The United Arab Emirates' venture capital market is experiencing a surge in funding for tech startups, fueled by government initiatives and an entrepreneurial ecosystem. The total capital raised in 2024 is projected to exceed US$1.1B.

Early-stage investment dominates the country, with a projected market volume of US$0.6b this year alone.

Investors in the UAE are increasingly turning to venture capital to diversify their investment portfolios and seek higher returns. This is driven by a growing awareness of the potential for high-growth startups to disrupt traditional industries and create significant value. Blockchain initiatives are rife with advantageous developments, further closing the chasm between traditional finance and distributed ledger technology (DLT) applications.

Additionally, investors are attracted to the potential for early-stage investments to generate outsized returns and the opportunity to support innovation and entrepreneurship in the region.

The UAE has several unique characteristics that contribute to its flourishing VC market.

1. Its strategic location is a gateway between East and West, attracting international investors and providing access to various markets.

2. The country strongly focuses on diversifying its economy away from oil and gas, leading to increased investment in sectors such as technology and innovation. Blockchain/Web3 sits right at this perfect intersection.

3. The government launched various funding programs and initiatives to support early-stage startups and encourage investment in the sector.

4. According to the Ministry of Economy, the UAE has more than 400,000 registered SMEs, contributing to 52% of the non-oil GDP and 86% of the total employment in the country. The UAE also has more than 100 incubators and accelerators, which provide mentorship, funding, and networking opportunities for startups and entrepreneurs.

5. According to the National Agenda for Entrepreneurship and SMEs, the UAE aims to increase its startups to one million, incubate ten unicorn startups, and achieve a strong partnership between the public and private sectors by 2030. The National Agenda also includes 29 initiatives and incentives to enhance the business environment and entrepreneurial mindset in the UAE, such as simplifying procedures, reducing fees, providing grants, and facilitating access to markets and finance.

The country has a stable and diversified economy, with a strong focus on sectors such as tourism, real estate, and financial services. This provides a solid foundation for investment and supports the growth of startups and innovative businesses. Additionally, the United Arab Emirates has a young and dynamic population with a high level of digital literacy and a strong entrepreneurial spirit. This creates a fertile environment for innovative startups and attracts local and international investors alike.