Angel investors are individuals who provide capital and mentorship to early-stage startups, often in exchange for equity or convertible debt. They play a crucial role in supporting innovation and entrepreneurship, especially in emerging markets where access to funding is limited.
According to the Investor Trends Report 2023, produced by startAD and VentureSouq, angel investors based in the UAE are a young and diverse cohort with a strong interest in climate tech. The report surveyed 100 UAE-based angel investors who participated in the Angel Rising Symposium, an annual event that connects investors with startups and industry experts.
The report found that the average age of the UAE-based investors was 42, significantly lower than the global average of 57.6 in the US and 55 in the UK. Moreover, the gender ratio was more balanced, with 43 percent of the investors being female, compared to 22 percent in the US and 14 percent in the UK.
The report also revealed that the UAE-based investors had a high level of education, with 72 percent holding a master’s degree or higher, and a diverse background, with 40 percent having experience in entrepreneurship, 28 percent in corporate, and 16 percent in academia.
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A focus on climate tech and emerging markets
Climate tech is a broad term that encompasses technologies and solutions that address the causes and effects of climate change, such as renewable energy, carbon capture, smart agriculture, and waste management. It is one of the fastest-growing sectors in the world, with global climate tech venture capital reaching USD 60 billion in 2023, up from USD 30 billion in 2020.
The report showed that the UAE-based investors had a strong preference for climate tech, with 38 per cent of them indicating that it was their top sector of interest, followed by fintech (24 per cent) and health tech (18 per cent). This aligns with the UAE’s vision of becoming a regional and global leader in sustainability and clean energy and its commitment to reducing its carbon footprint and supporting green initiatives.
The report also indicated that the UAE-based investors were more inclined to invest in emerging markets, particularly in Africa and the MENA region, over the more established markets in the US, Asia, and Europe. The survey revealed that the top three geographies for climate-related investment by the UAE-based investors were Africa (23 percent), MENA (19 percent), and Asia (15 percent).
This contrasts with the global distribution of climate tech venture capital, which is heavily concentrated in the US (around 40 percent), China (around 22 percent), and Europe (around 20 percent). The MENA region ranks fourth, accounting for about 1.5-3 percent of global climate tech venture capital, while Africa ranks fifth, with about 1-2 percent.
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A strategic position and a positive impact
The UAE-based investors are leveraging their strategic position and their expertise to provide sustainability solutions across the India-China Africa (ICA) corridor, which is home to over three billion people and has a huge potential for growth and development.
Ramesh Jagannathan, the Managing Director of startAD, said: “Our Investor Trends Report reveals a young generation of savvy climate tech investors who are using the UAE as a base to serve the vast markets on our doorstep. The global consumer class is set to reach 5.2 billion people by 2030, of which over three billion will be in India, China, and Africa. The MENA region, led by the UAE, is at the nexus of this ‘ICA Corridor’, with Africa arguably ranking as the biggest potential growth story of the coming decades.”
He added: “A recent IEA report notes that Africa attracts just three percent of global energy investment yet accounts for one-fifth of the global population, while energy investment across the continent must double to over USD 200 billion per year by 2030 to achieve their energy-related development goals. Furthermore, a UN report highlighted the potential for African countries to leapfrog previous innovations using frontier technologies, helping them quickly advance to a more sustainable, equitable and profitable future. This potential can be further unlocked by the UAE’s pledge of USD 4.5 billion to help speed up the development of clean energy projects in Africa, announced at COP28.”
The UAE-based investors are not only seeking financial returns but also social and environmental impact by supporting startups that are solving some of the most pressing challenges facing humanity. Daleya Uddin, the Head of Public Affairs and Outreach at the US Consulate said: “The US Mission to the UAE is proud to support startAD and VentureSouq in their efforts to foster a vibrant angel investing ecosystem in the UAE. We believe that angel investors can play a vital role in advancing the global goals of combating climate change, promoting economic growth, and empowering women and youth.”