UAE’s Beco Capital Projects Tech Startups to Boom in The Region Amid Low Oil Prices
Dubai-based BECO Capital firm believes that lower oil prices will help trigger an improvement in entrepreneurship and venture capital activity, especially in the technology sector. A slowdown in the economy will allow technology companies to boom globally as well as regionally, according to the venture capital firm.
BECO Capital noted that there is a strong positive correlation between a weak economy and a booming tech industry. The firm believes that now is the best time to improve tech businesses. As BECO Capital CEO Dany Farha puts it, "There is no better time to be a tech entrepreneur in the region than now. During these economic conditions, there is a silver lining. It is when economic conditions are challenging that consumers and enterprises look for the most efficient and innovative solutions, and these are provided by technology companies."
The strong correlation between economic slowdown and the surging tech industry has been proven in the second half of 2015. As reported by CPI Financial, despite a difficult economic climate during that time due to slumping oil prices and budget deficits, the UAE region's tech entrepreneurship landscape continued to move upwards. Even more, the ecosystem is expanding further with the rise of the digital economy. The condition is also strengthened by the emergence of potential regional unicorns during that economically challenged time.
The venture capital firm is determined to take advantage of the momentum to dedicate more fund to more SMEs and entrepreneurs in the region. "We should continue to innovate at the early stage and help build amazing businesses in the later ones. Those contribute substantially to income, output and employment," Farha said, as quoted by Trade Arabia. The CEO also noted that higher unemployment in a slower economy triggers professionals to create their own jobs, resulting in more new ventures and businesses.
The tech sector in UAE is also particularly supported by the GCC government's decision to replace oil-reliant economies through economic diversification policies. The policies will contribute largely to making more room for non-oil-reliant tech companies to grow with support from the government.
BECO Capital also cited data that reveal regional tech entrepreneurs raised $250 million in the last 18 months, as reported by Zawya. Currently, there are over 109 players investing in the tech startup sector across various stages. The growth in the tech sector will definitely help boost the economy, especially when the economy is suffering from other sectors such as the oil sector.
The UAE venture capital firm projected that regional tech startups will thrive over the next couple of years amid the slump in oil prices. BECO Capital sees the currently weak economy as an opportunity for tech startups to spur and contribute to the local economy growth.