Dubai Chamber has registered 48 per cent more companies than the same period last year, with the vast majority of those small to medium-sized businesses.
Entrepreneurs aim to grow in Dubai
Ironically, LeithMatthews used to hang out on his own in cafes as he slowly worked on his idea for a new company.
“When I was aspiring to get into business myself, I was doing it in regular coffee shops outside office hours,” says the founder of the Make Business Hub, a pseudo cafe-office for entrepreneurs and freelance professionals in Dubai Marina.
“That way you feel like you are the only person trying to start a business. Millions of people have done the same thing but I was in the coffee shop feeling like a real solo [person].”
In the six months since launch, Make Business Hub has become a vital part of the eco-system for entrepreneurs in Dubai, a city slowly beginning to flourish as a start-up community.
So far this year, the Dubai Chamber has registered 48 per cent more companies than the same period last year, with the vast majority of those small to medium-sized businesses.
Meanwhile, free zones, such as Virtuzone, have also experienced strong demand from entrepreneurs setting up shop and five new funds – Beco Capital, Y+ Ventures, Smart Start, Envestors and Virtuvest – are launching in Dubai looking to invest in small businesses.
“I do not know if it’s now a tipping point, I don’t know if we are there yet ... But money is pouring into the space,” says Fadi Ghandour, the founder and chief executive of Aramex and a prominent angel investor in the Middle East.
“The money is coming because there are entrepreneurs, not the other way round. As we know, some companies will make it and some companies will fail.”
Entrepreneurs, angel investors and venture capitalist funds all agree there is a buzz about small businesses in Dubai at the moment, which is epitomised by the launch next month of The Entrepreneur, a television show competition on Dubai One aimed at finding the next big business idea.
Created by du, a UAE telecommunications operator, the winner of The Entrepreneur will be awarded Dh1 million (US$272,272) to put towards their business.
“We are using the power of media and reach and a strong partner like du to send a clear message to young and budding entrepreneurs: with the right idea and the right business plan there is opportunity out there for financing, mentoring and support,” says Nisreen Shocair, the president of Virgin Megastore Middle East and one of the judges on the show.
“The UAE was built on entrepreneurship. We have an impressive number of successful entrepreneurs who built their businesses in the UAE before branching out into rest of the Middle East, Asia and the world at large across various industries.”
At Make Business Hub, those small business owners to whom Mr Shocair is referring, scribble ideas, meet with potential investors and interact with fellow start-ups looking to offer advice and receive some counsel in return. “Here you can feel part of the movement,” says Mr Matthews. “Leaving your job, doing it for yourself, is scary. It’s expensive. If you do not feel like you are the only one doing it, you are more likely to take the leap.”
About 8,600 new businesses have taken the leap in Dubai in the eight months to the end of last month, compared with 5,800 in the same period last year, according to the Chamber.
SeedStartup, a venture capital fund and start-up accelerator programme, mentors its current class of seven businesses from Make Business Hub.
These seven sets of entrepreneurs have all taken the leap and will pitch their ideas to investors on Thursday at Make Business Hub as they pursue their next level of investment.
Rony El Nashar, the founder of SeedStartup, believes there is a huge pool of wealthy businessmen and women in the Middle East who do not yet realise they could be angel investors and support the entrepreneurial community in Dubai.
“There are currently many angel investment opportunities,” he says. “There are many high net-worth individuals, many could be angel investors even though they do not know they are angel investors.”
Despite the growing number of entrepreneurs setting up business in Dubai and investors reacting to the trend by setting up venture capital funds and incubators, industry insiders say more needs to be done to position the emirate as a globally recognised breeding ground for entrepreneurs such as Singapore or Silicon Valley.
Dany Farha’s attitude and enthusiasm for the small business sector reflects his title as the chief energy officer at the newly formed Beco Capital, which invests in small businesses.
He believes a multiple-pronged approach to developing the entrepreneurship community is needed in Dubai and the wider UAE. Firstly, he says the Government should do more to lower the costs and cut bureaucracy involved in setting up as an entrepreneur, particularly the condition that companies have to buy office space.
“Remove all the red tape and obstacles,” he says. “Let them start a business out of a garage without having to get university attestations and office locations.”
He says the media, venture capitalists, meeting places such as Make Business Hub and the development of an education sector specifically directed at IT technology are all areas that should be nurtured further.
John Martin St Valery, the founding partner of the Links Group of companies, which helps businesses start up in the UAE, agrees the barriers need to be lowered.
He says the biggest obstacles are licence fees, the costs of requiring a local partner, outside a free zone, and office space.
“Barriers still exist,” he says. “We lobby quite hard for a relaxation of those three main areas of costs.”
Dubai is on its way to becoming a global entrepreneurial hub but there is still work to be done.