How to Get Funding For your Innovative Start-up Company in UAE?
Dubai is a growing trade hub of the world and a perfect destination for start-ups to thrive. It offers the perfect business ecosystem infrastructural and financial support to the growing start-ups and entrepreneurs.
Funding is one of the key challenges for a start-up company in UAE. The start-up will require capital to set up their workstation, create prototypes, conduct research, invest in marketing, apply for patents, and more.
Venture Capitalists and Business Incubators will help start-ups to sail across their initial stages until it reaches a sustainable stage where they generate ample revenue to sustain the business operations.
What are the Options for Startups to Receive Funding?
There are multiple options for the start-ups to thrive by achieving funding in the competitive marketplace. Following are a few ways to obtain funding for the start-up.
1. Business Incubators
Business Incubators are vital for start-ups as they can support significantly in the early growth stages of the company.
Also, the Business Incubators provide the right platform for the start-ups to test their products, launch prototypes, conduct staff training, and more.
They offer the perfect setting for small and medium businesses, start-ups, and freelancers. They offer early funding, working spaces, training programs and workshops, and more.
Dubai is home to several Business Incubators such as the Fazaa Centre (Emirati Entrepreneurs), Area 2071 by Dubai Development Authority (DDA), DMCC – Astrolabs, DTEC- Dubai Silicon Oasis, etc.
2. Venture Capitalist
Start-ups approach a Venture Capitalist or an institutional investor that will provide the funds on behalf of their clients. The investment amount will vary based on the business sector and stage of the company (early, growth, matured) and other business factors.
The amount invested is higher when it comes to VCs. They will conduct due diligence of the company and the entrepreneur before committing. They follow a strict onboarding process and the support is for the long term and huge amounts are dispersed as funds.
3. Crowd Funding
Crowdfunding is a way of raising money to finance projects and businesses. It enables the start-up founders to collect money from other investors via the online platform.
It helps to build a community around the product or service offering. Also, gain market insights and access new customers.
They are mostly fundraising campaigns for a social cause or for developing a product or service. Generally, the investors have to pool in a small amount to meet the overall target.
In return, the investors will be receiving the product for testing, or use depending on the terms stated by the company requiring funds.
4. Angel Investors
Angel Investors are high-net-worth individuals who will support start-ups to grow. They will provide the required funding as well as business advisory and mentorship services for the investors. Their vast industry experience will come in handy to easily scale up the start-up.
Few niche communities and groups offer Angel Investor service and support for start-ups. Referrals are the best ways to locate an Angel Investor that will suit your business requirements. They can be also located through entrepreneur events or trade shows.
Dubai Angel Investors
The Dubai Angel Investors (DAI) is a fully capitalized investment company where start-ups and entrepreneurs can meet and pitch to their angel investors and get mentoring and financial support for the projects.
5. Local Banks and Loans
Start-up owners who wish to raise capital for their business can approach the local banks or other non-Banking financial institutions for an interest-based loan.
The Bank would require the business plan, collaterals (if any), and various other documentation (reference, financial statements, business plan, etc.).
6. Friends and Family
Raising money from friends and relatives, and also using savings from personal funds helps the owner to stay afloat and away from any debts or interest payables.
Funding the business by self helps to retain complete control of the stakes and keep the financial burden of debt away. Raising money on its own is not an easy task also the business operations might have an effect in case of a shortage of funds.
Organized Funding Opportunities Available in UAE
To support the entrepreneurial goals and assist in investors’ financial requirements, there are a few business incubators set up by the Government in UAE.
Here are a few of the popular start-up incubators in the UAE that support the growth of start-ups in the region.
1. Mohammed Bin Rashid Fund for SME
The Mohammed Bin Rashid Fund is the financial arm of Dubai SME. It helps to finance pilot projects, small and medium enterprises, and start-ups in UAE.
To receive the funding, the project idea must be unique and the company must be registered in UAE. The long-term business development plan and feasibility to qualify the project for the funding requirements.
2. Dubai Future Accelerators & Area 2071
It is an initiative by Dubai Future Foundation for promoting start-up growth in the region. It also facilities the collaboration between government entities and private sectors to provide the perfect platform for entrepreneurs to start their business ventures easily.
The Area 2071 is a business ecosystem that enables global talents to grow their business in UAE. They will get access to networking, partners, other entrepreneur community, and more.
The registered business owners will have a 3-year business license for operation within Area 2071 and Dubai Development Authority (DDA).
3. Nasdaq Dubai Growth Market
The Nasdaq Dubai Growth Market helps small and medium companies to achieve the next level of expansion through Initial Public Offering (IPO).
It will help companies that are on a positive growth path to achieve a streamlined and cost-effective listing on the international exchange from UAE.
Hence, in a nutshell, funding requirements for a start-up company are a vital aspect for every start-up owner. The existence of the start-up depends on capital and operational investments.
To know more about the Business Funding Requirements and Business Incubator Support Services, connect with our expert business team right away!