Support for startups and entrepreneurs set as a priority for the future of the economy
• Key outputs from the Dubai Future Council on Entrepreneurship and Innovation Ecosystem
• Significant growth opportunities for startups in the UAE and the Arab world
• UAE accounts for 60% of inward venture funding in the MENA region
In its 5th report on the future of entrepreneurship and innovation, launched jointly with the Dubai Future Council on Entrepreneurship and Innovation Ecosystem, the Dubai Future Foundation confirmed that empowering startups and entrepreneurs and promoting digital economic activities is critical for the future of a sustainable economy at a national and global level.
The report, titled “Life After COVID-19: Innovation and Entrepreneurship” is part of a series of forward-looking reports to tackle the different challenges that the UAE and the Arab world will face once the pandemic subsides. The series comes at a crucial time where public and private sector organizations need to be well-prepared for future, and the challenges and opportunities that come with it.
Based on the recommendations and proposals of the members of the Council, the report tackles current and future challenges of the entrepreneurial and startup sector at a national and global level. It also highlights mechanisms to reduce the effects of the spread of "COVID-19" on startups and their growth opportunities, as well as, suggests motivational packages and incentives schemes as a means to support the startup sector and in economic development of the country.
Entrepreneurship in the UAE
The report states that the COVID-19 crisis will impose real challenges on startups in the UAE as it is the case globally, but the UAE is one of the best countries in preparation for future changes in the innovation and entrepreneurial sector, where small startups constitute about 50% of the companies registered in Dubai, about 47% of the UAE’s annual GDP.
According to the 2019 MENA Venture Investment Report, the UAE attracted the largest share of inward venture funding in the MENA region, accounting for 60% of the total, followed by Egypt and Saudi Arabia with 14% and 9% respectively.
The future for startups
Startups and entrepreneurism are working to adapt to the "new situation" by shifting towards fundraising via digital channels. MAGNiTT revealed that its online tool to draw funds for startups has seen an increase of requests for financing emerging projects by 117% per month since last January, which can be attributed to companies looking for alternative ways to raise funds during the current crisis.
According to an independent survey conducted by MAGNiTT Research, 59% of the founders of companies in the Arab countries announced that their businesses were affected by the crisis, while 48% mentioned that achieving revenues is their main concern, and 53% are opting for a strategy shift amid pandemic to sustain and grow their business.
The report highlights the incentives that the UAE has initiated to support startups and entrepreneurs as it acknowledges the pivotal role that small and medium enterprises play in various economic fields. The UAE promotes innovation and sustainability of the entrepreneurial sector by facilitating the issuance of commercial licenses and visas as well as managing cash flows and increasing reliance on the concept of working remotely. The UAE also proved to keep pace with the rapid changes in the technology and innovation sector, in addition to updating private legislation and regulations in light of global changes, especially in the health, education and energy sector.
Recommendations and suggestions
The report offers a number of proposals to enhance the innovative ecosystem in the UAE and the region, which includes reducing or delaying office costs, utility bills and license fees; offering open grants, providing loans and flexible financing. The report also suggests and promotes the concept of funding salaries for s short period of time, reducing living costs, increasing mobility across visas and free zones for highly skilled talents and supporting temporary employment as means to support the startup sector.
Provide support and financing
The report argues that government support for startups will restore the sector to pre-crisis levels once the COVID-19 pandemic recedes. It projects that the innovation sector will have a catalytic role in the UAE supporting the growth of startups and entrepreneurs by enhancing financing and providing low-cost financial services.