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Dubai incubates arena for start-ups [National, The (United Arab Emirates)](National, The (United Arab Emirates) Via Acquire Media NewsEdge) From seed money to advice on how to get a business off the ground, Dubai is fostering an environment for start-ups to prosper. With various 'free zones' working behind the scenes, the competition is fierce to attract future multimillion-dollar companies, Hareth Al Bustani reports After seven years in marketing, Maya Itani was disillusioned with life in the corporate world. In her mind was a fresh start with a business idea she was sure would succeed – a web portal to book classes for such varied pastimes as learning belly dancing and making a Japanese kimono, among many others. But how was she to make this happen? The 28-year-old Lebanese found her answer at Afkar.me, a business incubator for budding start-ups. While excessive red tape can hinder Dubai start-ups, the emirate is increasingly attracting entrepreneurs from the world over, won over by the support of the public and private sectors. In its most recent report, Dubai SME, the government organisation that supports small and medium enterprises, found that 95 per cent of local businesses fell into this category, employing four out every of 10 workers. The support Ms Itani received from Afkar to set up her booking website, The Curve, produced results in only a few weeks. "Already our business has gone from a start-up that launched a year ago with an idea and a small team, to having a long-term strategy and approach to the way we're doing business," she says. "Now, we're setting milestones for years into the future, looking at a much larger scale for the business and having the help of experts in the industry." Based in Dubai Studio City, Afkar provides entrepreneurs with US$20,000 (Dh73,500) for product development. In return, it takes a share in a company's profits rather than an equity share, a deal it says allows companies to keep the profits from any future lines they develop. Jose de la Torre, vice president of digital at Intigral, the company that created Afkar. "There are a lot of incubators, especially in the Middle East, that say 'We give you money'. But this money is really discount coupons." The Curve began as an idea Ms Itani had with her husband. "I started to feel like after moving here, and being here for years and years, I was focused purely on my own career development rather than my personal development," she says. "Maybe if I was living in my own home country I would still maintain the same hobbies that I had, like volleyball and horseback riding." The Curve's website allows visitors to book educational courses across the UAE, working with third-party companies."We developed an aggregator, through which you can find a class that suits you based on timing, location and company," Ms Itani says. "Then you can actually book and pay for it online." "My favourite moment is when you tell someone that you can do something like capoeira, which is a Brazilian martial art, and their eyes light up." Such stories demonstrate the speed of which Dubai is growing as an entrepreneurial market, says John Martin St Valery, a founding partner with another incubator, Links Group. "Over the years, and this is typical of a fast-growing market for new start-ups, we have seen a lot of companies that have performed well, that then have senior staff or mixed senior staff move on and compete in the same sector and set up their own business," he says. "That's particularly in the service sector, where individuals will need to move away from a corporate umbrella, with all the protections they had as an employee, to take the plunge and compete with the company they worked originally." But establishing a business means added responsibility, he notes. "It's not just the cost of running your business for the first year or so, it's the cost of supporting yourself personally as well. That needs to be built into the business plan." Such risk levels, in part because of a lack of protection in bankruptcy laws, and the cost and administrative hurdles of starting a business in UAE, can make starting a business seem an unattractive proposition. This is why incubators are increasingly providing entrepreneurs with safety nets, guidance and financial support. They provide training, analyse strengths and weaknesses, provide logistics such as office space and visas, introduce entrepreneurs to partners with expertise, and give access to a revenue pipeline. Majed Al Suwaidi, Dubai Internet City managing director, says free zones such as his play a huge role in start-ups. "Our responsibility as a free zone is to attract, to nurture and to build networks of companies, especially within the ICT [information and communication technology] industry," Mr Al Suwaidi says. "Part of our bigger role in the UAE economy is to develop a bigger knowledge-based economy, so we are responsible for attracting talented people from around the world to set up companies, or join companies in Dubai Internet City." The UAE is particularly lucrative, Mr Al Suwaidi says, because of its rules and regulations, "geared towards creating opportunities for entrepreneurs and companies seeking to expand into the Middle East". Dubai's free zones, he notes, provide entrepreneurs the infrastructure and transparency needed to operate. Internet City embodies a "one-stop" approach cultivated a dozen years ago by the emirate's free zone authorities, including DIFC, Media City and Tecom. To make things easier yet, in May Internet City created in5, a hub for entrepreneurs, investors and entrants. The free zone organises work permits, visas and licences at subsidised rates, as well as subsidised office space, incubation services and more. "This is just to help people start businesses, take big risks with these businesses and, hopefully, grow into the next multimillion-dollar company. It's a good opportunity. You get people that started businesses and for whatever reason were unlucky and closed down. Today, they get a second chance to find different partners, to get ideas they can work on and maybe restart, hopefully building a much more lucrative business," says Mr Al Suwaidi. He notes entering a country as an expatriate investor, entrepreneur or new entrant is "always difficult". The free zone, he says, aims to become a "go-to place for entrepreneurs", particularly as a source of information. Mr St Valery points out that despite being more costly initially, start-ups often do better in "onshore" locations rather than free zones. "The key thing we ask any company coming to us about licensing is 'where is the audience for your product or service?' If the audience is just a business in the free zone, or regional or international locations, then the free zone is clearly the right option." As far as the law is concerned, he says, if you are based in a free zone you have to operate within that free zone, or outside the jurisdiction of the UAE. "But knowledge-based or service businesses are being lured for good commercial reasons, pricing, etc, to other emirates' free zones, but then in effect come and work in Dubai. In certain sectors, like legal consulting or recruitment activity, that is being clamped down on. "From a Links perspective, there needs to be more clarity and the economic department just recently entered into an agreement with the Tecom Free Zones to say that they do have the ability to branch onshore with their activities." Part of the Links Group's service is to advise new entrants on some of the key risks entrepreneurs face. "Although it's not as exciting for entrepreneurs when they're setting up a business, keeping an eye on the exit strategy is probably the best piece of advice we give. "If you're a foreign company coming in with a local individual who happens to hold the right license for you, what happens if that individual were to die?" Another clear measure of the Dubai business climate is to look at how companies like the Links Group and Intigral have fared. "We are into our 12th year now. We've experienced double-digit growth from a revenue and profit perspective over the last 11 years," says Mr St Valery. During the 2009 global economic downturn, the number of business licenses issued in Dubai fell from 15,203 to 11,743 but rose to 16,688 by 2012. Mr St Valery says his company thrived, even in the downturn. "In fact, 2009 and 2010 were probably our highest growth years." [email protected] (c) 2014 s Abu Dhabi Media Company, All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |