Eden Rabbie, November 2020

30-second summary

- Investment firms in UAE venture space have tripled in number since 2015
- 86% of funded UAE startups raised capital from non-MENA firms
- 57% of investment firms invest in UAE startups for one year only – they leave and don’t come back
- Fixing the high investor turnover can boost UAE startup access to capital and grow the venture space to 153%

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UAE startup access to capital is slowing down. Despite its impact on startup’s fate and contribution to the economy, the number of UAE startups gaining access to capital every year has seen no significant growth since 2017. By 2020, out of every 10 UAE startups, only 3 get funded.

At the core, venture space is a two-sided marketplace where startups play supply, investors demand, and equity the transaction unit exchanging hands until a final buyer takes it off the market for a larger return for investors. When transactions see a flattening growth curve, it is a signal of problems on the supply side, the demand side, or the dynamic between supply and demand.

In this report, we explore demand.

We analyze 150 investment firms who had worked with UAE startups, 398 startups on their portfolios and 342 startup rounds worth $1.98 billion, to find out if demand has unusual trends or underwent a major shift, and whether investment firms have been more risk-averse towards UAE startups compared to foreign startups.

Back to series home | Next report: Return On Investing In UAE Startups 2010-2020

- Investment firms growth and capital contribution to UAE startups
- Foreign investment firms
- Local investment firms
- Collaboration between foreign and local investment firms
- Investor growth trends
- Number of active investors in UAE startups at its lowest growth since 2014
- Investor churn canceled out 46% of all gains over the past 5 years
- Only 26 investors sustain the entire venture space in UAE since 2010
- 57% of investors invest once and never come back again
- Did investors lose interest working with startups in general?
- Do UAE investors invest in earlier stages such as seed outside MENA?
- Do UAE investors participate in more capital to non-MENA startups?
- Final remarks

3. A – Investment firms

5-yr periods with UAE and non-UAE firms share

Note: Ventures backed by both UAE and non-UAE firms are not double-counted in totals

3. A. 1 – Foreign capital

**86% of funded UAE startups received capital from foreign investment firms in 2015-2019**,<sup>38</sup>**significantly up from 65% in 2010-2014.**<sup>39</sup> Overall, 84% of funded UAE startups relied on foreign capital since 2010.<sup>37</sup>**The number of foreign investment firms who fund UAE startups has more than tripled between 2014 and 2019**(+325% ±52%).<sup>40</sup>**In terms of capital, foreign capital participation in UAE startup rounds grew by 156% in the last five years**(+$431M ±52M).<sup>41‡</sup>**Foreign capital participation makes up 96% of UAE startup rounds**(-7%/+3%)**.<sup>42**‡**</sup>**This level remains unchanged since 2010-2014, and did not grow in 2015-2019.<sup>43‡</sup>**Non-MENA capital contribution is still the majority in foreign investments (89%)**<sup>44‡</sup>**, but its share has decreased**, dropping from 95% in 2010-2014 to 87% in 2015-2019.<sup>45‡</sup>

3. A. 2 – Local capital

**60% of funded UAE startups relied on local capital since 2010.**<sup>37</sup>**This level remains unchanged since 2010-2014, and did not grow in 2015-2019.**<sup>46</sup>**The number of local investment firms funding UAE startups has also more than tripled between 2014 and 2019**(+300% ±7%).<sup>47</sup>**In terms of capital, local capital participation in UAE startup rounds grew more than 3x in the last five years**.<sup>48‡</sup>**Local capital participation makes up 33% (±7%) of UAE startup rounds in the last five years,<sup>49**‡**</sup> significantly higher than it was in 2010-2014 (15%).<sup>50**‡**</sup>**

3. A. 3 – Foreign-local collaboration

**UAE and non-UAE investment firms have collaborated to back 44% of funded UAE startups in 2015-2019,**<sup>51</sup>**significantly higher than they did in 2010-2014 (25%)**.<sup>52</sup>- In terms of capital,
**participation of capital collaboration in UAE startup rounds more than doubled in the last five years, growing from 11% in 2014 to 29% by 2020 (±6%).**<sup>53‡</sup>

Technical notes (37-53)

<sup>Note 37:</sup> Percentage share of non-UAE backed startups in 2010-2019 reported as population proportion estimator of number of UAE startups who raised at least 1 startup round in 2010-2019 with participation from a non-UAE investment firm, out of all UAE startup rounds in 2010-2019, p=.836; N=245, 95% CI [.77, .90].

