Star Tech: Why Dubai has become a magnet for entrepreneurs
Majed Al Suwaidi, Managing Director, Dubai Media City explains to Khaleej Times about what makes the Emirate a one-stop destination for startups and entrepreneurs.
Majed Al Suwaidi, Managing Director of Dubai Media City, shares deep insights into the Emirate’s ease of doing business that’s striking a big chord with global innovators and entrepreneurs. in5, an enabling platform for entrepreneurs and startups, also falls under his remit.
Edited excerpts from an exclusive interview:
How conducive is the current landscape in Dubai for startups and entrepreneurs?
The landscape in Dubai is truly ripe for entrepreneurs to realise their ambitions. Dubai has become a magnet for entrepreneurs, thanks to our leadership’s vision and more than two decades of enabling ecosystems boasting world-class infrastructure, a business-friendly environment to fuel success and a culture that embraces innovation.
There are several government-backed initiatives enriching the opportunities available for startups and small and medium enterprises (SMEs).
The Ministry of Economy’s Entrepreneurial Nation has set a goal to nurture 20 unicorns by 2031, alongside a number of incentives for new businesses, while the 10-year Golden Visa and GoFreelance packages further entice independent individuals from around the world to choose Dubai as a place to live, work and invest in the emirate.
Business incubators like in5 further enhance prospects for aspiring entrepreneurs and creatives in technology, media and design by providing valuable launching pads or inventive ideas and business models.
We offer expert advisory and mentorship, access to investment opportunities, networking events and workshops that insert our startups within some of the city’s most active business districts as well as creative facilities with industry-standard equipment. By continuing to invest in our offerings, infrastructure and platform to meet the market’s evolving needs, we hope to boost business growth and reaffirm Dubai’s economic competitiveness on a global scale.
What is a unicorn?
To be considered a unicorn, a business needs to reach an investor valuation of $1 (Dh3.67) billion or more. It’s quite an ambitious goal, but it’s not impossible. Dubai’s robust technology ecosystem and world-class infrastructure play a vital role in helping nurture unicorn companies, such as Careem, which was acquired by Uber in 2019 for $3.1 (Dh11.39) billion. Soon after, Dubai-based Emerging Markets Property Group (EMPG) and OLX Group merged their Middle East and North Africa (MENA) and South Asia operations, Bayut and Dubizzle, resulting in a business valued at Dh3.6 billion.
In 2019, Cisco acquired Voicera, which had initially acquired in5-based startup Wrappup in 2018. Wrappup specialises in using Artificial Intelligence (AI) technologies to transcribe and convert audio recordings into notes. The startup was founded during a hackathon competition organised by in5 in 2015, and in the short span of four years, attracted the interest of the Silicon Valley giant.
Dubai has supported a number of start-ups. How are they faring?
We’re proud to support a number of very promising startups in our community that are leaving quite an impression on their industries. Last year, our startups successfully secured over Dh1.4 billion in funding, and that number is rapidly rising as we attract more and more investments. Agri-tech startup, Desert Control, is listed on Euronext Growth Oslo, a multilateral trading facility operated by the Oslo Stock Exchange, while in5 alum Derq has partnered with driverless technology pioneer Motional to pilot autonomous vehicles with smart infrastructure in Las Vegas. There is much action and promise brewing in our incubator, demonstrating the region’s entrepreneurial spirit.
What are essential traits that put you on track to becoming a unicorn?
Unicorns are traditionally tech-savvy startups that disrupt their market, rewriting how people interact with a certain kind of product or service. Careem is an example which is close to home — the company changed the nature of private transport in the region by bringing cabs directly to a consumer’s doorstep at any time and location, while being upfront about costs.
While that might be a lofty founding ambition, you can work towards this by being dedicatedly consumer driven. Identify a specific problem people within your target market face and work towards creating an effective solution for it. Take inspiration from your own experiences and inconveniences and research whether a satisfying product or service exists in the market that addresses it. Unicorns are efficient, focusing iterations on being cost-effective and including only the most essential components in early stages to seek feedback from consumers.
There is no one-size-fits-all solution, but these are key traits that help put startups on the right track.
