TEL AVIV – Israeli venture capital firm OurCrowd is investing tens of millions of dollars to set up an artificial intelligence company in the United Arab Emirates, in the latest sign of deepening trade ties between the two neighbors after they established diplomatic ties two years ago.
OurCrowd said it is partnering with the Abu Dhabi Investment Office, a government agency responsible for facilitating investment in the UAE’s capital, to expand its operations in the country, bringing the team out of four over the next four years will grow to 60 employees.
The two companies will invest a total of $60 million in the expansion, the majority of which will go toward building the new AI business, dubbed Integrated Data Intelligence Ltd. should be used, according to Jon Medved, founder and CEO of OurCrowd. The new company will serve as a tech hub for companies seeking AI as a service.
The story of the Abraham Accords is not a one-way investment, Mr Medved said, but “how we build things together”.
OurCrowd’s announcement follows a similar announcement by Israeli fintech firm Liquidity Group, which announced on Tuesday that it would set up a research and development center in Abu Dhabi with support from the Abu Dhabi Investment Office.
Abdulla Abdul Aziz AlShamsi, acting director general of the Abu Dhabi Investment Office, said his organization opened an office in Tel Aviv last year to both improve understanding of Israeli companies and help them expand in Abu Dhabi.
“Israel is an important focus for Abu Dhabi, given our two markets’ like-minded views on using innovation to make an impact,” he said.
Since Israel and the UAE normalized diplomatic ties in a US-brokered deal called the Abraham Accords in late 2020, bilateral trade between the two Middle Eastern countries has boomed and hundreds of thousands of Israelis have flocked to the Arab nation, including Dubai and Abu Dhabi are part, as tourists. From September 2020 to March 2022, non-oil trade exceeded $2.5 billion, while it hit $1.06 billion in the first three months of 2022 – five times the same period in 2021.
In May, Israel and the UAE signed a unique Comprehensive Free Trade Agreement between Israel and an Arab country. Officials said the deal would help trade grow to more than $10 billion within five years.
Israeli and Emirati officials say they want Israeli companies to expand their business in the UAE, using its geographic location and existing network to expand into markets in Asia, Africa and other Arab countries in the region.
Mr Medved and other Israeli business leaders say opening offices in the UAE also makes it easier to tap into global tech talent, as it’s easier to get work permits there than in Israel, but still operate for a short time flight away from home.
However, only a handful of Israeli companies are known to have established a physical presence in the UAE.
Mr Medved said dozens of Israeli companies are trying to expand their presence in the UAE, but the effort is taking longer than expected as Israelis, used to quick deals, adjust to an Emirati business culture that relies heavily on trust and trust established relationships.
Mr. AlShamsi said his organization will not have an equity stake in OurCrowd’s AI firm but will offer financial incentives, including rebates, to support the expansion of Israeli VC in the emirate.
Israeli fintech ThetaRay, a portfolio company of OurCrowd, made headlines in February when it secured a deal to use its AI platform to monitor Emirati bank Mashreq’s financial transactions for criminal activity. The company has since won further contracts in the United Arab Emirates and opened an office in Dubai to nurture customer relationships and protect financial data that is not allowed to leave the country, said Mark Gazit, the company’s chief executive.
Mr Gazit said his company plans to expand ThetaRay’s office in Dubai and open offices in nearby Abu Dhabi.
He said Israeli companies looking for partners in the Gulf state would benefit from similar moves.
“They want to know that they can trust you. So it’s important to be there,” Mr Gazit said.
He said the presence in the UAE has enhanced his company’s relationships with clients in Africa and expanded its network in the region. He expects his company to do more business with Bahrain, another signatory to the Abraham Accords, in the near future.
“We see the UAE as a gateway. … Hopefully in the near future both countries like Saudi Arabia and Oman will use our solutions,” Mr Gazit said.
Neither Saudi Arabia nor Oman have normalized relations with Israel, meaning all dealings with Israeli companies are done through third parties or kept secret.
Ron Daniel, Chief Executive of Liquidity Group, said the total investment in the R&D center was worth about $50 million and would increase the company’s workforce in Abu Dhabi from the current 35 to 75 by the end of next year and by the end of 2024 increase to 200.
Mr Daniel said Liquidity Group has already hired data scientists from around the world to work in its Abu Dhabi offices, including from Jordan, Nigeria, Turkey and Singapore.
Write to Dov Lieber at [email protected]
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