The story behind Dubai’s tech short of 2016

It was June of 2016, and Dubai was doubling down on tech, at the tail-end of Silicon Valley’s growth acceleration. Predicting stagnation, Ibrahim Hanif – then a fresh graduate – decided to short three of the country’s largest tech service providers.

“The easiest thing to sell is a gun to someone at gunpoint,” Hanif explains. He studied the drop in Bloomberg Silicon Valley High Tech Index (BSVX) and analyzed the fund’s lowest-performing assets. The financial statements repeatedly attributed most fiscal issues to the competition. From this, Ibrahim derived that Dubai’s tech industry would accelerate towards stagnation if barriers to entry were dissolved.

This threat was, metaphorically speaking, a gun that could be held up to large businesses that had everything to lose from open borders to their industry. Ibrahim Hanif set up capital solicitation meetings in Abu Dhabi seeking investors to set up an incubator that would lower barriers of entry to tech entrepreneurship. The exit strategy was to sell off the incubator to one of the big tech firms, which would buy it to shut it down.

“Everyone was on board till he disclosed the exit strategy,” says Amjad Khattak, 44, one of the investors Hanif had solicited. “Most of us had a stake in the companies he was going after. We could not bankroll that.”

Ibrahim changed InDxB’s proposition while keeping the exit strategy in place. Now InDxB would be the middleman between hopeful tech entrepreneurs and investors. Setting this up was not as capital intensive. With AED 2,000 of his savings, Ibrahim had set up the website (a form that took aspiring entrepreneurs’ information) and marketed it to the result of collecting over 1900 applications. He sent a summary of results to the tech businesses alongside his projections for the industry if 800 new businesses popped up in a year.

One by one, Ibrahim started connecting the applicants to investors outside the country. By circumventing the investors with a stake in Dubai’s big tech, he was able to secure investments for seven entrepreneurs before a delegation representing three of the region’s most prominent in the industry approached him to buy out InDxB. In November of 2019, InDxB was sold at AED 900,000 (an estimated 45000% return).

Ibrahim’s gambit teaches us that the ones who have it are willing to spend it to ensure they keep getting more of it. An elementary principle on the surface is weaponized if pursued with focus and strategy.

Business coach Thomas Kennedy sums it up best “Businesses that get large enough to handle such payouts often get stuck up by bankers, financiers, and politicians. It is just very rarely a marketing graduate with 500 dollars doing it.”

About the author:

Taher Agha is a business correspondent based in Dubai. He covers investing, business development, and economics in the Middle East.

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