How to Raise Capital for Your New Business Venture in the UAE

Finding Funding for Your Plans for Company Formation in UAE

So, you’ve got a vision for launching a new UAE business. That’s great! Getting a business set up in Dubai is an exciting prospect, but that can be hard to pull off without having all the needed funds in hand to turn your dream into a reality.

But first things first – choosing to start a business in Dubai is indeed a wise decision. More and more foreign investors are flocking to Dubai by the day, due in no small part to the fact that Dubai is so business-friendly and tax-friendly when it comes to foreign business ownership. But even so, you really won’t be able to move forward with your vision until you secure the necessary funding for your initial business launch.

So how can you attract investors, and what are some good tips to follow when it comes to securing funding for your business venture? Keep reading because the team at MSZ Consultancy has some good insights to share!

The Rise and Demand for Funding of Business Setup in Dubai

Thankfully, you’re not the first – or the last – to pursue venture capital funding in the UAE. In fact, the volume and average amount of business venture funding for startups in Dubai have really been on the rise in recent years. In the past, many investors have had to rely on obtaining funding from traditional sources like banks or other money lending institutions. But with the trending success of business startups in the UAE, more and more individual business investors and incubator groups have come on board to help entrepreneurs seeking to launch in Dubai and the other Emirates.

As a result, the region has experienced massive growth in crowdfunding, private equity, and venture capital spaces. And to that end, the UAE government has also announced several initiatives to help foreign-owned businesses get off the ground, including those focused around technology and fintech in particular. And government officials are always happy to support any entrepreneurial efforts that have any ties to local UAE nationals.

What Are Some Proven Ways to Raise Capital for Your Business Expansion in the UAE?

Ready to raise some money for the launch of your new business startup in Dubai? Here are some areas in which other UAE entrepreneurs have found success when it comes to raising needed capital.

1. Build Your Network

Networking is important for business in general, but the importance of networking for the purpose of raising startup capital for your new UAE business venture can’t be overstated. Building connections, reaching out to your existing network, and sharing your business vision can never hurt. Not only can this help you to raise some needed funds, but you’ll likely pick up lots of valuable business leadership insights in the process.

To that end, in-person meetings and touch bases are certainly valuable but don’t underestimate the value of social media, either. LinkedIn can be a particularly effective networking tool, as can other social media platforms. Striking up conversations with like-minded business leaders and professionals is always a good thing and can possibly help you to gain some investors.

2. Crowdfunding

Crowdfunding is another potential source of capital that can be worth considering. Crowdfunding has been used to help meet the special needs of individuals and organizations for many years, and sometimes with great success!

Can you tap into some of the many available crowdfunding platforms to pitch your business idea and see whether you can draw any interest? You absolutely can, and it certainly wouldn’t hurt to try. Who knows? You may be able to attract some like-minded individuals who would be happy to invest in your business venture. Three crowdfunding platforms you’d be wise to consider for your UAE business venture include Eureeca, Beehive, and Zoomaal.

Just make sure not to place all of your eggs in the crowdfunding basket because there are really no guarantees about how much capital you may be able to raise with this method.

3. Business Incubators

Not familiar with business incubators? These organizations actually exist to provide support for startups from inception, financing, to launching, to product positioning, to marketing. Pretty cool!

And since the UAE is a global economic hot spot, you shouldn’t be surprised to learn that there are some business locators based in the UAE itself. Some leading UAE business incubators include the Dubai Technology Entrepreneur Center, FinTech Hive, In5, Astrolabs, Turn8, and Techstars Dubai. It could certainly be worth your while to become familiar with groups like these and to explore what opportunities might exist for a mutually-beneficial partnership.

4. Venture Capital and Angel Investors

Venture capital (or VC) is an approach where businesses proactively choose to invest in other businesses. In this method of fundraising, your startup or your existing company receives capital investments in exchange for an agreed level of equity to be held by the venture capital group. Depending upon the terms of your agreement, you may have the option to buy back that equity or the VC group can opt to sell their shares to other parties.

Just note that VC groups and angel investors tend to look more at the financials of your business than they do at the quality of your products or services. And when it comes to private equity investments in the UAE, you should also be aware that certain local regulations are in place. Because of these restrictions, most VCs that operate in the UAE are based offshore, so you’ll need to bear that in mind when seeking a VC group or angel investor with which to partner. The Dubai Angel Investor Network, Women’s Angel Investor Network, Falcon Network, VentureSouq, Shorooq Partners, and BECO Capital could be some good places to start.

5. Secure a Loan

While many startup business owners tend to be more hesitant about obtaining a large startup loan from a bank or financial institution, this still could be an option worth pursuing. If you have confidence in your business plan and believe you could demonstrate that your business setup would be a sound investment for a bank, then a loan could make good sense.

In addition, business-friendly banks are also willing to compete with one another in offering the most attractive interest rates to businesses which pique their interest. This is certainly something you may be able to use to your advantage!

Some Fundraising Mistakes to Avoid

Many startups who are looking for financing may not meet the basic threshold for VC or angel investment. In order to attract as much startup capital as possible, your startup must show considerable growth potential.

Here are some mistakes you’ll want to avoid when approaching potential investors.

1. Beginning to fundraise too early

One of the worst mistakes you can make is to begin fundraising efforts for a startup that’s not truly ready to launch. Few are willing to invest in an early-stage company that’s not ready to stand on its own two feet. Make sure you do some honest self-reflection before you move forward with any capital fundraising initiatives.

2. Failing to understand your audience

Many startup owners wrongly assume that their investors will be attracted by the same things as their customers, but that’s usually not the case. In most instances, the only thing an investor is interested in is knowing that your company will flourish and will provide a good return on investment. Anything is trivial and secondary when it comes to making most investment decisions.

3. Making cold pitches for capital

If your sole purpose in networking is just to put out your hand and ask for money – even from people you don’t really know – then you’re likely to burn a lot of bridges in the process. Better to reach out to your current connections first, before making a connection only to follow up with a cold lead pitch. Those types of pitches often tend to fall on deaf ears.

MSZ Consultancy Is Here to Help!

Not sure about the next step to take when it comes to getting your UAE business launched and off the ground? Honestly, the whole process can sometimes feel a bit daunting and confusing. But don’t worry! MSZ Consultancy is here to come alongside and help! We’re based right here in Dubai, and we know all the ins and outs about navigating the UAE business foundation process and getting you set up for success.

Reach out today to book your FREE consultation! You can get the conversation started by shooting us an email at info@mszconsultancy.com, or for a faster response, just give us a call at +971 52 544 1248. There’s no need to wait any longer to turn your UAE business dreams into reality; we’re here to help you to make it happen!