Dubai Chamber has released a whitepaper outlining the key funding challenges faced by startups in the country. Published in collaboration with Roland Berger, an international management consultancy, the whitepaper calls for cooperation between the government, universities and investment funds to “expand the scope of investments” in order to “support the growth of startups in the UAE.”
The paper was based on the information, feedback and insights from startups, banks, VCs, angel investors, accelerators, incubators as well as government agencies. It illustrates that the funding ecosystem for startups is complex with high hurdle rates in the path to qualifying for capital on the equity side, in addition to the low-risk appetite by investors.
The findings showcase the limited business models, technologies and sectors that are of interest to the investors. While some investors do show interest in other cases, many play by the cautionary “wait and see” approach before committing capital. Startups also face hurdles from banks who typically require an established company track record for three years before startups can qualify for funding.
Solutions put forth in the paper call for more cooperation between various entities, especially incubators to foster the entrepreneurial spirit and support startups, in addition to calling upon the government to “play a leading role in reducing the risks incurred by banks in financing early-stage startups.”
Read more about the whitepaper here.