How the startup space has evolved since Souq.com
The romanticism of entrepreneurship, start-ups and the evolving culture of being your own boss is seeing more and more businesses setting up in the region. 69% of employees in the UAE want to have their own business, according to a recent study by Bayt. With so many start-ups being founded and receiving attention from the ecosystem, there are major initiatives been undertaken across fundraising, hiring, customer acquisition, and more to ensure that the space is constantly growing.
Following are the milestones that are a reflection of the speed at which things are evolving in this space:
1. Setting up processes: The UAE has one of the largest number of free trade zones in the world, which makes opening a business much easier.In 2019, the UAE announced economic activities on the mainland that allow 100 %foreign ownership. It also launched the Virtual Company Licence with which non-residents can partake in the economy and run a business without needing residency. Citizens of 101 countries can apply for this licence. Banking has been recognised as one of the challenges in setting up. This has also been answered by Mashreq and Emirates NBD who have launched digital banks for businessesIn addition, the governments have been attracting international accelerator programmes that support start-ups and invest in them as well. Abu Dhabi has launched multiple initiatives to attract and support start-ups in the country’s capital. It launched the AED 535 million fund, to invest in tech start-ups and venture capitalists at Hub71. Through a government matching scheme, the fund has started co-investing with VCs since April, 2019. The fund is also going towards providing subsidies for licences, insurance and office spaces as well as accommodation.
2. Start-up funding and investor ecosystem: The UAE’s financial bodies launched the new fund passporting facility that allows investors more freedom to invest in the country. Moreover, the Virtual Company Licence will also allow international investors to partake in the growing economy. There are new funds that have been set up for start-ups. Funding activities have been growing year-on-year, with many investors interested in the startup ecosystem, especially family businesses.
3. Finding the right start-up talent: Hiring is a challenge faced by most investors, especially in sales and computer engineering.. In 2017, H.H. Sheikh Mohammed bin Rashed Al Maktoum launched the 1 Million Arab Coders Programme initiative that offers free educational programmes for individuals interested in developing their digital skills. They have also partnered with Coded, who is helping youth learn how to code and help businesses find talented individuals.
4. Customer acquisition: With many start-ups being launched with a niche solution that caters to a small segment of the market, competition naturally increases. A white paper by the Dubai Chamber of Commerce highlighted the importance of data, citing it as crucial for entrepreneurs to realistically evaluate the market size and potential before launching their products and services. The paper encouraged companies and governments to share data. In addition, the UAE government has brought about a number of reforms, such as reduction in a number of fees, abolishing other fees, reducting the payment terms so SMEs receive payment in 30 days instead of 90.. Another enhancement is also the government’s initiative for SMEs to receive 5% of government capital projects, worth up to AED 400 million.