Are you someone that has a billion-dollar, or should I say a billion-dirham idea?
If yes, then you might be wondering about some options when it comes to raising funds for your idea. New businesses or start-ups might require funds at different levels of their growth.
For some, the requirements are purely seeding capital which can help them get up and running. For others, it might be several years down in their journey.
In the past few years, the Middle-Eastern country of UAE has been at the forefront of heralding a change. The nation has moved or shifted its reliance from oil and gas reserves and has moved to become a major economic and financial hub.
In this article, we speak to leading business legal experts at BSA Ahmad Bin Hezeem & Associates LLP. We ask them how start-ups and other businesses can raise funding in UAE’s principal Emirate, Dubai. Before we get to the list of ways, let us first try to assess the entrepreneurial ecosystem that exists in UAE in general and Dubai in particular.
How Favourable is UAE’s Entrepreneurial Environment?
The good news for business owners and entrepreneurs is that as a nation, UAE is pro-business! This means that it encourages and helps new businesses, especially in up-and-coming niches like tech, green energy, cybersecurity, and data management.
In recent years, the government has gone out of its way to ensure that investors, new businesses, and entrepreneurs are drawn to this part of the world. They have been able to create this favorable ecosystem thanks to the following-
- A host of funding options is provided by both public as well as private players in different industry niches and segments.
- Ease accessibility of finances that are devoid of bureaucratic hurdles and red-tape. This makes quick injection of cash possible.
- The paperwork is done pretty fast and is not at all time-consuming in any way. You can get the business up and running in no time.
Some of the world’s leading professionals are moving to the UAE and contributing to its ex-pat population. The free tax regime also acts as a major source of attraction for entrepreneurs.
List of 5 Proven Ways to Raise Funds for your Business in Dubai
1. Khalifa Fund for Businesses-
In 2007, the Ruler of UAE and Abu Dhabi set up the Khalifa Fund for Business Enterprises. The fund is used to provide financial assistance to SMEs, MSMEs, and Start-Ups. The focus of the fund is to help businesses that are contributing to making changes and leading innovation. There are two types of programs- Funding Projects and Outreach Programs.
2. Angel Investors-
There is no dearth of HNIs in Dubai. An Angel Investor is a rich high net worth individual that helps a new business idea come to fruition. Angel Investors pick up a considerable stake or equity in the new business and in return offer seed capital. This is a quick, simple, and easy process and requires entrepreneurs to convince in most cases, a wealthy Dubai resident to invest.
3. Financial Loans from Banks-
Many start-up entrepreneurs do not like to entertain the idea of giving up equity in their company in exchange for money. They try to retain complete ownership and opt for simple financial loans from banks. They pay a low-interest rate, make monthly payments, and enjoy complete control. Thankfully, nearly all major banks in the UAE offer business loans.
4. Venture Capitalist Firms-
Raising money from VCs is emerging as one of the hottest trends in the Dubai start-up ecosystem. VCs carry the money of wealthy investors and operate as semi-business consultancy. They are willing to take major risks, only if the gains are out-of-this-world. This helps entrepreneurs with an unlimited war chest, as well as legal and business expertise.
5. Dubai Small and Medium Enterprises Fund-
The Dubai SME continues to be one of the most sought-after funding sources for small businesses in the region. The major attraction behind this is the fact that it is run and operated by the Department of Economic Development of the UAE. The interest rates are marginal and getting state financial funding means that the terms and conditions for the same are relaxed.
The Final Takeaway
Start-ups and entrepreneurs should ensure that they are moving ahead with the funding only after evaluating and assessing the merits mentioned in the terms and conditions of the agreement. You need to be in compliance with the local business laws of the region. By working with experienced business lawyers, you can ensure that your start-up does not run into any problems.
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