Every startup owner dreams of launching their business in a city full of opportunities and growth potential so that it turns into a unicorn. As the world’s leading business hub, Dubai offers a unique combination of top-tier infrastructure, attractive tax and legal frameworks, modern lifestyle opportunities, and access to a large number of multinational corporations. So why a startup in Dubai, you may ask?
As part of the United Arab Emirates (UAE), the Emirate of Dubai is a perfect place for launching a startup. With its rapidly growing economy and population, it offers entrepreneurs the chance to benefit from the city’s many advantages. If you are looking to start a business in the Middle East and are wondering what it takes to launch a startup in Dubai, this article will provide you with all the information you need.
What is a Startup?
A startup is a company that seeks to solve an existing problem or provide a new solution through innovative means. Entrepreneurs typically identify a market gap and then develop a business model. Startups are often characterised by their unique ability to launch quickly, scale quickly, and pivot as needed to remain competitive in the marketplace.
What Are The Characteristics of a Startup Dubai?
Would you call every new business a startup? Not necessarily. A startup has some unique characteristics. Let’s get familiar with them, as it will help you understand the Dubai startup community and ecosystem better.
- Solving a problem: A startup should solve an existing problem or fill a market gap. For instance, if you feel a need for a delivery service that caters to the elderly, you can create an app or platform that connects them with drivers or delivery persons.
- Innovation: Startups typically should offer something unique and different from other existing products on the market. For example, a startup might use AI or artificial intelligence for marketing automation or develop new software for cloud storage solutions.
- Quick launch: Unlike traditional businesses, startups often launch quickly due to their agile nature and ability to pivot as needed to stay competitive in the marketplace.
- Scalability: Part of what makes startups so attractive is their potential for rapid growth. Startups should have a scalable business model that can be adapted quickly to meet changing customer needs or to take advantage of new opportunities.
Now that we have a basic understanding of a startup, let’s take a closer look at why launching one in Dubai is an attractive option.
Why Launch a Startup in Dubai?
The Department of Economic Development Dubai (DED) has been actively promoting the startup culture in Dubai over the past few years. The government has created a friendly entrepreneurial environment for startups, providing them with financial and legal support. This includes tax incentives, visa programmes, and access to funding through venture capital firms.
DED’s continuous efforts have paid off, and the UAE now ranks 16th in the Ease of Doing Business Index. Let’s now run through some main reasons why launching a startup in Dubai is such an attractive proposition.
Source: Invest in Dubai
Abundant Government Support
DED has established a separate wing, Dubai SME, to support the startups. It provides advice and guidance on setting up a business, funding options, tax incentives, visa programmes, etc. Additionally, many government programs are in place to provide financial assistance for startups, such as:
- Scale2Dubai: The program aims to support businesses operating in Dubai and now looking to scale. Scale2Dubai opens up new funding opportunities to the selected applicants.
- Hamdan Innovation Incubator (HI2): HI2 provides innovative entrepreneurs with a unique platform to launch their businesses. It provides mentorship, seed funding, access to resources and networks, and legal advice. HI2 even allows you to test-launch your innovation product in Dubai while you stay outside the UAE. The project has supported over 600 startups so far.
- Dubai Entrepreneurship Academy: As Dubai SME’s educational wing, the Academy provides comprehensive training and guidance to entrepreneurs to help them scale their businesses.
Business Incubators and Accelerators
There are many business accelerators and incubators in Dubai that provide entrepreneurs with the support they need to launch their startups, including coworking space, professional networking, and necessary grooming. The most prominent ones, certified by the Dubai SME, include:
- Re-Urban Studio: A coworking space in Dubai specifically designed for businesses in the creative arts industry.
- The Co-Dubai: A network of several coworking spaces located across Dubai.
- ASTROLABS: Helps tech startups in Dubai with capacity building and relevant support.
- The Higher College of Technology-Dubai Men’s Campus: A government-funded higher education institute.
- Bedayat: A prominent business incubator in Dubai that helps build sustainable businesses.
- British Centers for Business: A dedicated centre to help UK businesses expand operations in Dubai.
- TALG Incubator: A privately owned business accelerator that supports startups in the retail and consumer goods industries.
One of the most compelling reasons to start your business in Dubai is the attractive tax regime. The newly introduced UAE corporate tax regime has set the corporate income tax rate at 0% for businesses with a net profit of AED 375,000, which makes it a tax-friendly environment for startups. Additionally, there is no personal income tax in the UAE.
Free Zones and Supporting Infrastructures
Dubai is home to over 50 economic free zones, offering companies a range of benefits such as 100% foreign ownership (without the need for a local partner), freehold property rights, and access to world-class infrastructure. Companies in these free zones can also benefit from tailor-made services and facilities designed to help startups achieve their business goals.
Moreover, the new corporate tax regime has kept all free zones in the UAE exempt from corporate tax. This has further boosted the appeal of these free zones and made it easier for startups to start their free zones businesses in Dubai.
Various Visa Options
The UAE offers one of the most versatile visa programmes in the world, making it easier for entrepreneurs to launch a business. Depending on the business you are planning to launch, you can benefit from different visa options, such as the UAE Business Visa, the Golden Visa, the Investor Visa or Green Visa.