<sup>Note 38:</sup> Percentage share of non-UAE backed startups in 2015-2019 reported as population proportion estimator of number of UAE startups who raised at least 1 startup round in 2015-2019 with participation from a non-UAE investment firm, out of all UAE startup rounds in 2015-2019, p=.864; N=195,95% CI [.79, .94].

<sup>Note 39:</sup> Growth in percentage share of non-UAE backed startups by 2020 reported as difference in population proportion estimator of number of UAE startups who raised at least 1 startup round with participation from a non-UAE investment firm, in 2015-2019 vs 2010-2014, is positive. δ=.21, N<sub>pooled</sub>=245, 95% CI [.07, .36] (statistically significant). For 2015-2019 population proportion estimator, see Note 38. 2010-2014 p=.65, N=50, 95% CI [.52, .78].

<sup>Note 40:</sup> Growth in number of non-UAE investment firms in UAE reported as relative change in non-UAE investment firms who have participated in at least 1 UAE startup round with, in 2015-2019 vs 2010-2014, is positive. δ=3.25, N<sup>pooled</sup>=105, 95% CI [2.73, 3.77] (statistically significant).

<sup>Note 41:</sup> Growth in capital participation from non-UAE investment firms in UAE startups reported as relative change in disclosed UAE startup rounds size with participation from 1+ non-UAE investment firm, in 2015-2019 vs 2010-2014, is positive. δ=.34, N=208, 95% CI [.26, .42] (statistically significant); ⌊95% CI as dollar figure⌋ [379M, 483M]. Size of participated rounds in 2010-2014 and 2015-2019, respectively, ⌊95% CI as dollar figure⌋ ([265M, 288M], [657M, 759M]).

<sup>Note 42:</sup> Percentage share of capital participation from non-UAE investment firms in UAE startups reported as population proportion estimator of disclosed UAE startup rounds size with participation from a non-UAE investment firm out of all UAE startup rounds in 2010-2019, p=.96, N=208, 95% CI [.89, .99]; ⌊95% CI as dollar figure⌋ [913M, 1056M].

<sup>Note 43:</sup> Difference in percentage share of capital participation from non-UAE investment firms in UAE startups reported as difference in population proportion estimator of disclosed UAE startup rounds size with participation from a non-UAE investment firm, in 2010-2014 vs 2010-2019 and 2015-2019 vs 2010-2019, is not statistically significant in every case s.t. 0 ∈ 95% CL. 2010-2014 vs 2010-2019 and 2015-2019 vs 2010-2019, respectively: N=208, 95% CI ([-.08, .08], [-.10, .10]).

<sup>Note 44:</sup> Percentage share of capital participation from non-MENA investment firms in UAE startups reported as population proportion estimator of disclosed UAE startup rounds size with participation from a non-MENA investment firm out of all UAE startup rounds in 2010-2019, p=.89, N=208, 95% CI [.82, .96]; ⌊95% CI as dollar figure⌋ [841M, 977M].

<sup>Note 45:</sup> Difference in percentage share of capital participation from non-UAE investment firms in UAE startups reported as difference in population proportion estimator of disclosed UAE startup rounds size with participation from a non-UAE investment firm, in 2015-2019 vs 2010-2014, is negative. δ=-.08, N=208, 95% CI [-.15, -.004] (statistically significant). For 2010-2014 and 2015-2019 population proportion estimator, respectively, p=(.95, .83), N=208, 95% CI ([.91, .98], [.81, 93]); ⌊95% CI as dollar figure⌋ ([262M, 282M], [597M, 683M).

