it is hard to establish the origins of certain shared cultural practices and food habits. Trade tended to flourish where the political dispensation made it conducive for traders to operate unhindered. Traders historically would flock to ports that offered a favorable environment. Likewise, startups today want a transnational presence to maximize opportunities. They look for ease of doing business, access to finance, favorable policies, and modern infrastructure.

An idea that germinates on a kitchen table or within a dorm needs resources to grow into a full-scale business. These resources could exist in any country. The startups’ digital foundation allows them to seamlessly operate across international borders. They often rely on accelerator programs to become viable transnational businesses from their early bootstrapped days through to late-stage venture funding.

International cooperation is creating new accelerator programs with influential networks. Under the India-UAE Comprehensive Economic Partnership Agreement (CEPA) that was signed in early 2022, India and the UAE pledged to jointly nurture startups by strengthening relations with ecosystem stakeholders such as accelerators and incubators.

The two governments followed through by launching the India-UAE Startup Bridge. This will allow UAE startups to explore incubation opportunities in India and vice versa. Additionally, investors in one country can fund startups in the other’s jurisdiction. Dubai International Financial Centre (DIFC) and FICCI LEADS India’s major incubator, have launched the India-UAE Start-Up Corridor. They have agreed to identify 50 promising early-stage startups from both countries in the next 5 years. A $150M fund has been launched with an aim to develop at least 10 such startups into unicorns by 2025.

The UAE-India startup synergy has happened at a decisive moment. In 2022, India celebrated its 100th Unicorn, while UAE ranked No.1 worldwide in the latest Global Entrepreneurship Index. Both countries have stepped up from a position of strength when building a shared startup ecosystem.

Startups that will thrive in this evolving ecosystem will become the ecosystem, thus fuelling the two economies. They will help create new jobs and attract capital. However, in tough market conditions, they will be the most vulnerable. Such inter-government initiatives can provide a protective padding to fledgling startups in tough times, and the thrust to help them take-off in the new digital world of Metaverses and Blockchains.

Source:https://www.khaleejtimes.com/opinion/uae-india-innovation-bubble-boosts-startup-ecosystem?_refresh=true