The United Arab Emirates will soon adopt new legislation designed to attract more venture capital investment and funds to the Gulf nation.
“Regulation in and of itself doesn’t encourage more VC investment. But if regulation allows a fund manager to access capital from investors that largely invest in regulated funds, that will be attractive to VC fund managers,” said Hardeep Plahe, a Dubai-based private equity partner at Gibson Dunn.
The government is pushing its tech sector as a prime investment area for venture capital fund managers, and wants to replicate the Californian model for a venture capital fund market.
“The UAE are looking to create a regional ‘silicon oasis’, and hoping to stimulate VC activity in the region,” said Fraser Dawson, a private equity associate also based in Gibson Dunn’s Dubai office.
“It will be important to ascertain exactly what will qualify as a venture capital fund in terms of this legislation, and understand how this law will be interpreted and implemented in practice,” Dawson added.
The venture capital market is nascent in the UAE, but there is potential for fund managers to explore.
“There have been some VC successes in the region, such as Careem, the [chauffeur-driven car hailing] app,” Plahe said.
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