<sup>Note 46:</sup> Percentage share of UAE-backed startups in 2010-2019 reported as population proportion estimator of number of UAE startups who raised at least 1 startup round in 2010-2019 with participation from a UAE investment firm, out of all UAE startup rounds in 2010-2019, p=.60; N=245, 95% CI [.54, .66].

<sup>Note 47:</sup> Growth in percentage share of UAE-backed startups by 2020 reported as difference in population proportion estimator of number of UAE startups who raised at least 1 startup round with participation from a UAE investment firm, in 2015-2019 vs 2010-2014, is not statistically significant s.t. 0 ∈ 95% CL. N<sub>pooled</sub>=245, 95% CI [-.15, .13]. 2010-2014 and 2015-2019 population proportion estimator, respectively, p=(.60, .59); N=(50, 195), 95% CI ([.48, .73], [.53, .66]).

<sup>Note 48:</sup> Growth in capital participation from UAE investment firms in UAE startups reported as relative change in disclosed UAE startup rounds size with participation from a UAE investment firm, in 2015-2019 vs 2010-2014, is positive and > 3. δ=4.70, N=208, 95% CI [3.52, 5.88] (statistically significant); ⌊95% CI as dollar figure⌋ [148M, 249M]. Size of participated rounds in 2010-2014 and 2015-2019, respectively, ⌊95% CI as dollar figure⌋ ([31M, 53M], [192M, 290M]).

<sup>Note 49:</sup> Percentage share of capital participation from UAE investment firms in UAE startups reported as population proportion estimator of disclosed UAE startup rounds size with participation from a UAE investment firm out of all UAE startup rounds in 2015-2019, p=.33, N=208, 95% CI [.26, .40]; ⌊95% CI as dollar figure⌋ [192M, 290M].

<sup>Note 50:</sup> Difference in percentage share of capital participation from UAE investment firms in UAE startups reported as difference in population proportion estimator of disclosed UAE startup rounds size with participation from a UAE investment firm, in 2015-2019 vs 2010-2014, is positive. δ=.18, N=208, 95% CI [.10, .26] (statistically significant). For 2015-2019 population proportion estimator, see Note 49. 2010-2014 p=.15, N=208, 95% CI [.11, .18].

<sup>Note 51:</sup> Percentage share of UAE startups backed by collaboration between UAE and non-UAE backing in 2015-2019 reported as population proportion estimator of number of UAE startups who raised at least 1 startup round in 2010-2019 with participation from at least 1 UAE and 1 non-UAE investment firms, out of all UAE startup rounds in 2015-2019, p=.437; N=195, 95% CI [.38, .50].

<sup>Note 52:</sup> Growth in percentage share of UAE startups backed by collaboration between UAE and non-UAE backing in 2015-2019 reported as population proportion estimator of number of UAE startups who raised at least 1 startup round with participation from at least 1 UAE and 1 non-UAE investment firms, in 2015-2019 vs 2010-2014, is positive. δ=.19, N=245, 95% CI [.07, .30] (statistically significant). For 2015-2019 population proportion estimator, see Note 51. 2010-2014 p=.25, N=50, 95% CI [.16, .35].

<sup>Note 53:</sup> Growth in capital participation from collaboration of UAE and non-UAE investment firms in UAE startups reported as relative change in disclosed UAE startup rounds size with participation from at least 1 UAE and 1 non-UAE investment firms, in 2015-2019 vs 2010-2014, is positive and > 3. δ=5.9, N=208, 95% CI [4.44, 7.37] (statistically significant); ⌊95% CI as dollar figure⌋ [138M, 230M]. Size of participated rounds in 2010-2014 and 2015-2019, respectively, ⌊95% CI as dollar figure⌋ ([22M, 40M], [170M, 260M]).

Measurement is on year of round announcement.

Statistical significance and effect size are studied through analysis of confidence interval.

CI is Wilson score interval.

Unless explicitly mentioned, alpha = .05.

N is startups aged 2+ years, measured as founded on or before 31 Dec 2017 to allow for median age to raise first startup round to take effect.

