Any viable business idea requires capital initially. As such, establishing your company in Dubai – or anywhere else in the world for that matter – can become a bit complicated if you don’t have sufficient funds.
The good news is, the UAE has built a favourable environment for its startup community, where financial aid is available for aspiring entrepreneurs, startups and SMEs.
There are five ways to secure business funding in the UAE. These are: local funding and outreach programmes; angel investors; venture capitalists; institutional investors; and business incubators. Let’s delve into each of these financing options.
1. Local funding and outreach programmes
One of the ways you can raise capital for your business is through local funding and outreach programmes, such as:
The Khalifa Fund for Enterprise Development
In 2007, the President of the UAE and Ruler of Abu Dhabi H. H. Sheikh Khalifa bin Zayed Al Nahyan announced the establishment of the Khalifa Fund for Enterprise Development (KFED), which offers convenient financing solutions to local investors, entrepreneurs and SMEs in the country. The Fund’s mission is to promote entrepreneurship and investment in the UAE, as well as to foster innovation and finance business ideas that are both feasible and creative, with an impact on the national economy in a variety of sectors. The KFED Programmes are divided into two types, namely: Funding Programmes (including microfinance, Khutwa, Bedaya, Zeyada, Tasnea, Zaarie and Al Hasela) and Outreach Programmes (such as Al Radda, Ishraq, Sougha and Amal) targeting certain categories.
Dubai SME is an agency of the Department of Economic Development offering financing options, among other support services, to startups and established SMEs.
2. Angel investors
Angel investors are high-net-worth individuals, entrepreneurs and families who, as per Forbes Magazine, “invest in early stage or startup companies in exchange for an equity ownership interest.”
This is one of the quickest ways to get funding as this usually entails minimum paperwork and a more straightforward funding procedure.
However, finding the right angel investor is the tricky part, as this requires in-depth knowledge of reputed angel investors in the UAE, or at least, a local partner that has enough resources to look for and liaise with such investors. If you are looking for angel investors, you can check the website of Dubai Angel Investors and use this as a starting point.
3. Venture capitalists
Venture capitalists (VC) are another potential funding source for your small business. These are private equity investors who are usually willing to invest large amounts of money despite high risks, as they stand to gain big if the companies they support manage to successfully launch their businesses and sustain their operations.
This type of funding is similarly advantageous to having angel investors onboard. Most entrepreneurs feel more confident about partnering with venture capitalists when they have a local partner, agent, or business setup consultancy representing them.
Some of the most active venture capital investors in the UAE are VentureSouq, which invests in high-growth early-stage tech companies; Shorooq Partners, a leading seed stage venture capital fund; and BECO Capital, an early-stage venture capital firm.
4. Institutional investors
Getting a loan from local institutional investors to set up your business in Dubai or anywhere in the UAE is also a viable option. Institutional investors are companies who have access to other people’s funds and invest these into a variety of projects.
Although banks are the most renowned type of institutional investors, other organisations such as insurance companies and mutual funds also provide business funding solutions.
Among the notable institutional investors in the country are Greenstone Equity Partners, the largest fund placement firm in the region, and Gulf Capital, a leading alternative investment company.
With a broad range of local and international institutional investors in the UAE, startups can have the support they need to gain a strong footing in the market.
5. Business incubators
Business incubators are organisations that offer full-fledged support to startups, from market positioning and launching, to marketing and financing. Some of the leading business incubators in the UAE comprise Astrolabs, the Dubai Technology Entrepreneur Centre (DTEC), In5, FinTech Hive, Turn8 and Techstars Dubai.
At Virtuzone, we use our extensive local market knowledge to advise entrepreneurs on the financing options available to them. Having the largest network of partners in the industry, we can connect clients with government agencies and private companies that provide startup support and oversee peer-to-peer lending programmes.
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