To make more money, you'll need money! This remark properly describes the startup fundraising stage. Money is at the heart of any business. The amount of earnings your venture produces in the long run is determined by the strategic use of finances from the start. As a result, the most crucial aspect of the startup cycle is capital or first investment.
Any entrepreneur will tell you that identifying –and choosing on– the correct funding option for their business is one of the most exciting parts of their job. Startups and small and medium businesses face numerous challenges, including a dearth of venture funding and excessive interest rates on bank loans (SMEs).
Fortunately, Dubai's entrepreneurial ecosystem provides plenty of options. Dubai is one of the greatest locations in the world to start a business because of its diverse finance sources, ease of accessibility, and relatively quick approvals of early investments. On your way to becoming an entrepreneur in Dubai, here is a list of financial options to explore.
So without any further ado, let’s learn!
Viable Funding option in United Arab Emirates for Startups
SELF FUNDING/ BOOTSTRAPPING
Let's start with the things you can do on your own. If you've lived in the UAE for a long, you've probably saved some money that you can put to good use right away. If you have adequate savings in your bank account, you are good to go, depending on the expected initial cost of your firm.
CROWD FUNDING AND PEER TO PEER FINANCING
Peer-to-peer financing is one of the most effective ways to find the right investor for your business. This is a sort of debt financing that allows you to borrow and lend money without the involvement of a bank. Here are a few internet channels to look into in the UAE:
Beehive
It is the UAE's first online marketplace for peer-to-peer lending, connecting businesses in need of funding with investors directly.
Eureeca
Another famous crowd funding platform in the UAE is Eureeca. It is the world's first worldwide equity crowd funding platform, with a presence in Dubai. It allows members of its investor network to purchase shares in growth-oriented enterprises while also giving critical money to operational businesses.
Zoomaal
It is a terrific resource for event organizers, creatives, scientists, engineers, online and mobile developers, product designers, video makers, and community activists, and was founded by four significant Arab investors.
LOAN FROM BANKS
Almost all major banks in the UAE provide attractive lending options for startups and entrepreneurs. Any bank where you have a current account, as well as new banks, can offer you a number of possibilities. Flexible payment plans ranging from a few months to two years are available. You could want to look into Emirates NBD, First Gulf Bank, and HSBC, to name a few.
Aside from traditional startup loans, there are other startup funds administered by local banks that you should be aware of. Mohammed Bin Rashid Innovation Fund (MBRIF), a government-backed fund worth AED2 billion, was established in February. It is a Ministry of Finance project run by Emirates Development Bank that provides direct Sharia - compliant loans to selected recipients.
ANGEL INVESTORS
An angel investor, by definition, is a person or company who invests in a startup company in exchange for convertible debt or ownership stock. As Dubai's entrepreneurial ecosystem has grown in recent years, so has the number of angel investment opportunities available. If you're looking for an angel investment, you have a lot of alternatives, ranging from individuals to small groups to major corporations.
A number of people in Dubai and the United Arab Emirates invest in startups. https://angel.co/dubai/investors contains a thorough list. If you're a female entrepreneur, you should know that there are angel investors in Dubai who specialize in female-led businesses. WAIN (Women's Angel Investor Network) and WOMENA (Women's Angel Investor Network) are two of the most active investors in this segment.
EQUITY AND VENTURE CAPITAL
One of the most frequent ways to receive money for your startup is through equity funding and venture capital, and Dubai has a wealth of possibilities for both. The following are a handful of the most well-known:
Arzan Venture Capital
Careem and Jamalon are two well-known names in the entrepreneurial sector who have received funding from this Dubai-based venture capital firm. It offers fascinating pre-seed funding options that can be beneficial if you're just getting started with your business.
Wamda Capital
Wamda, based in Dubai Design District, is one of the most reputable venture capitalists involved in long-term collaborations with entrepreneurs. Wamda Capital's investment operations have helped build some of the MENA region's most successful and innovative firms, including Maktoob, Souq.com, Yemeksepeti (FoodonClick), and others.
STC Ventures
STC is an independently managed venture capital fund that is another trusted name in the investor market. The enterprise, situated in Dubai Media City, intends to assist entrepreneurs to build market-leading digital companies.
BECO Capital
BECO is another well-known name in the region's venture capital business. BECO promotes new businesses by leveraging its wide experience in the technological, entrepreneurial, and financial sectors to help them build value much faster.
Middle East Venture Partners (MEVP)
MEVP is a Middle East-focused venture capital fund that invests in innovative companies led by exceptional entrepreneurs in their early and growth stages. It is based in Dubai. MEVP offers a variety of funding choices with a variety of investment options.
STRATEGIC INVESTMENTS
Strategic acquisitions can also be used to fund UAE enterprises, especially if a foreign investor is looking to enter the UAE market and grow inorganically. Recent transactions in the UAE include Amazon's acquisition of Souq.com and Uber's acquisition of Careem.
BUSINESS INCUBATORS AND ACCELERATORS
Although most business incubators (and accelerators) do not give finance, they can provide a variety of products and services that can help start-ups and entrepreneurs save money in the long run.
- Dubai Future Accelerators,
- In5,
- Dubai Technology Entrepreneur Centre (DTEC),
- Hub71,
- ImpactHub,
- TechStars Dubai,
- Fintech Hive are some of the most important business incubators in the UAE.
IPOs (INITIAL PUBLIC OFFERINGS) IN THE UNITED ARAB EMIRATES
The UAE Companies Law (Federal Law No. 2 of 2015 on Commercial Companies) and regulations issued by the Securities and Commodity Authority govern the issue of securities by onshore companies (SCA).
Only public joint-stock companies are permitted to offer securities to the public through a prospectus under the UAE Companies Law; other companies, whether incorporated in the UAE (mainland or in a free zone) or in a foreign jurisdiction, are prohibited from advertising, including the invitation to a public subscription, without the approval of the SCA (Article 32). As a result, limited liability corporations (LLCs), which are the legal structure used by many start-ups in the UAE, are unable to raise funding from the general public. As a result of this, and the UAE's underdeveloped capital market, local start-ups seldom make it to the IPO stage.
Conclusion
Thus we can conclude with the fact that, there is array of options available to get the funding for your business. We hope this blog provided you with incite full information. For more information on other related aspects, feel free to check out our website as well.