‡ Participation in a round does not equal contribution. Due to the nature of data it is not feasible to calculate the actual share of each contributor.

‡ Given the difficulty of attribution due to lack of granular data, we recommend using the insights marked with the double dagger sign (‡) on total capital contribution by investment origin only to gain a sense of direction and relation from the data.

‡ N is the sample size of disclosed rounds 2010-2019.

Source

Rabbie, Eden. (2020). UAE Startup Access To Capital 2010-2020. *Startup Report MENA* [Online]. https://startupreport.me/uae-startup-access-to-capital-2020 (Based on analysis of 1011 equity-only seed, series A, bridge and series B startup rounds, 443 investors, 4730 ventures in MENA 2008-2019; enriched database: Crunchbase, PitchBook and fieldwork. Data last accessed 30 April 2020).

Newcombe, R. G. (1998). Interval estimation for the difference between independent proportions: comparison of eleven methods. *Statistics in medicine*, 17: 873-890. doi:10.1002/(SICI)1097-0258(19980430)17:8<873::AID-SIM779>3.0.CO;2-I

Newcombe, R. G. (2001). Estimating the difference between differences: measurement of additive scale interaction for proportions. *Statistics in medicine*, 20: 2885-2893. doi:10.1002/sim.925

Wallis, S. (2013). Binomial Confidence Intervals and Contingency Tests: Mathematical Fundamentals and the Evaluation of Alternative Methods. *Journal of Quantitative Linguistics*, 20:3, 178-208. doi:10.1080/09296174.2013.799918

3. B – A flattening curve

3. B. 1

**Number of yearly active investors in UAE startup rounds remained within the same level in the last 3 years**(since 2017).<sup>54</sup> This level is the highest on record.<sup>55</sup> 2019 had 47% of all investors who where active in the last 5 years (since 2015).<sup>56</sup>**However, growth rate of yearly active investors continues to slow down**. In a rolling 5-year window, the number of yearly active investors remains within the same level for the third period in a row (since 2017),<sup>57</sup> dropping by half since 2015 (from 55% in 2015 to 29% in 2019).<sup>58</sup>**All investor growth metrics have flattened in 2019**. The rate of attracting new investors to the UAE venture space remained within the same level in the last 5 years (since 2015).<sup>59</sup> Similarly, the rate of retaining investors in UAE venture space remained within the same level in the last 4 years (since 2016).<sup>60</sup> Meanwhile, the rate of investors leaving had doubled in 2018 (a 100% YoY spike)<sup>61</sup> to reach an all-time high,<sup>62</sup> and kept that record in 2019.<sup>63</sup>

3. B. 2 – Investment firms situation by 2020

**Flattened investor acquisition.**27 new investors participated in UAE startup rounds in 2019, the same level since 2015 (27 -8/+10).<sup>64,</sup>**Flattened investor retention:**27 investors returned to invest again in 2019, the same level since 2016 (27 -8/+10).<sup>65</sup>**Spiked investor churn:**29 investors who were active in 2018 stopped investing in 2019, keeping the 100% spike in gross churn from 2018 intact (29 -8/+11).<sup>66</sup>**New = retained = churned**: By the end on 2019 investor churn has caught up, leaving the investors landscape in a position where the annual average number of retained, churned and new investors is the same (5-yr EMA ≈ 21) for all three.<sup>67</sup>

Technical notes (14 notes, 54-67)

<sup>Note 54:</sup> Difference in number of investment firms who participated in at least 1 UAE startup round, in 2019 vs 2018 and 2019 vs 2017, is not statistically significant. Difference in 2019 vs 2018 and 2019 vs 2017, respectively: N=150, Wilson p’ 95% CI ([-.07, .15], [-.06, .16]); ⌊95% CI⌋ ([-10, 22], [-9, 23]). Active firms in 2017, …, 2019, respectively, Wilson p’ 95% CI ([.25, .40], [.24, .39], [.28, .44]); ⌊95% CI⌋ ([37, 60], [36, 59], [42, 66]).

