Vice President, Dubai Technology Entrepreneurship Centre, Mr. Hans Christensen, spoke with journalists in Dubai about the opportunities offered by the centre, its economic impact and the strategy to make Dubai Silicon Oasis the leading science and technology park in the world. Emma Okonji brings the excerpts:
How best can one describe the Dubai Technology Entrepreneurship Centre (DTEC)?
The DTEC is a physical place where technology startups are groomed and where they do physical business with each other. It is located inside the Dubai Silicon Oasis (DSO), a tightly integrated free zone area. It has everything that makes an ideal workplace and it is close to affordable housing, leisure, lifestyle, entertainment ventures and the airport. DTEC’s central location makes work-life balance possible without cutting away precious time that could be spent working on new ventures. Now the DSO is a revolutionary technology park established by the government of Dubai. DSO is considered the only technology park in the region that provides both a living and a working integrated community. The DSO provides a full package of incentives and benefits to companies operating within its premises, including all essential ingredients for success.
Designed as a hi-tech ecosystem, the DSO offers businesses, a plethora of advantages including a state-of-the-art infrastructure, in-house business services and strong business support such as technology investment incentives for large enterprises, entrepreneurial support, an incubation centre and venture capital funding. DTEC in itself is best explained through its six essential elements such as: government support, infrastructure, universities and incubators, venture capital, SMEs and large enterprises. We operate the free zone model, which allows start-ups to set up their legal frameworks with us and grow their business to maturity.
What is the operational module of companies in DTEC?
Companies in DTEC are mainly software companies who operate in their own space within the environment. So far we have set up 1,300 companies in the past four years, of which 800 are still up and running and they are predominantly software companies. About 15 per cent of the companies are from Europe, six per cent from America, and quite a few Russian companies and they are mainly into software development. The companies operate in a free zone centre in DTEC, and we have several free zone centres in Dubai and DTEC is just one of them. The reason for free zone communities is to enable businesses strive in an environment where the start-up needs a local sponsor since the start-up will not have 100 per cent ownership of his company, but certain percentage of the business. The business owners are allowed to repatriate all the money made in the business that belong to them based on the ownership structure. We allow companies to operate without government interference, but we expect companies to do their yearly financial report for the purpose of transparency. There is also a five per cent VAT that is payable to the government.
So how does DTEC make its money having provided the facilities for start-ups to work?
We have a co-working space, which comes with dedicated desks and private offices where start-ups pay to use. Our dedicated desk area provides opportunity for start-ups to have their personal desk with lockable storage located in semi- private areas. The private office is a private space that is fully furnished and we also have unfurnished office space, ranging from 12-50 square metres, which is subsidised for businesses. We rent the co-working space for a period of 18 months and we allow that period because we want a sustainable co-working space for every startup .
What is the growth rate of start-ups in DTEC?
The number of start-ups is on the increase and they have grown beyond our expectations by 40 per cent, considering what we had in mind when we were designing DTEC some years ago. Based on the rapid growth of start-ups at the centre, we are planning to add additional 5,600 square meters of space to accommodate more co-working space and we plan commissioning the additional workspace in the next three months.
What are the criteria for start-ups to get access into the co-working space?
The criteria are very simple. The person must be a start-up, have a tech company that can fit into the nine elaborate activities of DTEC. There must also be a proof of minimal funding for the business, before looking up to local investors who may be interested in the line of business. In our part, we create accelerators and venture capitals (VC) for start-ups. Apart from the co-working space, we also do venture investments outside of the working space. We are the only free zone community in UAE that accepts VC facilities, and we have facilitated investments in more than 25 companies and some of them are doing pretty very well. We also record some failures in some business models of the start-ups, which of course is associated with start-up business, because not all start-ups with ideas eventually succeed. Some do not succeed but some also succeed depending on their models and the market viability.
Does the centre operate on corporate innovation initiatives, where organisations are encouraged to invest in start-ups operating within the DTEC community?