What frequent mistakes do startups make in early stages?
It’s necessary for startups to lay strong foundations from the beginning. One of the things that make or break a business is the right set of stakeholders, including employees, strategic partners, and investors. Finances are understandably tight, especially in the early stages of setting up, but creating a strong team is an essential cost for long-term growth. Of course, it’s important to find people with the necessary skill set and expertise, but it’s equally as important to choose members whose drive and values match yours. Bring everyone on the same page so you can collaborate effectively to achieve growth in the long-term.
Another is to create a product or service without identifying what problem or challenge it helps solve. Conduct first-hand research of your audience and the challenges they face so you can develop solutions based on actual needs. Don’t forget to heed the feedback you receive and adjust your business model and user experience accordingly, even before launching. Follow up future iterations with the same feedback and improvement loop to ensure a desirable product
Finally, and perhaps most importantly, is being realistic about your goals and strategies. Be ambitious, be driven and aspire to succeed, but that comes with setting achievable goals for your business and remaining steadfastly dedicated to achieving sustainable growth and attracting investors. Fuel your passion to succeed and remain persistent – you might face setbacks in the journey but remain resilient. If after numerous iterations the feedback is still low, pivot and keep moving forward.
Incubators like ours play a pivotal role in helping young entrepreneurs and start-ups avoid the common pitfalls. We are committed to providing our members regular and up-to-date advisory in line with international best practices, as well as regional know-how, so they can make educated decisions for their future.
What must startups keep in mind as they prepare to scale their business?
Networking is essential for any business, whether you are an established organisation or just getting started. A large, strong network will aid you in finding potential investors, business partners and board members as well as industry leaders and C-Suite figures who can guide you and facilitate valuable opportunities for collaboration.
Businesses part of our incubator have the benefit of in5’s annual calendar of networking events and expert-led discussions to forge these critical relationships. We not only offer startups hundreds of hours of advisory and mentorship with a steering committee of representatives from some of the leading organisations in the world, but also nurture a community of future-minded businesses that can rely on each other for support at different stages of their journey. Plus, startups are located within larger business ecosystems such as Dubai Internet City, Dubai Design District and Dubai Production City, offering them unrivalled access to some of the biggest players in tech, design and media.
Another essential relationship is with your early customers and consumers. Heed their feedback, collate the data you gather from their experiences and adjust your product — their loyalty and endorsement can go a long way. Data is essential, especially in technology. Identify ways you can securely collect data from your users and let that guide how you pitch to investors, devise your marketing and traction plans, and move forward into proceeding growth phases.
What are the major impacts of VAT
In this article, KT has assessed the impact of VAT on businesses, individuals, government and overall economy
Since VAT is a consumption and multistage tax, so it has an impact on each player of the supply chain and individuals, who are buying the goods and services for consumption purposes. It has an effect on the economy and it is a major source of revenue for the government. In this article, we have assessed the impact of VAT on businesses, individuals, government and overall economy.
(a) Impact of VAT on businesses
There are some common impacts of VAT on each business and some specific impacts, based on the categories of supplies.
(i) Common Impacts of VAT on Businesses
Whenever VAT is being introduced in any country, every business is required to have an impact assessment to assess the impact of VAT. Based on the impact assessment, they will be able to know, on which areas of business VAT will have an impact and what are they required to do to implement it properly. Like based on the impact assessment, they will be able to adopt the proper tax position of their supplies. Businesses will be able to know eligibility of VAT registration, impact on their working capital and system, required changes in the processes, compliance requirement etc.
Based on the impact assessment, businesses are required to implement the VAT properly which requires changes in the system, tweaking existing processes, training to the employees, communication with the suppliers and customers etc.
Once the VAT is up and running, businesses are required to submit the VAT Return, and while submitting the VAT returns, businesses cannot claim input tax on some purchases/expenses like expenses for throwing parties, expenses related to Car which can carry less than 10 people and is available for personal use, expenses related to the dependents of the employees where companies have no legal obligations, non-business expenses etc. All such blocked input tax will become cost of the businesses.
Businesses requires work force to comply VAT so it will lead to increase in administration and hiring cost. Sometime, companies are required to hire consultants which will lead to increase the consultancy charges.
