Avoid UAE-specific startup challenges with these 4 tips

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There is no doubt that establishing a company, especially a startup, isn’t an easy job, no matter where you are in the world. Hans-Henrik Christensen, director of Silicon Oasis Founders, says that despite the UAE’s advanced ranking in the World Bank Ease of Doing Business 2014 report, the process is no easier in the Emirates than elsewhere, “especially if the company is a startup fighting for credibility.”

Christensen, who has vast experience in helping entrepreneurs establish their startups in his work at Dubai Technology Entrepreneurship Center (DTEC) and DSOA’s initiatives, says that the authority is working on facilitating the startup process and making it less costly. “Within months, we’ve helped more than 35 technology startups join Dubai Technology Entrepreneurship Center. We made procedures much faster and costs very reasonable. Establishing a technology startup costs around 12,000 AED ($3,200 USD) per year,” he adds. Christensen cites the UK as an example of how simple it can be to establish a company (it takes only a few hours there), as well as Singapore, which many consider to be the ideal country in which to start a business.

In the UAE, you have two options when establishing a startup: you can either register it as a limited liability company, which requires you to have an Emirati partner, or you can establish the company without any local partner in one of the 21 free zones.

To establish a company in a free zone, entrepreneurs need to choose the zone that best suits their startup’s activities. They only need enough money to launch their operations and pay their staff. Then they are eligible to apply for incorporation.

Further, in the UAE, the law doesn’t distinguish between corporations and startups, despite a few initiatives launched with the aim of helping startups. In the west, by contrast, startups are able to negotiate the taxes they pay in the crucial first years.

Despite the challenges, “mentalities and culture are changing in the region and are now more receptive of most startups, making thus the task easier for entrepreneurs,” he adds.

Aside from the country-specific logistic and administrative procedures involved in founding a startup, here are some tips from Christensen that any entrepreneur should consider:

  1. Have a clear picture of what you want. Christensen says that many think that the “business plan” times are over. They’re wrong. You must have a clear idea of your project and cost forecasts. “If you get funding, you should have enough money to move to the next stage and be [careful with it] because things don’t always go as planned.”
  2. Set a clear growth strategy. Christensen says that a company goes through different stages and that you must make the right decisions in every one of them. “You might consider for instance stepping down from the CEO position because you’re not qualified to run a company with 50 or 100 employees. You should take into consideration here that working with a few friends is different than working in a company that has a complex organizational chart,” he adds. It might be better for the company director to focus on their area of expertise instead of being an obstacle to the company’s growth. Christensen believes that most startups don’t grow and develop because of the poor managerial skills of their founders.
  3. Test the market as soon as possible. Don’t wait to produce the perfect product. “The first iPad wasn’t perfect, but Apple still sold gigantic numbers of it,” Christensen says, adding, “I’ve seen many people invest huge sums in developing and designing the perfect product without testing market demand first. Entrepreneurs need to make a lot of noise in the market for customers to discover the product, without wasting a lot of money. They need to reach the largest segment possible of people in the right way, especially with the many options available for customers, and to only see the ‘good product’ as one station on the road to success.”
  4. Build a network of partners. You should think of the type of customers you want to work with. “An entrepreneur can choose for instance to outsource the marketing or sales aspect to a specialized company, which would require them to share their profits with it. However, this company would be accelerating in return the scaling process of the startup, as the latter would benefit from its network of contacts and significant business relations.”

Christensen says “the UAE is working towards encouraging and supporting entrepreneurship as fast as possible and is competing today with the biggest countries which have years of experience in this field.”

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