We have corporate innovation where corporates are allowed to come to the centre to find start-ups that have business models that appeal to them. The reason being that they look for start-ups with profitable business and invest in their business, and the ownership structure changes because no start-up owns 100 per cent of the business, since the policy gives room for joint ownership and the start-up is allowed by law to repatriate his or her earnings based on his or her percentage in the ownership structure. We have the Intel, IBM, Microsoft and other big organisations that have signed into the corporate innovation initiative. They offer free services to start-ups and train them with their proprietary solutions. We also have the DTEC Technology Learning and Events, where we organise between 70 and 100 events in a year to train corporate organisations in different fields of technology that are trending, such as Financial Technology (FinTech), Artificial Intelligence (AI), Internet of Things (IoT), among others.
How is the impact of DTEC accelerator programme on the global economy?
We have the DTEC acceleration and incubation initiatives that have attracted start-ups with global connections. It is a smart city accelerator initiative, which is a consortium of investors. We started the acceleration and incubation centre in the smart city area, where we invested $300 billion, which was built by China State Corporation. The maximum period of stay in the innovation centre is a maximum of three years for start-ups where they produce new ideas and we achieved this through our accelerator programme. Our first cohort won award as the best accelerator in Dubai and today it is attracting more than 1000 applications would wide. We currently have about 10 companies from four continents. We first started it as an incubator centre and later realised that it has grown beyond our expectations and today it has grown, contributing to the digitalisation of the UAE. Going forward, we plan to expand out accelerator initiative to health tech, space tech, and logistics and we plan to establish an all female accelerator because only about 16 per cent of the companies in DTEC are female run and we are trying to boost that up, in line with the United Nation’s target to bring women and girls up to speed in technology innovation.
What is the economic impact of DTEC and DSO?
The economic impact of DTEC is enormous, creating $300 million from engaging with other development teams in the countries of the world like Russia, India, UK, Egypt. The DSO is contributing to Dubai’s economic development through attracting companies operating in the knowledge, innovation and technology domains. In 2018, it attracted $80 million net profit to Dubai and $158 million revenue, with 2,620 companies operating in DSO, which increased by 161 companies from 2017, which is a rise if six per cent. The Silicon Park located inside the DSO is 90 per cent complete and will be commissioned in June this year. The Silicon Park comprises of 71,000 square metres of office space, 25,000 square metres of commercial space, 46,000 square metres of residential area, 112 room business hotel, 59 furnished apartments, with conference centre. The Silicon Park, is expected to accommodate 20,000 workers and residents at full capacity.
How do you manage start-ups within the DTEC centre who have the tendency to work in silos, just to hide their ideas from others?
Yes, we have found out that 60 -70 per cent of the start-ups have started collaborating and doing business with each other, and that is our goal to dissuade them in working in silos and hoarding information that others could develop better. We try to achieve this through networking events. We try as much as possible to discourage start-ups from working in silos, because experience has shown that collaborated efforts yield better results faster. The structure of the workplace also enables them to collaborate in their various projects.
How does DTEC accommodate Intel’s strategy about start-ups, where most times they are interested in buying over a business idea that they think is economically viable?
We accommodate Intel and other big technology companies of the world. We have Intel space at DTEC where they engage start-ups at the early stage. In the past what Intel used to do about innovation, is to throw huge sum of money around any company that they are interested in their innovative package and most times they end up buying the company and fuse it into their own business plan, but that business model is phasing out for Intel because it is no longer meeting their set targets and they end up spending lots of millions of dollars, without recouping it. What they do now is to optimise that business model to rather engage early start-ups with good business ideas and provide Intel application for the start-ups. So Intel is here in DTEC, engaging with some start-ups and the same business model has been adopted by Huawei, IBM, who are also in DTEC, currently focusing on Artificial Intelligence and Blockchain Technology.
Aside start-ups, does DTEC accommodate students training at the technology centre?
Yes, we also engage in students’ training and we receive lots of institutions’ request to have their students trained at the centre and of course we oblige them. We have trained over 5,000 students so far in the centre and we also offer training for corporates aside the startups programme that we run at the centre.