Do you have a million-dollar business idea but haven’t got the actual million dollars to push it through? Is your company facing challenges and you’re looking for financial aid to help make a breakthrough? Are you seeing potential growth in your market in the next few years and you plan to expand your business to meet this need?
Whether you own a startup or an established business, growing your company revenues is always a sensible goal. However, you need money to make money.
If you’re planning to seek funding for your business in the UAE, here are the different types of funding options that you can tap into.
Funding for SMEs
Did you know that the majority of companies in the UAE is composed of small to medium enterprises (SMEs)? However, since startups generally don’t have solid proof of income, it can be hard to get funding from banks and other traditional lenders. If you’re looking to build a startup in one of the UAE’s free zones, you can check local funding programmes in your chosen area for business.
One such programme for startup funding in the UAE is the Khalifa Fund for Enterprise Development (KFED), which targets both microfinance and outreach categories. With the large population of SMEs in the UAE, it’s no wonder that the Khalifa Fund has been set up to foster further social and economic development in the region. This is just one of the many reasons why the country is one of the favoured locations for Fortune 500 companies worldwide, 80% of which have established their presence in the UAE.
Another option for startups to get funding is through the assistance of angel investors, or high-net-worth individuals (or families) who provide investment in exchange for ownership equity or, in other cases, convertible debt.
Having an angel investor backing your startup can give your business the power to grow from the ground up, and you still get controlling percentage, too. Finding a trusted angel investor who will help with your startup funding can be a challenge, though, so make sure to consult with experts first before you forge any form of partnership.
If you prefer the conventional way of funding your startup, getting a bank loan is one of the most reliable options for you. As long as you have the paperwork to prove your ability to pay back the loan, you’re set and ready to go.
With bank loans, you can get instalment plans within a specific range of years. This will depend on your loan amount and your company’s credit history, of course. It’s advisable to get a bank loan from renowned and established institutions for your own security and to get possible lower interest rates. Be sure to consult with your lawyers and accountants about bank loans so they can comb through the fine print for you.
Getting a venture capitalist on board your business is also a proven way to secure funding. Like angel investors, venture capitalists provide the monetary resources to help launch your products and services, often even at the seed funding stage. They will assist with research, mentor you through birth pains and bumps along the road, and help manage your expectations for the next few years.
In exchange for the investment, venture capitalists will get a stake in your company. A venture capitalist firm can also cater to different industries, ranging from information technology to food and beverages and management consultancy businesses. This allows startups and smaller companies to create value faster and to better compete in their respective markets.
Crowdfunding, or peer-to-peer financing, could also be an option for startups to raise more capital. In the UAE, there are several online platforms that connect entrepreneurs with potential investors, such as Beehive and Eureeca. However, crowdfunding activities in the UAE must be done according to the regulations of the Central Bank of the UAE.
The crowdfunding company must be incorporated or hosted in the UAE; uses a UAE address for correspondence; and provides crowdfunding to UAE-based clients. On the other hand, the borrower must be a UAE-registered company and cannot be an individual, sole proprietorship or a company registered overseas.
Let our experts guide you
In conclusion, getting the funding will still depend on your product, business model and cash flow. If you believe in your products and services, get the funding option that best suits your goals, and make sure to partner with investors who see the same value in your company.
If you require an expert’s objective advice on the startup funding options available to you, get in touch with our team. We will advise you on the most beneficial financing option for your startup, as well as introduce you to trusted government offices and private organisations that can finance and help your startup grow.