Do you want to start a business in Dubai for yourself, but you have little or no cash? If you have a solid business idea and a firm resolve to accomplish your goals, we can recommend a few solutions for you.
The current landscape of external financing does not treat all business sectors as the same. It is far easier to receive funding if your proposed business is in the tech sector. While financing for traditional business sectors is available, it tends to have higher barriers to qualify for funding. Keep these factors in mind before you pitch your ideas.
Incubators and Accelerators
The steady growth of business incubators and accelerators in Dubai has been driven both by the private sector as well as government initiatives. The most well-funded programs are geared to increase entrepreneurship amongst Emirati nationals. Dubai SME, a division of the Department of Economic Development (DED), supports the growing Emirati small and medium enterprise (SME) sector. The support services range from planning to financing a business idea from start to finish.
In5, a business incubation hub established in 2013 focusing on technology, media, and design, accepts applicants of all nationalities. Thanks to its affiliation with TECOM, it offers a business license for only AED 1000. The ideal applicant for In5 is a start-up that has a strong business plan but could benefit from affordable administrative costs, ongoing training, and mentorship, along with funding opportunities.
Peer-to-Peer and Crowdfunding
Peer-to-peer lending is a type of financing by which an entrepreneur can get a loan from a multitude of individuals. Instead, most investors invest small sums of money on several investments to reduce their risk.
There are many local and regional peer-to-peer lending firms operating in the UAE with an assortment of criteria to qualify. We recommend you look for those that are regulated by UAE financial regulators. Also, while some peer to peer lenders provide loans at or below commercial rates, some choose to take equity in your business instead. It is essential to understand how each of these options could have an impact on your long-term business growth.
Zoomaal is an initiative by four major Arab investors: Wamda, Middle East Venture Partners, Hivos, Cairo Angels, N2V, and Sawari Ventures. It is an innovative crowdfunding platform that you can use to fund things such as a new product prototype without having a business license. It’s a good source if you are seeking to build a proof of concept product before delving into creating a fully-fledged business.
The UAE government has created a 2-billion-dirham fund called the Mohammed Bin Rashid Innovation Fund that aspires to assist all UAE residents to facilitate access to business loans to finance projects and help turn ideas from concept to realization. Select locally owned banks have signed up to this initiative.
If you choose to get a personal loan to start your business, please be aware that the non-payment of debt can have serious legal consequences. Personal cheques are often used as guarantees, and if you default, a criminal case can be lodged. Unless you are confident that you will not default, financing via a bank loan is a risky proposition.
An angel investor is a wealthy individual who provides funding for a start-up, often in exchange for an equity stake in the company. Typically, angel investors will invest in helping a company get started if they foresee a high rate of return in the years to come. In many cases, such investors are the last option for start-ups that don’t qualify for bank financing and may be too small to interest a venture capital firms.
Thousands of angel investors can be found on the angel.co website. There are angel investors in Dubai that invest specifically in women-led start-ups. Many are also sector-specific specialists; therefore, there are options for all types of businesses.
In summary, while you have many choices of getting funding for your business, not all of them will be right for you. If you do your due diligence and research, you’ll find the perfect one!