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I’ve recently returned from a few weeks in the UAE, where I met with European founders and investors who’ve gone to the country to build their businesses or to secure some of the Gulf’s freer-flowing capital.

They spoke with fervour about the region. “I love the ambition here, they understand that the future needs ambition,” a Swedish founder told me, as we sat overlooking an infinity pool in Dubai Marina.

“Every VC is touring the region,” one source said. “Any fund that tells you that they’re not raising from here, it’s because they didn’t manage; it’s not because they haven’t tried,” said another.

The stats also suggest it’s not just a one-sided love affair. In 2023, investors from Gulf countries put $3bn into European startups, according to data platform Dealroom — a 5x jump from 2018.

But, on the ground, the excitement with which European founders spoke about the Gulf didn’t quite feel like it was being equally reciprocated.

“The region is standing on its feet now,” Omar Hassan from Global Growth Hub, which advises founders and VCs about the Gulf, told me. “Unlike before, the UK and Europe need the region more than the other way round.” With VCs after Emirati capital, the country has the pick of the funds.

The UAE is historically somewhere with limited tech IP — hence its interest in overseas companies. But that’s also changing. Microsoft’s $1.5bn investment in Emirati AI company G42 last month proved, people in the UAE said, that the country is further ahead in AI than people outside of it realised. Numerous people pointed out that Microsoft backed an Emirati AI company before it backed a UK one.

Eyes on Africa

Europe has stiff competition for the Gulf’s foreign investment cheques and its eyes are increasingly straying towards newer axes of power. As Janan Ganesh wrote in the Financial Times recently: nothing symbolises the transference of power away from the West quite like the city of Dubai.

People I met there spoke excitedly about the potential of Africa, in particular. In 2022, the UAE pledged $53bn in foreign direct investment into the continent, exceeding China’s contributions 20 times over. In 2023, it pledged a similarly large $45bn.

Emirati investments have so far focused on the critical minerals the continent has to offer. For example, a company controlled by the brother of President Sheikh Mohammed bin Zayed recently paid $1.1bn for a 51% stake in a Zambian copper mining company. Tech funds are starting to invest too: Abu Dhabi sovereign wealth fund Mubadala recently backed the largest VC fund operating in Africa, French VC Partech’s €280m fund.

On the ground in Dubai, a chat I had with a local investor stuck with me. There’s an arrogance, he felt, in the way some founders approach the region, with the assumption that they’ll earn kudos just for being a London or Paris-based company. As competition for the region’s capital heats up, it’s an arrogance that will serve Europe poorly.

Read all my reporting from the UAE here. And if you have thoughts on the Europe-Gulf dynamic, email me.

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