<sup>Note 55:</sup> Difference in number of investment firms who participated in at least 1 UAE startup round, in 2019 vs years 2010-2016, is positive. Difference in 2019 vs 2010, …, 2019 vs 2016, respectively, δ=(47, 53, 46, 37, 43, 27, 18), N=150, Wilson p’ 95% CI ([.22, .39], [.26, .43], [.21, .39], [.14, .34], [.19, 37], [.07, .28], [.01, .22]) (statistically significant in each case); ⌊95% CI⌋ ([33, 60], [40, 65], [32, 59], [22, 51], [28, 56], [11, 42], [1, 33]) (statistically significant in each case). Active firms in 2010, …., 2016, respectively: Wilson p’ 95% CI ([.02, .10], [.0003, .04], [.03, .11], [.07, .18], [.04, .13], [.12, .25], [.18, .32]); ⌊95% CI⌋ ([3, 14], [0, 6], [3, 15], [10, 26], [5, 19], [18, 37], [26, 47]).

<sup>Note 56:</sup> Percentage share of investment firms who participated in at least 1 UAE startup round in 2019 out of all UAE startup rounds in 2015-2019, p=.47; N=150, 95% CI [.39, .55].

<sup>Note 57:</sup> Growth rate in yearly active investment firms studied as rolling 5-yr CAGR of number of investment firms who participated in at least 1 UAE startup round in a year in periods of 5 years, 2015-2019 vs 2013-2017 and 2015-2019 vs 2014-2018, is not statistically significant; respectively: N=150, 95% CI ([-.18, .04], [-.17, -.05]). 2013-2017, …, 2015-2019 5-yr CAGR, respectively, 95% CI ([.29, .44], [.28, 43], [.21, .37]).

<sup>Note 58:</sup>Growth rate in yearly active investment firms studied as rolling 5-yr CAGR of number of investment firms who participated in at least 1 UAE startup round in a year in periods of 5 years, 2015-2019 vs 2011-2015, is negative. δ=-.26, N=150, 95% CI [-.36, -.15] (statistically significant); δ/G=-46%. For 2015-2109 5-yr CAGR, see Note 57. 2011-2015 5-yr CAGR 95% CI ([.48, .61]).

<sup>Note 59:</sup> Absolute rate of attracting new investment firms to invest in UAE startups reported as difference in distinct number of investment firms who have participated in at least 1 UAE startup round for the first time, in 2019 vs 2015, …, 2019 vs 2018, is not statistically significant in each case; respectively: N=150, ⌊95% CI⌋ ([-7, 19], [-3, 21], [-10, 16], [-11, 15]); Wilson p’ 95% CI ([-.05, .13], [-.03, .14], [-.07, .11], [-.08, .10]). New firms in 2015, …, 2019, respectively, ⌊95% CI⌋ ([13, 31], [11, 27], [16, 34], [16, 53], [18, 37]); Wilson p’ 95% CI ([.09, .21], [.07, .19], [.11, .23], [.11, .24], [.12, .25]).

<sup>Note 60:</sup> Absolute rate of retaining investment firms in UAE venture space reported as difference in distinct number of investment firms who had participated in a UAE startup rounds in 2 different years, including measurement year, measured on the latest year, in 2019 vs 2016, …, 2019 vs 2018, is not statistically significant in each case; respectively: N=150, ⌊95% CI⌋ ([-3, 21], [-10, 16], [-8, 18]); Wilson p’ 95% CI ([-.03, .14], [-.07, .11], [-.06, .12]). Retained firms in 2016, …, 2019, respectively, ⌊95% CI⌋ ([11, 27], [16, 34], [14, 32], [18, 37]); Wilson p’ 95% CI ([.07, .19], [.11, 23], [.10, .22], [.12, .25]).