(ii) Specific impact of VAT on businesses
So far as specific impact of VAT is concerned on businesses based on the categories of supplies, the industries that are dealing with standard rated supplies, VAT will impact the purchasing power of their customers and it will have a negative effect on the demand of their supplies. VAT registered companies which have longer payment terms with the customers and shorter payment terms with the suppliers, VAT will have adverse impact on their working capital, and vice versa.
Businesses which are dealing with the exempt supplies, like local passenger’s transport, banks and financial institutions offering margin-based services, suppliers of bare land etc will not be able to claim related input tax and such input tax will become their cost which will lead to increase in the operating cost of the business. Most probably, such businesses will pass on this cost to their customers by increasing the prices of their supplies to achieve their targeted margins so it will have a negative impact on the purchasing power of their customers which will affect demand of their supplies.
Businesses that are dealing with zero rated and out of scope supplies, VAT will not have any major impacts on them except the common impacts as mentioned above.
(b) Impact of VAT on individuals
Individuals who are buying standard rated goods and services for consumption purposes, they would be liable to pay five per cent VAT, and Individuals who are buying VAT exempt goods and services, most probably, they would be liable to pay higher prices. Such purchases will have a negative impact on their purchasing power. However, if they are buying zero rated or out of scope supplies, they wouldn’t be liable to pay any VAT and/or increased price which will not have impact on them.
(c) Impact of VAT on the government
Globally, taxes are the major source of revenue for the Governments and Governments across the globe spend these taxes for the welfare of the public. In the same way, VAT has become a source of income for the Government of United Arab Emirates (UAE) and UAE Government spends this income for the welfare of the public by developing world-class infrastructure, hospital, roads, medical facilities etc.
Moreover, VAT has reduced reliance on the oil-generated money and led to diversified sources of income for the Government which is a sign of healthy and matured economy.
(d) Impact of VAT on the economy
I am always saying, this is not only introduction of VAT, but the documentation of the whole economy. Government will be able to know the sales and purchases of each registered supplier in the supply chain, which would be helpful for the Government to take decisions.
Moreover, standard rated and exempt supplies of goods and services will make supplies more expensive and it will push the inflation rate up based on average supply of standard rated goods and services in the market.
Dubai to enhance its position as a global liveability hub
Under the terms of the agreement, DET and HSBC will promote to HSBC customers and employees the unparalleled quality of life in Dubai, its position as a global investment hub and the diverse features of the destination that everyone can enjoy
Dubai’s Department of Economy and Tourism (DET) and HSBC Bank Middle East have signed a memorandum of understanding (MoU), paving the way for increased cooperation in further enhancing Dubai’s position as a global liveability destination.
Under the terms of the agreement, DET and HSBC will promote to HSBC customers and employees the unparalleled quality of life in Dubai, its position as a global investment hub and the diverse features of the destination that everyone can enjoy.
The MoU also envisages collaboration in marketing activities designed to promote events and experiences across the tourism ecosystem to further amplify the city’s position as a leading international business, leisure and events destination.
Issam Kazim, chief executive officer, Dubai Corporation for Tourism and Commerce Marketing; and Abdulfattah Sharaf, CEO of HSBC UAE and head of International, HSBC Bank Middle East Limited, signed the MoU.
“We are pleased to partner with HSBC, a global brand that has played a significant role in the development of Dubai’s business, banking and finance sectors, in showcasing our multi-faceted business and tourism offering,” Issam Kazim said.
“This MoU reflects the trust and confidence reposed in Dubai by multinational corporations and will further enhance our efforts to support the aim of our visionary leadership to make Dubai the most sought-after international city and the most attractive location to live and work in,” he said.
“Our partnership with HSBC is also testament to the continued efforts being made in collaboration with our stakeholders to leverage the city’s strategic location, world-class infrastructure and its position as one of the world’s safest destinations to attract multinationals, entrepreneurs, investors and tourists to Dubai,” Kazim added.
Abdulfattah Sharaf said: “Opening up a world of opportunity is our purpose at HSBC and it is what we have been doing every day for our customers in the UAE since we became the first bank to open our doors for business here more than 75 years ago.
