Dubai Next: What the new crowdfunding initiative means for entrepreneurs
Over the years, the startup space in the UAE has gone through its own evolution. The UAE is one of the countries that have always been at the forefront of fintech, technology, and entrepreneurship. In 2018, the country led the Middle East and North African region in terms of securing startup funding, which amounted to $893 million, according to a report on Statista. While the coronavirus pandemic has had a ripple effect which has been felt in UAE’s entrepreneurial landscape, there are some initiatives being taken to help entrepreneurs and startups find the funding they need for scaling their business, attracting new markets and talent acquisition.
So, it made perfect sense when the Dubai Crown Prince and Chairman of The Executive Council of Dubai, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, made the announcement of a new digital crowdfunding platform called ‘Dubai Next.’
According to reports, this newly launched digital crowdfunding platform aims at providing much-needed support to startups and entrepreneurs who wish to start a business in Dubai. The idea is to stimulate positive competition and encourage youth to obtain community support through crowdfunding for their ideas. Before this amazing initiative, there were only a few ways in which entrepreneurs and startups could secure the funding they needed in the region.
First Steps to Securing Funding in This Region
Funding can be a great way to get the finances that startups need during the initial stages, but finding those funds can be easier said than done. With many entrepreneurs unsure of how to approach investors or use crowdfunding platforms and the amount of competition that’s around in the UAE’s entrepreneurial landscape, securing funds can be a tough nut to crack.
Fortunately, there are ways in which entrepreneurs and startups in the UAE can secure funds via crowdfunding platforms, angel investors, and venture capitalists. But for now, let’s stick with how you can secure funds from one of the most attractive methods of raising funds - crowdfunding platforms.
To get started, entrepreneurs and startups will have to mention their product specifications, business goals, and profit plans, along with the amount of funding they need. The more transparent you are in your presentation, the better your chances will be of hitting the mark with your crowdfunding goals. Other factors that entrepreneurs and startups need to consider before securing funds include having a clear and concise business strategy, market entry strategy, product alignment, and ensuring regulatory compliances in the UAE.
Crowdfunding platforms allow entrepreneurs or startups to either offer investors an option to donate directly towards their startup or make a pledge to pre-buy products before they hit the market.
Advantages of Crowdfunding for Entrepreneurs
Dubai offers a vibrant economy and access to investors and a global market. The following are some of the other advantages of crowdfunding your startup in Dubai:
Robust Regulatory System: We’ve touched on the need for entrepreneurs and startups to ensure that their initiative complies with the regulatory system in the UAE. Dubai’s DIFC has laid down the rules and regulations of CFPs when it comes to licensing, organization, and the protection of rights and obligations of all interested parties. This regulatory mechanism offers protection for investment avenues across the board, which means that entrepreneurs and startups can choose from an assortment of avenues to suit their need for securing capital.
Encourages Competition: Another benefit of crowdfunding for entrepreneurs and startups is that it encourages competition. With many startups looking to use crowdfunding platforms to attract investors, there is an increasing need to offer the best products or services possible. In this way, crowdfunding platforms help expand participation in the market by breaking down traditional institutional barriers and by encouraging the active participation of entrepreneurs from all niches.
Enhanced Social Engagement: Needless to say, a crowdfunding campaign done right can significantly increase social engagement, which is exactly what entrepreneurs and startups can use to create momentum during the initial stages of their business. It also shows investors and the market that the venture has sufficient market validation from the get-go. Apart from that, enhanced social engagement allows a business venture to receive input from a wider audience, including other players in the market, that can help the business grow and expand.
Hanane Benkhallouk is an award-winning entrepreneur and senior consultant, with a broad scope of expertise and exposure to international markets, from the Americas, Africa, the Middle East and Asia. She is the Founder and Executive Director of Sustain Leadership, a consultancy specialized in strategic leadership, Innovation management, transformation.