ABU DHABI — Abu Dhabi is doubling down on its push into the technology sector with a $250 million investment to support start-ups from the Middle East and North Africa region.
Mubadala, Abu Dhabi's state investment arm, announced Monday its new MENA tech funds will invest in companies and venture funds that help boost local tech incubator Hub71.
Hub71 was launched earlier this year as part of a broader effort by the government of the United Arab Emirates (UAE) to diversify its economy. Microsoft and SoftBank are also partners in the Abu Dhabi-based scheme. Hub71 offers incentives like office space and health care coverage to encourage start-ups to set up shop in the region.
"A core part of our offering are the incentive programs that lower the cost of doing business for them as well as, at the same time, providing them connectivity within the region," said Hub71 CEO Mahmoud Adi in a CNBC interview Monday.
States like Abu Dhabi and Dubai in the UAE, as well as other countries in the Middle East, are increasingly pumping funds into local tech ecosystems, in part to help reduce their reliance on oil-dependent industries.
"It's a new chapter for us here in the region around supporting, investing and building great technology companies," said Ibrahim Ajami, Head of Ventures at Mubadala Capital, in a CNBC interview Monday. "Over the next 10 to 20 years you will see great global technology companies that have started from the region."
Ajami said the new MENA tech funds will build on Mubadala's ten years of experience investing in tech companies from around the world. The state investor committed $15 billion to Softbank's Vision Fund I, which has bankrolled tech companies like Uber, WeWork and Slack. Mubadala started its tech portfolio in 2007 with $770 million stake in U.S. chipmaker Advanced Micro Devices, which it sold last month after making $4.25 billion, according to Reuters.
The first investment of the new Middle East-focused funds went toward a Dubai-based start-up called Bayzat. Bayzat, which helps companies automate HR administration, was one of the first companies to set up its operations in Hub71.
Meanwhile WeWork is planning to launch its first space in the UAE next year in Hub71. The embattled office-sharing start-up postponed its IPO last month as investors raised alarms over the company's big losses and the leadership of its now-ousted CEO Adam Neumann.
Mubadala's Ajami said investors are increasingly focusing on company "fundamentals" and whether founders have a long-term plan to make money.
"We are in the business of investing for capital returns," he said. "So that's an important dynamic and relationship we have with our founders is how you get to that profitability."