In this guide, we’ll show you everything you need to know to get started finding investment for your business in the UAE. This will be a quick reference you can use to find different sources of capital, what to show the people you speak to, and where to find support and programmes that will help your business succeed.
So let’s not waste any time, and get straight into it!
The importance of networking
Before we go any further we wanted to highlight the most important part of raising capital – no matter where you are or what your business does. Networking is a currency all of its own and the stronger and wider a network you build the better your chances of success are in almost any field.
Being connected with smart people, particularly with knowledge and skills that you don’t have, is such a powerful thing for you and your business. There’s no excuse not to network these days, as it’s made so much easier with the instant connections provided by platforms like LinkedIn. When you network, you’re making an investment in your future.
Get your info in order
No matter what type of investment you’re looking for, there are going to be common requirements for everyone you speak with. Investment applications will always require information on the nature of your business, who is involved, and what capital you require – all the basics. Having all of this information ready, and in a single document, will make any applications you make far less time-consuming and error-free.
First, you need to compile a complete business strategy that holds all the detailed information on your business. Leading on from your complete business information, you need to put together an executive summary and a pitch deck. These two things will go together and form part of how you market to investors or how you approach lenders. It needs to include the key headlines about your product or service, as well as financial information on your business today, and the predictions for its future success.
Remember, don’t just have figures in a vacuum – show your reasoning, because investors are going to press you on your research.
Here’s a snapshot of some of the most popular ways people bring investment into their business:
Let’s start with a way of raising capital that is often overlooked – taking out a loan. The reason this often gets ignored is that there are big hurdles that SMEs have to vault in order to prove to banks that they are a legitimate business and that they are going to be able to pay back what they borrow. This is always difficult in the early stages of a business because there is little financial information outside of forecasts. That being said, banks often compete with one another to offer the lowest interest rate to entice new customers. You might be able to use this to your advantage if the other options on our list don’t look viable.
Crowdfunding has taken off in popularity in the last five years and right now is a great way to raise capital if you aren’t looking for a massive investment. There are many online platforms available, such as Kickstarter, that offer individuals and businesses a space where they can show off their ideas and get financially backed by any groups of, often anonymous, contributors.
If your product or service has a small serviceable niche then crowdfunding offers a unique space where groups of people who are passionate about certain projects can support the ideas they want to see develop further.
Venture capital (VC) is built around businesses that invest in other businesses. This is the method of fundraising that revolves around your company receiving capital for an agreed level of equity that the VC company then holds. Because of the restrictions within the UAE on private equity, most VCs are based offshore so you may need to look further afield than your local network.
Depending on the type of agreement that you have, further down the line you can either buy that equity share back or the VC company will look to sell it on their own terms. VC is built around speculation and very often it focuses more on the financials of a business rather than how good its products or services might be.
Last on our list is Angel investors. These guys are typically individuals behaving as solo venture capitalists. They’re likely to start by focusing on your relationship with them rather than the cold hard facts and this lower level of formality can help to put new businesses at ease when they’re under pressure to raise capital.
There are a number of Angel investment networks, such as Emirates Angels, that you can also tap into so that you can make the right connections with investors who are more likely to have an interest in what you’re building.
Support from the UAE
The UAE is a global hub for startup enterprises and because of this, there are a number of government funds as well as guidance and support available for entrepreneurs. We’ll touch on them briefly here and if you want to find out more about them all the links are provided for you.
The Mohammed Bin Rashid Fund For SME
The goal of the Mohammed Bin Rashid Fund For SME is to help Emirati investors finance innovative pilot projects for small and medium-sized businesses. This is done by putting in a lot of time and effort to study the projects presented to the fund and then working with them to find the best ways for you to start and also grow your business.
It isn’t just money that the Mohammed Bin Rashid Fund For SME fund provides but also advice, direction and guidance for the most promising UAE startups. In their own words, ‘Our goal is not just to provide funds, but to prepare a generation of entrepreneurs’.
Dubai Future Accelerators & Area 2071
AREA 2071 is a centre for innovation inspired by The UAE Centennial Plan 2071 and brings together talented people, government support, as well as the private sector, to work together on designing and testing new solutions for the future. It also focuses on building strategic partnerships, remembering what we said about networking, and gives its community opportunities to grow by looking toward the future of its business and the wider industry.
The Khalifa Fund was set up in June 2007 as an independent, non-profit agency of the Government of Abu Dhabi to help develop SMEs. The goal of creating the fund was to help develop local businesses in Abu Dhabi by making UAE citizens more interested in investing in them. The fund now helps to support and grow small to medium-sized investments in the wider emirate. The Khalifa Fund began with a capital of AED 300 million, which has grown over time to AED 2 billion and now covers the whole UAE.
Where do you start?
There is of course a great deal more involved in raising capital than what is in this guide. Certainly, a lot of hard work goes into creating some of the things we have touched on but you need to get the basics sorted, all of your business information ready, and at the same time start connecting with people.
Right now is the best time to start and if you do you’ll be joining a large group of other great people and businesses. In fact, SMEs represent more than 94% of all companies in the UAE so it’s clearly a good place to build your business.
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