The UAE boasts one of the most diversified economies in the world. Especially for several years, the government has been aiming to reduce its dependency on oil revenue and focus on non-oil sectors such as tourism, hospitality, real estate, and finance. This means that a wide range of business opportunities are available to entrepreneurs in the region.
Large Number of Expatriates
According to the latest census, only about eight percent of the UAE population is Emirati, while the remaining 92% consists of expatriates from different parts of the world. This creates an incredibly diverse environment with a large number of potential customers and partners for businesses across industries. Also, you will find it incredibly easy to source diversified talents for your startup.
What Are The Leading Startup Industries in Dubai?
Dubai is a leading hub for startups, with entrepreneurs from all backgrounds and industries finding success in the city. Dubai’s most famous startup industries include technology, retail, hospitality, healthcare, FinTech (financial technology), e-commerce and logistics.
Invest in Dubai, the local government’s official startup support channel has identified several promising industries for startups in Dubai where you will find easy access to funding and governmental support:
- Technology: Dubai is home to some of the world’s leading high-tech companies, such as Microsoft and IBM. With its robust infrastructure, favourable regulations and a large pool of highly educated talent, startups in this sector have an excellent potential for success.
- Electronics: This industry has recently seen an influx of foreign investment. Startups in this sector can benefit from the city’s excellent infrastructure and access to global markets.
- Finance: As one of the most important financial hubs in the Middle East, Dubai offers numerous opportunities for startups looking to break into this sector. From banking solutions to asset management services, startups have access to many potential customers and a large pool of capital and investors.
- Cleantech: The UAE has set an ambitious goal of reducing carbon emissions by 30% by 2030. Startups in this sector can benefit from government incentives and access to a large market of businesses and consumers.
- Agriculture: The UAE’s arid climate makes it difficult for traditional farming practices to be successful. However, startups are finding innovative ways to make agricultural production more efficient using modern technology such as hydroponics and vertical farming.
- Retail and eCommerce: With its rapidly growing population, the UAE offers an attractive market for startups looking to break into the retail and eCommerce sector. Startups in this industry can benefit from easy access to customers and several government initiatives such as the Dubai Economy Accelerator program.
What Are The Examples of Successful Startups in Dubai?
Dubai is home to many successful startups, such as Careem, Souqalmal.com and Dubizzle. These businesses have leveraged the city’s advantages to become leaders in their respective markets. Let’s get familiar with a few highly promising startups in Dubai.
Founded in 2017, Keepface aims to make it easy for global businesses to get in touch with social media influencers and utilise their services for brand advertising in a marketplace-like setting. In 2019, they raised funding of $450,000 from a single investor.
At present, Keepface has a network of over half a million influencers with a potential outreach of 1.4 billion.
There’s a rising demand in the Middle East among students and professionals to learn English as a second language. Englease capitalised on it by providing a flexible classroom-like experience through an intuitive online learning platform. Students and instructors can easily interact on the platform.
Englease is now affiliated with several UK-based education providers for providing certificates to trainees. Englease received funding of $3.4 million for the development and branding of its platform.
Founded in 2019, they offer various healthy and delicious snacks for children through their online shopping platform and a strong physical distribution channel. Their product line includes crackers, cookies, brownies, muffins, crisps, peanut balls, and more!
Koala Picks participated in a startup funding round in September 2021 and successfully raised over $400,000, according to Crunchbase.
Opontia started its journey in Dubai’s startup landscape in 2021 as an eCommerce solution provider to small business owners. They offer one-stop solutions and loan facilities related to product sourcing, delivery, eCommerce website building, and more.
As more and more businesses were moving to eCommerce operations after the pandemic, Opontia seized the opportunity to raise $62 million of funding from 14 investors within a few months after commencing the process.
How to Launch A Startup in Dubai?
Launching a startup in Dubai is not complicated if you can carefully follow every step to start a business in Dubai and have the proper guidance. Here’s a quick guide on launching a startup in Dubai:
- Choose business structure: The first step is to choose the appropriate business structure for your startup. Your options include sole proprietorship, limited liability company, free zone entity or an offshore company.
- Obtain initial approval and trade name: You can obtain your initial approval and trade name from DED through their online portal or by visiting one of the physical service centres. The process usually takes less than ten minutes if you have the correct documents.
- Rent a space and apply for a commercial licence: You can use your initial approval document to rent an office space in Dubai. Once you have the office ready, you can apply for a commercial licence from DED by submitting your tenancy agreement.
- Set up your business: You can have your commercial licence ready instantly for several business types where you do not need any additional permissions from external authorities.
Some other activities related to establishing your Dubai startup include:
- Obtaining valid residence visas for yourself and your dependents
- Opening a corporate bank account
- Setting up a virtual office if required
- Completing VAT registration with the Federal Tax Authority.
Fortunately, Virtuzone has all the resources and expertise you need to help you establish your Dubai startup quickly. Due to its exceptional range of services, Virtuzone won the best startup support services award in the MEA Finance Awards 2022.
Wrap-Up: Launching a Startup in Dubai
Dubai is a thriving business hub that offers entrepreneurs the opportunity to benefit from its many advantages and achieve their startup dreams. With the right guidance and resources, launching a startup in Dubai can be an easy process.
The economy is booming, and you will have all the right resources and support to help you succeed. Whether it’s tax breaks, access to investors or opportunities in various industries, Dubai is a great place for startups.
What are you waiting for? Reach out to Virtuzone today for guidance and a full range of support services.