The future’s bright: What are the current top industries for tech startups?

Let’s be honest, at the start of the COVID-19 pandemic there were some major doom and gloom outlooks for tech startups. At the start of April 2020, the New York Times was calling it “The great unwinding”. Yet, as things settle, we are realizing just how far off this prediction was. Several tech industries are now thriving, and here are our top five recommended industries for tech startups right now:

1. Artificial intelligence

AI is the tech sector to be in right now. Not only is it an industry in its own right, but it is a technology that transcends all others, too. Every other tech industry we mention going forward will likely rely in some way on AI.

According to the Fortune Business Insights, the global AI market was valued at USD 27 billion in 2019. The COVID-19 pandemic has done little to alter the prediction that in seven years its market value will rise nearly 1,000 per cent to USD 266 billion.

Tech hubs are hugely important to the AI industry, because they pair those with knowledge of AI solutions with those with knowledge of an industry’s problems. Take Prognica Labs as an example. They combine tech expertise in AI with in-depth medical knowledge to help doctors better read medical images and improve breast cancer detection.

Excited by AI?

Then be sure to check out the many events on the subject that are held in the UAE every year. Eventbrite is a great place to search for these, but check out the Dtec Forum too. We’ve run highly successful events on AI in the past, including the Moving towards Artificial Intelligence forum, which led to the publication of the 2018 Corporate Artificial Intelligence Adoption, Strategies and Implementation report. Check it out here.

2. Health tech/biotech

If COVID-19 has taught us anything, it’s the value of our health and that of those we love. But even before the pandemic, these industries were already getting increasing attention from some major investors in the UAE, including Meddy.com, Cheffa and Yodawy.

There are three fundamental aims of this industry: to enhance the quality of care, reduce costs, and improve access to care. Wearable health devices are just one of the powerful ways that this is being implemented right now.

Increasing prevalence of chronic diseases and improved diagnostic outcomes are rapidly accelerating the acceptance of wearable medical devices across the globe. According to Fortune Business Insights, this market is set for big growth over the coming decade.

Intrigued by health tech?

This is an industry with a lot of funding opportunity. A recent report by Wamda Research Lab found that over half of the startups they surveyed in the ‘MENA healthcare ecosystem’ received early career support. Nearly two-thirds (62 per cent) reported finding funding from business-plan competitions, incubators, accelerators, governments and even universities. Be sure to check these out.

3. Space tech

Hands up who silently imagined themselves as an astronaut when Major Hazza AlMansouri became the first Emirati in space? That will be all of us then.

Space tech is a rapidly growing industry, especially in the MENA region. It’s an exciting and disruptive space for a startup. There are opportunities to be involved in satellites, space debris removal, telescopes, launch services and more.

The small satellite industry alone was worth nearly USD 4.2 billion in 2018, with Fortune Business Insights predicting it will hit USD 18.3 billion by 2026. Excitement, opportunity and capital – what more can we want?

Reaching for the stars?

The current climate is ripe for investment opportunities in space tech as Mohammed Bin Rashid Space Centre has a dedicated location within the Dubai Technology Entrepreneur Campus, offering both a work location and support to selected space tech startups. Many tech startup ecosystems are also actively creating programmes that support space technology entrepreneurs.

4. Ed tech

A 2016 article in techcrunch.com stated that “Edtech is the next fintech” – it’s probably fair to say that this prediction never transpired. Historically education systems have been very rigid and resistant to change. So why do we think things are different now?

School and university closures around the world were one of the biggest fallouts from the recent pandemic, and sometimes what an industry really needs is an unexpected push to get it going. For many entrepreneurs, COVID-19 merely solidified the view that this is an area in desperate need of technology disruption.

There are already some great examples in the UAE, including Arabee, an award-winning educational programme that teaches young people to speak, read, write and listen to Arabic and Schoolvoice, a school-to-parent communication solution.

Looking to shape education?

While there is so much opportunity here, we do recommend thinking deeply about what you can offer.

In their 2007 paper on this topic, K-12 Entrepreneurship: Slow Entry, Distant Exit, Larry Berger and David Stevenson point out that a huge barrier for technology in education is that teacher time is a sunk cost. That is, it is a cost that has already been incurred and cannot be recovered. Many are continuing to try to overcome this barrier, but would a startup be wiser to concentrate on looking for improvements elsewhere – such as student outcomes?

5. Fintech

Digitization of financial services is happening at an unprecedented rate. In 2019, the MENA region alone saw USD 77 million invested in fintech. The UAE has established itself as a top international hub for these startups, now hosting a third of fintechs in the region. COVID-19 is only likely to increase the pace of this transformation.

The financial industry is frequently seen as bland, boring, and overly complex, providing the perfect platform for tech disruption. The last few years have seen impact from insurtech startups. Dtec Ventures’ investment Yallacompare, for example, has grown from a tech startup in 2011 to become the leading finance comparison site in the Middle East in just nine years.

Pointcheckout, another Dtec Ventures company, saw an opportunity in the rewards point sector.  According to the Bond Brand Loyalty 2017 Loyalty Report, more than USD 100 billion worth of rewards points go unredeemed. Pointcheckout stepped in and created a platform that allows users to pay with reward points and miles at over 1,000 online merchants across MENA. The startup has also recently pivoted into message-based merchant payments.

Other hot fintech segments include: open banking, with startups such as Dapi leading the way; remittance fintechs, particularly on the SEA/ GCC corridor; wealth management with robo-advisors such as Sarwa; and real estate investment startups such as Smart Crowd.

Looking to finance your fintech?

Given the UAE is rapidly becoming a prime location for fintech, there are lots of options here. Check out the Ghadan Ventures Fund, the Mohammed Bin Rashid Innovation Fund, and Innovation Impact Grant Programme for starters.

Just the start

COVID-19 may have appeared to put a dampener on startups during the second quarter of 2020, but many entrepreneurs are already adapting to the challenges ahead. They say that opportunities are always disguised as problems and for the five industries mentioned here this really is the case.

AUTHOR: HANS CHRISTENSEN, VICE PRESIDENT, DUBAI TECHNOLOGY ENTREPRENEUR CAMPUS