By giving the right and required amount of water to a seedling, makes it grow into a wonderful plant. Just as well, investing adequately in a new start-up would determine the future scope of the business. To set up a whole new idea demands for adequate funding or what we call as ‘capital’ in the language of commerce.
Money is the lineage of any business. In the UAE, there has been a recent outburst of this startup culture owing to the country’s favorable business environment and fairly flexible government norms. Also, the Emirates has a mounting and diversified market, which encourages and offers opportunities to all kinds of business startups. In spite of all that is given, often startups find it difficult to arrange for the required capital. Basically, what matters the most is how a new start-up strategically manages its initial investment.
The nature and the type of your business, would also majorly affect your source of finance to be picked. Although as per the recent statistics of 2019, the UAE is making evolution in the world of business as a significant incubator of mainly technology startups.
The following are the names of the 6 most well-funded tech startups in the UAE. These initiatives gained success within a limited time frame owing to having followed responsible business financing. They are:
The Luxury Closet
What are the Available Options?
As they say ‘money isn’t everything but everything needs money’, which defines the need to acquire funds to transform your ‘start-up’ into a successful profit-making venture. Such new ventures have great access to many sources of finance.
Personal loan in Dubai is considered to be one of the best alternatives to meet all kinds of financial needs whether it is education, business or mortgage. Many initiatives also opt for business loans to avail funds for their new start-ups. Many banks in the UAE offer reasonable financial loans to entrepreneurs and startups at lucrative interest rates. Working capital loans are also a smart option to meet the small-term business needs. In order to qualify the loan sanction, banks demand a proper business plan and specifics related to a firm’s future goals.
Generally, entrepreneurs consider funds from bank on interest as their first choice to bring in funds for their startups. However, availing funds can be tedious at times owing to the lengthy procedures required.
Therefore businesses should apply for funds only after analyzing the requirements of the various banks. Apart from taking funds from the bank, there are other sources of finance available to the entrepreneurs in the UAE. To name a few are:
This is a process of financing a project or in this case a startup, by raising money from a group of people through certified online platforms. Basically, it comprises of investments from more than a single person at the same time. Crowdfunding is a recent phenomenon that is now seen as being practiced by many firms in the UAE.
The best part about this source of finance for a startup is that marketing and financing of the business take place altogether. An entrepreneur lists out all the specifics about his/her initiative on the crowdfunding platform regarding the long-term goals, financial requirements for the startup, etc. By following the same way, you would be able to gather some feedback for your ideas and also, familiarize your brand name.
This source of finance has been recently adopted by the central bank of the UAE. This is done to add to the regulatory framework of the financial sector and also to encourage the expansion of financial technology businesses (FinTech).
2. Angel Investors
These are individual investors with a strong financial background. They provide capital to particular startups in which they see high potential for growth in the future. Angel investors seek the risk by investing in such businesses, in exchange for ownership in equity. Apart from the financial assistance they also facilitate you with necessary consultations with respect to your startup.
3. Incubators and Accelerators
Opting for incubators and accelerators for startups is a preferred option in the UAE. They assist many new businesses to get their funding from various sources. Incubators are always there with you to guide you through every step towards the growth of your business. They make you accessible to potential investors by creating a network for your business.
Incubators are there to make your business grow slowly. Accelerators, on the other hand, provide you with instant measures to take a long jump to further up your startup.
4. Venture Capital
These are the firms with professionally managed funds that seek to invest in startups with high potential in the future. They demand some percentage of ownership in the company against the loan they provide. This enables them to establish their control over the business operations for the smooth functioning of the firm.
5. Personal Investment or Bootstrapping
The self-financing of your startup would count in for comparatively lower risks than the other sources of finance. An entrepreneur can employ his or her savings for the initial investment. Such financing could also be availed from family or friends. This option would turn out to be convenient due to lesser formalities and negotiable interest rates on the borrowed funds.
Bootstrapping can be helpful provided the required necessity doesn’t comprise of that a big figure.
Choose Wisely !
In today’s time, there are plenty of emerging startups in the run, seeking to achieve greater heights. Unfortunately, only a few can make their way through the various hurdles. Only those who flourish who
can take risks, measure the pros and cons of almost every step they take and most importantly, who can
responsibly finance their business in a manageable order. As someone wise enough has said that, ‘money doesn’t grow on trees’ but ‘money grows on the tree of persistence’. So it is entirely upon us, on how to use it once we get the hold of it!