“In that time the UAE has built itself into a global trade and logistics hub, an international financial market, a leader in Sustainable Finance, a magnet for innovation, and a focus of global wealth creation. HSBC has been with the UAE on every step of that journey and this MoU reflects our commitment to the future of the UAE and our ambitious plans for growth here.”
With an increasing number of international firms choosing Dubai as their base of operations, DET and HSBC will work closely to support these companies with the aim of making it easier for them to set up their business in the city.
DET and HSBC will further elevate the city’s standing as a global liveability hub by highlighting and promoting the initiatives launched by Dubai to ease barriers to entry for business and leisure travellers, as well as the long-term residency initiatives that have been launched to offer pathways for deeper engagement and longevity with Dubai.
These include the new visas and programmes such as Golden Visa targeting investors, entrepreneurs and specialised talents, the five-year multi-entry visa for employees of multinational companies, and the Virtual working and Retire in Dubai Programmes.
UAE is the best place to relocate for business and living, Vanessa Eriksson says
Erikkson has spent 20 plus years working with premium brands and UHNW families.
Expo 2020 Dubai, Golden Visa programme, and a full schedule of upcoming global events position the UAE as a great place for people from around the world to relocate for business and residence, said Vanessa Eriksson, CEO of Ritossa Family Office, Dubai UAE.
Eriksson is responsible for spearheading Sir Anthony Ritossa’s Global Family Office Investment Summits in Dubai, Riyadh, and Monaco. She advises high profile families, leading entrepreneurs, fund managers, and established business owners on how to effectively communicate and network with their peers in the Summit’s private, closed-door setting.
Erikkson has spent 20 plus years working with premium brands and UHNW families. Prior to joining the Ritossa Family Office full-time, she worked for three family offices — GK Investment Holdings in Milano and Lugano, Majida El Roumi in Lebanon, and Fernand Schroeder Family Office in Luxembourg.
She is also Founding Partner of The Globe-Trotting PR, which she launched in 2014 as a public relations, investor relations, and marketing firm to promote and connect conscious names in Europe and the GCC. Additionally, she was General Manager of the Albert Premier Hotel, one of the Small Luxury Hotels of the World where she served primarily diplomats and business leaders in the financial sector. Previous positions also include work at Calvin Klein, Sotheby’s, Bulgari Hotels & Resorts, The Address Hotels & Resorts, and JG Black Book of Travel.
Erikkson is a member of the Advisory Board of The Majestic Group and a Consultant Volunteer for Save the Children. She earned a Master’s in Business Management at BSDA Bocconi, a B.A. in Art, History and Sociology at UCL, and attended the British School of Paris. She speaks seven languages fluently and is an avid world traveller.
“The UAE’s economy is vibrant indeed. Our region’s economic performance is on a strong upwards trajectory. Government programmes and incentives helped our region recovery quickly from the pandemic and our handling of the health pandemic led the world in terms of effectiveness and responsiveness. To help support growth, the governments in Dubai and throughout the region help small- to medium businesses and entrepreneurs and welcome public-private partnerships. The UAE works hard to attract talent and focuses on a superior quality of life based on solid infrastructure, healthcare systems, sustainability, safety, and resiliency,” she added.
Eriksson informs there is a trend toward women-founded and women-led businesses moving to Dubai and the UAE more broadly. “During our Summits, we hold panel discussions specifically geared to women’s issues and concerns and this topic often leads the conversation. This has also been discussed in detail in connection with Expo 2020 Dubai,” said Eriksson, who is currently busy with forthcoming Sir Anthony Ritossa’s 17th Global Family Office Investment Summit on December 12-14, 2021.
“New regulations support investors’ search for opportunities and growth is accelerating at a rapid pace. Dubai is producing unicorns and there is a strong focus on early growth stage companies as it expands its position as a technology hub. During our Summits, we hear from many important global businesses that they intend to either move their headquarters to the UAE or open a satellite office. Lifestyle is also an important part of their decision-making process as the UAE offers impressive opportunities in areas such as education, healthcare, infrastructure, recreation, shopping, travel, and more,” concludes Eriksson.