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Dubai Ranks As World’s Fastest Growing VC Ecosystem

The FDI angle:

- Venture capital (VC) investment in the past decade has fuelled growth of start-up ecosystems outside established tech hubs.

- Higher interest rates and uncertainty have recently squeezed capital availability, VC returns, tech valuations and exits.

- Why does it matter? High-growth tech hubs could prove more suitable than mature ecosystems for founders to grow their start-ups and investors to deploy capital.

PitchBook generated these growth scores by combining data on VC deals, exits and fundraising in start-up ecosystems. Size and maturity scores were then calculated, weighted and combined to assess overall development of the ecosystems. Each location was assessed over various shorter and medium-term periods to smooth out fluctuations in market conditions.

Macroeconomic uncertainty and changes to monetary policy have challenged unprofitable private start-ups in recent years. Global VC funding, exits and tech company valuations have all plummeted from the highs reached in 2021, after major central banks brought an end to more than a decade of near-zero interest rates.

While the top 20 high-growth start-up hubs have seen lower VC activity than more mature ecosystems, PitchBook analysts argue there is a possibility they could be the source of highly valued and successful tech companies in the future.

“They’re in the stage of potentially creating that next wave of ‘unicorns’,” says Nalin Patel, a PitchBook analyst behind the research, referring to private companies with a valuation of at least $1bn. He adds that these rankings provide a basis for start-ups or investors to consider less obvious locations when assessing where to expand into, target or launch a new fund.

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