UAE’s startup sector gained momentum during the pandemic. According to a report, the region was first to receive funding and deals in 2021 amongst emerging markets, showcasing strong venture capital interest. The government is looking to capitalize on this investor interest and develop the UAE into a global entrepreneurial hub over the next decade. The region is targetingto house more than 20 startups worth $1 BN each by 2031.
The UAE government has already made great strides to improve the business environment- tax incentives, more foreign workers, visa and business reforms to attract global talent, and support from government-backed funding. If you were contemplating setting up a business in Dubai, the time is now.
In order to boost the startup ecosystem further, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, announced the launch of ‘Dubai Next’ in May 2021. It is a first-of-its-kind digital governmental platform by Dubai SME that enables innovators and entrepreneurs to secure the necessary funding to launch their startups through crowdfunding campaigns.
Looking to start a business in Dubai and considering a campaign on Dubai Nextfor the same? Here’s all you need to know.
An alternative approach to financing, crowdfunding, is essentially crowdsourcing the money required for a business venture from a large group of people. Budding entrepreneurs can bring their business ideas to life by seeking monetary contributions directly from the community through the Dubai Next platform.
Dubai Next follows the all-or-nothing crowdfunding model to mitigate risks. This means that funds are released to the business only after it reaches the target fundraising goal. This way, campaigners do not have to complete a project without funds, and supporters are reassured that their money goes towards resilient businesses. Contributors receive a refund if the campaign ends without meeting its target goal.
The eligibility criteria
Any individual above the age of 12 of any nationality residing in Dubai or a company with a business idea can start a campaign on Dubai Next. All business ideas such as arts, education, fashion, travel, finance, and more are welcome to apply for a funding campaign as long as it’s a Sharia compliant business activity based in Dubai.
Campaign owners are registered via UAE PASS, a national digital identity solution. Ideas submitted on Dubai Next undergo viability testing before moving to the funding stage to minimise future risks.
Individuals and companies based in the UAE can contribute to the different campaigns listed on the platform. Recently, a new federal framework was announced which will allow operators from the government and private sectors to back these projects too. Contributors, in turn, are eligible for certain rewards from the campaigner. Campaign owners are supported by Dubai SME in marketing their ideas to target contributors.
An incentives package is provided to projects that obtain financing on Dubai Next. Dubai SME will support them with the launch, business expansion, licensing, and incubation.
The terms and conditions
The currency used for fundraising is United Arab Emirates Dirham (AED). Since the platform is a non-profit, there are no registration fees attached. However, a 5% service fee is levied from successfully funded projects. Most importantly, unlike other modes of funding, campaigners get to keep 100% ownership of their projects. Contributors are not entitled to equity, ownership, or profit.
The success so far
Within a month of its launch, the platform successfully funded one enterprise. Since then, a totalof 1,570 campaigns have been registered, 62 campaigns are approved and running, 8 startups are fully funded and 398 contributors have participated. If the prospects of Dubai Next excite you and you are looking to commence a business setup in Dubai, FlyingColour can help you. With over 10,000 clients globally and 17+ years of experience in company formation in Dubai, we are equipped to guide you throughout setup- right from the business and legal consultancy, accounting, VAT, and immigration services to liaising with the UAE government.