Experts in the field predict that investment funds from the Middle East could soon become influential figures on the global stage within the thriving artificial intelligence (AI) domain, spurred by an aggressive advancement in the high-tech sector.
Notice is being taken internationally as the region sets its sights on untapped markets, refining governmental policies to nurture advanced tech ecosystems and integrating AI comprehensively in both private and public spheres, according to industry specialists.
A few years back, consultancy firm PwC projected that by 2030, the Middle East could capture a 2 percent share—amounting to $320 billion—of the global AI market.
This forecast preceded the regional influx of multi-billion-dollar investments and strategic alliances with prominent Western tech entities such as Oracle and Amazon. A notable example in recent times is Microsoft’s $1.5 billion investment and partnership with the UAE’s leading AI company G42 in April.
The UAE and Saudi Arabia lead the Arab world as the largest economies, striving to diversify from oil dependencies and establish themselves as international centers for technological entrepreneurship and innovation. Major global corporations are keen to leverage the region’s promising technological future.
Mohammed Soliman, a director at a Washington-based think tank, notes that while Middle Eastern AI funds are relatively young, their growth trajectory is poised to be remarkable. He emphasizes the region’s strong case for AI investors, bolstered by active governmental support through dedicated funds and initiatives.
Soliman also highlights the broader interest from global tech leaders eager to connect with the Middle East’s evolving AI landscape.
Regional investment funds, generally not confined to specific sectors, are increasingly focusing on high-growth industries that will have significant economic impacts.
According to start-up tracker Shizune, the top 50 venture capital (VC) funds in the Middle East, specifically investing in AI, have made 502 investments. Israel is at the helm with 29 funds, followed by Saudi Arabia with six VC funds including Raed Ventures and Wa’ed Ventures, totaling 67 investments. The UAE boasts two funds, Abu Dhabi’s Shorooq Partners and Dubai’s Global Ventures, with a combined 16 investments.
However, the Middle East still trails behind regions like Asia, with 786 VC funds, and Europe, with 1,227. The United States leads the pack with 2,298 VC funds, the top seven of which alone eclipse the entire Middle Eastern count.
While specific investment figures in AI are elusive, the number of AI start-ups in the region serves as a barometer for the sector’s expansion. Crunchbase data reveals 1,843 AI start-ups in the Middle East, with 1,773 funding rounds accumulating $12.9 billion.
In contrast, Europe’s 9,994 AI start-ups have secured $37.8 billion across 10,598 rounds, and Asia’s premier 10,000 AI start-ups have raised $105.3 billion. The US, however, has seen 17,320 rounds with a staggering $211.5 billion in funding. Tracxn estimates an even higher count of AI start-ups in the US at approximately 23,209.
The UAE, recognized for its technological prowess, has been a trailblazer with significant investments in AI since 2017, including the appointment of the world’s first Minister of State for AI. The country continues to foster a robust tech ecosystem, attracting substantial investment interest.
Philipp Pabst from the Dubai Future District Fund remarks that despite being smaller and less specialized than global counterparts, Middle Eastern funds have the advantage of deep regional integration. He acknowledges the increasing focus on AI within regional funds given its potential to enhance productivity.
Recent developments, such as Adnoc, G42, and Presight’s joint venture AIQ, and G42’s $1.5 billion Microsoft deal, underscore the region’s commitment to AI advancement. Abu Dhabi’s AI and Advanced Technology Council also launched MGX, signaling a robust AI push.
Furthermore, initiatives like Dubai’s Future Labs and the Global Prompt Engineering Championship exemplify the UAE’s comprehensive strategy to foster technological growth.
Saudi Arabia is also making strides, with Accenture noting the kingdom’s ambition to transform into a competitive, AI-centric economy. Reports suggest Saudi Arabia is planning a colossal $40 billion AI investment fund, positioning itself as a future leader in the technology.
Both the UAE and Saudi Arabia have reportedly secured high-end AI chips from Nvidia, indicating their serious commitment to AI capabilities. Tech leaders like Nvidia’s Jensen Huang and OpenAI’s Sam Altman have highlighted the UAE’s potential to be at the forefront of the next industrial revolution.
Qatar, too, is enhancing its AI strategy, exemplified by the establishment of an AI research center in partnership with Germany’s Centre for Tangible AI and Digitalisation.
Sam Blatteis, CEO of The Mena Catalysts, points out the unique combination of tech-friendly governments, vast capital, and a concentrated focus on AI in the Gulf, paralleling North America’s tech landscape.
The UAE ranks 10th globally in technological expertise, according to US News and World Report, with Japan leading the list. Blatteis emphasizes the importance of strategic expansion for AI companies, recognizing the Gulf as a fertile ground for such endeavors.
The UAE’s strategic initiatives, including the training of one million AI prompt engineers and establishing a federal AI CEO, are attracting global venture capital, with the GCC region becoming increasingly receptive to AI enterprises.
Blatteis describes the Gulf’s AI investments as capturing the public’s imagination, backed by tangible projects and infrastructural developments. As the region caters to underserved markets with AI solutions, sectors like health care, financial services, education, and smart cities stand to benefit significantly.
PwC’s 2018 report suggests that AI could boost the region’s economy by 20 to 34 percent annually, with the UAE and Saudi Arabia leading the way.
Pabst envisions the region’s AI products and services gaining a foothold in the global market, presenting lucrative opportunities for investors looking to back locally developed innovations with international potential.