TEL AVIV—Israeli venture-capital firm OurCrowd is investing tens of millions of dollars to start an artificial-intelligence business in the United Arab Emirates, in the latest sign of deepening commercial ties between the two neighbors after they established diplomatic relations two years ago.
OurCrowd said it is partnering with Abu Dhabi Investment Office, a government entity responsible for facilitating investment in the U.A.E. capital, to expand its operations in the country, which will see its team grow to 60 employees from four over the next four years.
The two entities will invest $60 million in total for the expansion, the bulk of which would be used to set up the new AI business, named Integrated Data Intelligence Ltd., according to
Jon Medved,
founder and chief executive of OurCrowd. The new company will serve as a technical hub for businesses seeking AI as a service.
The story of the Abraham Accords isn’t one-way investment, Mr. Medved said, but of “how we build stuff together.”
The announcement from OurCrowd follows a similar announcement from Israeli fintech company Liquidity Group, which said on Tuesday that it was establishing a research-and-development center in Abu Dhabi with backing from the Abu Dhabi Investment Office.
Abdulla Abdul Aziz AlShamsi, acting director general of the Abu Dhabi Investment Office, said his organization opened a branch in Tel Aviv last year to both increase understanding of Israeli businesses and help guide them toward expanding in Abu Dhabi.
“Israel is a key focus for Abu Dhabi, given our two markets’ like-minded view on utilizing innovation for impact,” he said.
Since Israel and the U.A.E. normalized diplomatic ties in late-2020 in a U.S.-brokered agreement called the Abraham Accords, bilateral trade between the two Middle East countries has boomed and hundreds of thousands of Israelis have flocked to the Arab nation, of which Dubai and Abu Dhabi are a part, as tourists. From September 2020 to March 2022, nonoil trade surpassed $2.5 billion, while it reached $1.06 billion in the first three months of 2022—five times the total from the same period in 2021.
In May, Israel and the U.A.E. signed a first-of-its-kind comprehensive free-trade agreement between Israel and an Arab country. Officials said the agreement would help trade grow to more than $10 billion within five years.
Israeli and Emirati officials say they want Israeli companies to grow their business in the U.A.E as well as take advantage of 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 that opening offices in the U.A.E. also makes it easier to tap into global tech talent because it is easier to get work permits there than in Israel, but still keeps operations a short flight away from home.
Still, only a handful of Israeli companies are known to have established a physical presence in the U.A.E. so far.
Mr. Medved said dozens of Israeli companies are looking to grow their presence in the U.A.E., but the efforts are taking more time than expected as Israelis, used to fast-paced deals, become accustomed to an Emirati business culture that relies heavily on trust and established relationships.
Mr. AlShamsi said that his organization won’t have an equity stake in OurCrowd’s AI company, but is offering financial incentives, including rebates, to support the Israeli VC’s expansion in the emirate.
Israeli fintech company ThetaRay, a portfolio company of OurCrowd, made headlines in February when it secured a contract to use its AI platform to monitor the financial transactions of the Emirati bank Mashreq for criminal activities. The company has since received other contracts in the U.A.E. and opened an office in Dubai to handle customer relations and safeguard financial data that can’t 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 businesses looking for partners in the Gulf country would benefit from similar steps.
“They want to know they can trust you. So being there is important,” Mr. Gazit said.
He said being present in the U.A.E. had improved his company’s ties with clients in Africa and expanded his network in the region. In the near term, he said he expects his company will report more business with Bahrain, another signatory of Abraham Accords.
“We do see the U.A.E. as a gateway. …Hopefully in the near future both countries like Saudi Arabia and Oman will be using our solutions,” Mr. Gazit said.
Neither Saudi Arabia nor Oman have normalized ties with Israel, meaning any business with Israeli companies is done through third parties or kept secret.
Liquidity Group Chief Executive Ron Daniel said the total investment in the R&D center is worth about $50 million and would take the company’s employee count in Abu Dhabi to 75 from 35 currently by the end of next year, and to 200 by the end of 2024.
Mr. Daniel said Liquidity Group has already hired data sciences from all over 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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