- Dubai to award entrepreneurs who come up with novel concepts.
In a major push towards making the emirate the entrepreneurial capital of the region, Dubai SME has allowed 100 per cent ownership to small- and medium-sized enterprises under its business incubator licence.
So all those innovative entrepreneurs and students who come up with a novel idea will have full ownership. However, their proposals will be scrutinised by the authorities to ensure that it is practical and executable.
This announcement was made as part of new regulations for “Incubators and Business Accelerators” for innovative entrepreneurs. Generally, the UAE laws allow 49 per cent ownership in companies but free zones allow 100 per cent ownership.
Dubai SME, the agency of the Department of Economic Development in Dubai, said entrepreneurs can apply for incubator licence online and every application will undergo a feasibility check by a special committee.
“The new regulations provide a legal form for incubators for the sake of universities, colleges and venture capitalists as well as entrepreneurs who have unique ideas and initiatives,” said Abdul Baset Al Janahi, CEO, Dubai SME.
He said the initiative would attract local and foreign investment in SMEs and international expertise in business incubation and enhancing business competitiveness.
The business incubators will be able to provide a range of services including required workspace for entrepreneurs, consultancy and guidance on project development, and support for implementing innovations and applying the latest technology in product development.
A number of initiatives have been taken locally to encourage entrepreneurship and startups in the UAE, especially Dubai.
Dubai Startup Hub by Dubai Chamber and Hamdan Innovator and Incubator by Mohammad bin Rashid establishment have been set up to empower the emirate as the entrepreneurial capital of the region.
Dubai aims to bolster SME contribution to GDP from 40 per cent in 2017 to 45 per cent by 2021.
There are currently 17 accelerator programmes, 12 incubators and 7 co-working spaces in the UAE, says MAGNiTT, a platform that tracks developments in the Mena entrepreneurship space.
“Given the challenges associated with starting a company, we believe that to create a flourishing environment for startups, it is important to create an ecosystem where founders are able to cost-effectively set up, potentially fail and still be incentivised to start up again. Serial entrepreneur are proven to be the best founders who learn from their mistakes,” said Philip Bahoshy, CEO and founder of MAGNiTT.
He noted that initiatives by the government to create incubators and working spaces that allow for startups to set up in a cost-effective manner with 100 per cent ownership is a positive step to achieving this goal.
Santhosh Rao, principal research analyst, Gartner, said the first step for any startup eco-system to mature is incentivise whatever business they are getting into.
“So, if you want a startup ecosystem to mature, I think 100 per cent ownership is attractive and it is a right step in the direction by the Dubai government. This will result in mushrooming of several emerging vendors and people will conceptualise products that will fit the economic need of the region itself. This is definitely going to accelerate emerging vendors and accelerators coming into the region,” Rao said.
In addition, this will also help boost foreign direct investment inflow into the emirate, he added.
Jebin George, programme manager, IDC Cema, said the introduction of 100 per cent ownership for incubators will make it easier to start and run an incubator in Dubai, and will trigger the opening of more incubators, especially from international incubators who want a presence in the region, as well as international and local private companies.
“Many incubators in UAE run on the rental and services income business model and one of the key issues a startup is facing is the high setup cost. The starting of new incubators will give more options to startups as well as it will increase the quality of mentorship and funding,” he said.
George of IDC pointed out that two most important sectors in UAE where there is significant startup activity are ICT and eCommerce/mCommerce.
He stated that any positive move in the incubation landscape would benefit these sectors the most.
“However, as it becomes easier for foreign investors and private companies to set up incubation centers, we expect to see the opening of centers with focus on specific sectors as well, such as oil and gas and manufacturing,” he concluded.