<sup>Note 61:</sup> Difference in churned investment firms in 2018 reported as distinct number of investment firms who had participated in a UAE startup rounds in a previous year, and none in measurement year in 2018 vs 2017, is positive. Relative change in churned firms in 2018 = 1.00, N=150, 95% CI [0.93, 1.07]; δ=15, ⌊95% CI⌋ [2, 27]; Wilson p’ 95% CI [.01, .18]. Churned firms in 2017 and 2018, respectively, ⌊95% CI⌋ ([8, 24], [21, 41]); computed local p* 95% CI ([.09, .25], [.17, .34]).

<sup>Note 62:</sup> Comparison in churned investment firms in 2018 vs 2011-2017 reported as difference in distinct number of investment firms who had participated in a UAE startup rounds in a previous year, and none in measurement year in 2018 vs 2011, …, 2018 vs 2016, is positive in each case; respectively, δ=(23, 29, 26, 18, 22, 19), N=150, ⌊95% CI⌋ ([10, 33], [17, 39], [13, 36], [4, 29], [9, 32], [5, 30], [1, 26]) (statistically significant in each case); Wilson p’ 95% CI ([.13, .26], [.07, .23], [.12, .26], [.09, .24], [.03, .20], [.06, .22], [.04, .20], [.01, .18]). For 2018 vs 2017, see Note 61. For churned firms in 2018 and 2019, see Note 61. Churned firms in 2011, …, 2016, respectively, ⌊95% CI⌋ ([3, 14], [0, 6], [1, 10], [6, 20], [3, 15], [5, 19]); computed local p* 95% CI ([.39, .99], [.00, .40], [.04, .37], [.19, .59], [.07, .28], [.08, .26]).

<sup>Note 62:</sup> Difference in churned investment firms in 2019 vs 2018 reported as distinct number of investment firms who had participated in a UAE startup rounds in a previous year, and none in measurement year in 2019 vs 2018, is not statistically significant. N=150, ⌊95% CI⌋ [-15, 13]; Wilson p’ 95% CI [-.10, .09]. Churned firms in 2018 and 2019, respectively, ⌊95% CI⌋ ([21, 41], [20, 40]); computed local p* 95% CI ([.17, .34], [.14, .27]).

<sup>Note 64:</sup> Comparison of new investment firms in 2019 vs 2015-2018 reported as difference in distinct number of investment firms who have participated in at least 1 UAE startup round for the first time, in 2019 vs 2015, …, 2019 vs 2018, is not statistically significant; respectively: N=150, ⌊95% CI⌋ ([-7, 19], [-3, 21], [-10, 16], [-11, 15]); Wilson p’ 95% CI ([-.05, .13], [-.03, .14], [-.07, .11], [-.08, .10]). New firms joining in 2015, …, 2019, respectively, ⌊95% CI⌋ ([13, 31], [11, 27], [16, 34], [16, 35], [18, 37]); computed local p* 95% CI ([.24, .56], [.15, .38], [.16, .35], [.14, .29], [.12, .25]). The figure mentioned in the insight text is “New firms joining” for 2019 with CI.

<sup>Note 65:</sup> Comparison of retained investment firms in 2019 vs 2016-2018 reported as difference in distinct number of investment firms had participated in a UAE startup rounds in 2 different years including measurement year, measured on the latest year, in 2019 vs 2016, …, 2019 vs 2018, is not statistically significant; respectively: N=150, ⌊95% CI⌋ ([-3, 21], [-10, 16], [-8, 18]); Wilson p’ 95% CI ([-.03, .14], [-.07, .11], [-.06, .12]). Retained firms in 2016, …, 2019, respectively, ⌊95% CI⌋ ([11, 27], [16, 34], [14, 32], [18, 37]); computed local p* 95% CI ([.16, .35], [.12, .26], [.12, .25]). The figure mentioned in the insight text is “Retained firms” for 2019 with CI.

<sup>Note 66:</sup> Churned investment firms in 2019 reported as distinct number of investment firms who had participated in a UAE startup rounds in a previous year and none in 2019 = 29. N=150, ⌊95% CI⌋ [20, 40]. This is the figure mentioned in the insight text. For more details, see Notes 61, 62 and 63.

<sup>Note 67:</sup> Comparison of new investment firms vs retained vs churned in 2015-2019 reported as difference in 5-yr exponential moving average of F) investment firms who have participated in at least 1 UAE startup round for the first time; G) investment firms had participated in a UAE startup rounds in 2 different years including measurement year, measured on the latest year; and H) investment firms who had participated in a UAE startup rounds in a previous year and none in measurement year; with 2015-2019 as measurement period, for F vs G, G vs H, and F vs H, is not statistically significant in each case; respectively, N=150, ⌊95% CI⌋=([-10, 14], [-11, 14], [-13, 11]); Wilson p’ 95% CI ([-.07, .10], [-.07, .09], [-.09, .08]). ⌊EMA⌋ for F, G and H, respectively = (22, 19, 20); N=115, ⌊95% CI⌋ ([14, 32], [12, 30], [13, 31]).

Measurement is on year of round announcement.

Statistical significance and effect size are studied through analysis of confidence interval.

CI is Wilson score interval.

Unless explicitly mentioned, alpha = .05.

N is sample size of investment firms active in 2010-2019, unless context shows otherwise.

Source

Rabbie, Eden. (2020). UAE Startup Access To Capital 2010-2020. *Startup Report MENA* [Online]. https://startupreport.me/uae-startup-access-to-capital-2020 (Based on analysis of 1011 equity-only seed, series A, bridge and series B startup rounds, 443 investors, 4730 ventures in MENA 2008-2019; enriched database: Crunchbase, PitchBook and fieldwork. Data last accessed 30 April 2020).

Newcombe, R. G. (1998). Interval estimation for the difference between independent proportions: comparison of eleven methods. *Statistics in medicine*, 17: 873-890. doi:10.1002/(SICI)1097-0258(19980430)17:8<873::AID-SIM779>3.0.CO;2-I

Newcombe, R. G. (2001). Estimating the difference between differences: measurement of additive scale interaction for proportions. *Statistics in medicine*, 20: 2885-2893. doi:10.1002/sim.925

Wallis, S. (2013). Binomial Confidence Intervals and Contingency Tests: Mathematical Fundamentals and the Evaluation of Alternative Methods. *Journal of Quantitative Linguistics*, 20:3, 178-208. doi:10.1080/09296174.2013.799918

3. B. 3

Reference point: 1/1/2020

**68% of all investors who had invested in a UAE startup 2+ years ago have stopped investing again in UAE startups.**<sup>68</sup>- This 68% churn stands also when limiting observation to investors who were active in 2015-2019 and stopped investing again on or before 2017.<sup>69</sup>

Technical notes (2 notes, 68-69)

<sup>Note 68:</sup> Percentage share of churned investment firms by 2020 reported as distinct number of investment firms who had last participated in a UAE startup rounds 2+ years before 2019, p=.684; N=150, ⌊95% CI⌋ (54, 79); N’=98, 95% CI [.46, .81].

<sup>Note 69:</sup> Percentage share of churned investment firms between 2015 and 2019 reported as distinct number of investment firms who had last participated in a UAE startup rounds between 2015 and 2017, p=.68; N=150, ⌊95% CI⌋ (32, 55); N’=63, 95% CI [.52, .87].

Measurement is on year of round announcement.

CI is Wilson score interval.

N is sample size of investment firms active in 2010-2019, unless context shows otherwise.

Source

Rabbie, Eden. (2020). UAE Startup Access To Capital 2010-2020. *Startup Report MENA* [Online]. https://startupreport.me/uae-startup-access-to-capital-2020 (Based on analysis of 1011 equity-only seed, series A, bridge and series B startup rounds, 443 investors, 4730 ventures in MENA 2008-2019; enriched database: Crunchbase, PitchBook and fieldwork. Data last accessed 30 April 2020).

Newcombe, R. G. (1998). Interval estimation for the difference between independent proportions: comparison of eleven methods. *Statistics in medicine*, 17: 873-890. doi:10.1002/(SICI)1097-0258(19980430)17:8<873::AID-SIM779>3.0.CO;2-I

Wallis, S. (2013). Binomial Confidence Intervals and Contingency Tests: Mathematical Fundamentals and the Evaluation of Alternative Methods. *Journal of Quantitative Linguistics*, 20:3, 178-208. doi:10.1080/09296174.2013.799918

3. B. 4

3. B. 5 – One-off investors

Comparison: One-offs out of all active firms, UAE one-off out of all active UAE firms, non-UAE one-off of all active non-UAE firms

**By 2020, UAE startups saw 70 (±12) investment firms active for only one year, then leave and never invest again in UAE startup rounds.**<sup>73</sup>**This is 57% attrition off the gate**(±15%).<sup>ibid.</sup>**66% of foreign firms invested in UAE startup rounds for only one year and never came back to invest again**(-13%/+14%).<sup>74</sup>**35% of UAE firms invested in UAE startup rounds for only one year and never came back to invest again**(-15%/+24%).<sup>75</sup>

Technical notes (3 notes, 73-75)

<sup>Note 73:</sup> Percentage share of one-off investment firms by 2020 reported as distinct number and population proportion estimator of investment firms who had last participated in 1+ UAE startup rounds in only 1 year on or before 2018, measured on 1/1/2020, p=.57. o=70. N=150, ⌊95% CI⌋ [57, 82]; N’=123, 95% CI [.47, .67].

<sup>Note 74:</sup> Percentage share of one-off non-UAE investment firms by 2020 of all active non-UAE firms reported as population proportion estimator of distinct number of non-UAE investment firms who had last participated in 1+ UAE startup rounds in only 1 year on or before 2018 out of non-UAE firms who invested in 1+ UAE startup rounds before 2019, measured on 1/1/2020, p=.66. N=150, ⌊95% CI⌋ [45, 69]; N’=86, 95% CI [.53, .81].

<sup>Note 75:</sup> Percentage share of one-off non-UAE investment firms by 2020 of all active UAE firms reported as population proportion estimator of distinct number of UAE investment firms who had last participated in 1+ UAE startup rounds in only 1 year on or before 2018 out of UAE firms who invested in 1+ UAE startup rounds before 2019, measured on 1/1/2020, p=.35. N=150, ⌊95% CI⌋ [7, 22]; N’=37, 95% CI [.20, .59].

Measurement is on year of round announcement.

CI is Wilson score interval.

N is sample size of investment firms active in 2010-2019, unless context shows otherwise.

Source

*Startup Report MENA* [Online]. https://startupreport.me/uae-startup-access-to-capital-2020 (Based on analysis of 1011 equity-only seed, series A, bridge and series B startup rounds, 443 investors, 4730 ventures in MENA 2008-2019; enriched database: Crunchbase, PitchBook and fieldwork. Data last accessed 30 April 2020).

*Statistics in medicine*, 17: 873-890. doi:10.1002/(SICI)1097-0258(19980430)17:8<873::AID-SIM779>3.0.CO;2-I

*Journal of Quantitative Linguistics*, 20:3, 178-208. doi:10.1080/09296174.2013.799918

Remarks

Why do investment firms leave?

While the cyclical nature of funds lifecycle can explain cyclical churn, it fails to explain the high number of firms who left and never came back, as it fails to explain why we are left with only 23 investors as the consistent base for an entire ecosystem.

What happens on the investor side? Did they run out of funding? Have they lost interest in startups altogether to favor less risky vehicles? Do they prefer to invest abroad in larger rounds and more advanced stages?

We find out the answer to these questions in the next section.

Data Analytics and Commercialization in MENA

– 12 years of experience working with governments developing their SME sectors.

– Data science background, CIM, Six Sigma. Japanese-trained.

– Featured author on Medium.

Worked 8 years with the Japanese government to help MENA governments develop their SME sectors, followed by 3 years with UAE government to grow its venture space.

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You may use any part of this report for any purpose on condition that you link to it and cite it properly.

Rabbie, Eden. (2020). UAE Startup Access To Capital 2010-2020. Startup Report MENA [Online]. https://startupreport.me/uae-startup-access-to-capital-2020

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