Announcing AngelHack Dubai 2014: Dubai’s Startup Scene & What You Need to Know
Don’t know much about the Dubai tech and startup scene? Well, fear not. Just in time for our 1st AngelHack Dubai hackathon, we sat down with Sameer Sortur, AngelHack’s Dubai Ambassador and Director of Operations and Revenue Growth at the Innovation 360 Institute (i360), an innovation consulting firm that also runs the i360 Accelerator, a Dubai-based accelerator and seed funding program which has backed several Dubai startups, including Ta3rifah (which tracks customer loyalty) and Asly (which helps consumers detect counterfeit products).
Sameer gave us the rundown on how tech and entrepreneurship are taking off in Dubai, some of the challenges entrepreneurs face, and finally, some great resources to help you make the most out of Dubai’s burgeoning startup ecosystem.
Dubai Tech in a Nutshell
There are people from over 220 different nationalities living in Dubai, each one comprising 6-7% of the expatriate population. People and companies come to Dubai because of its historical importance as a trading hub, its business-friendly practices, its highly developed infrastructure, and standard of living, all comparable to any global city.
Tech companies are no different. While investment has traditionally been focused on real estate and infrastructure projects, Dubai has recently initiated a shift towards a knowledge-based economy. The government has created a tech “free zone,” called the Dubai Internet City (one of 13 such zones in Dubai), where tech giants like Microsoft and Google have set up shop.
In a free zone, entrepreneurs retain 100% ownership of their companies and have a space to operate in, as opposed to registering a company in the Dubai mainland, where by law, you have to bring in an Emirati business partner who controls 51% of the company’s shares.
Challenges To Be Aware Of
Small Developer Community: Dubai has historically played host to a very transient population, the cost of living is high, and foreigners need to renew their visas every 2-3 years. As a result, most developers only stay in Dubai for 2-3 years.
Tough to Raise Capital: Venture capital funds are very expensive to set up in Dubai, and the VC market is not structured or organized. Private equity firms fund most projects, and infrastructure-related projects are prioritized. Most Dubai startups are funded by the entrepreneurs themselves, their friends and families, and possibly some angel investors (to the tune of $200-$500K), before leaving Dubai to register in the US.
Barriers to Entry: And you’ll need more than just capital to start up. Founders have to be legal residents, which means they have to have visas. Each individual visa costs $2,000, and must be renewed every two to three years, for up to $5,000 each time. Add in cost of living and the free zone fees, and the cost of starting a company in Dubai comes out to $10-15K, higher than in the US or Australia.
Exciting Growth & Development
New VC Fund: i360 Accelerator has partnered with Fenox Venture Capital to set up Fenox Global Fund IV, a $100M VC fund with the express purpose of providing seed and Series A funding for tech startups, focusing primarily on the Middle East, Asia and the US. Lack of funds was the biggest challenge facing Dubai startups, and through this new fund, it’s being addressed - 10% of the fund has already been committed.
Seed Funding: i360 Accelerator also runs a seed funding program. Whereas in many cities, you find investors willing to invest only in proven companies, i360’s program only looks at idea stage companies, and takes a risk on them. Between this program and the new Fenox fund, a Dubai startup can go from seed funding to a Series A round, without looking outside the country.
Working Spaces and Infrastructure: Free zones like the Dubai Internet City provide robust and complete working spaces for tech startups to set up shop, including The Cribb, which will host AngelHack’s spring hackathon in Dubai. Dubai’s transportation and public services infrastructure is on par with other global cities like San Francisco, Singapore and Beijing.
Speaking of The Cribb…
The Cribb is an awesome place for Dubai entrepreneurs to build their startups. Besides the working space essentials - comfortable, with high-speed internet and a bean bag or two - The Cribb also gives members business tools, training facilities, a café and even a lounge.
Members also have access to a great community of like-minded people. The Cribb makes their pool of mentors and advisors, including Dr. Bruce Ferguson from the Masdar Institute, and Brent Traidman from Fenox Venture Capital, available to their members. The space also hosts free meetups for events (like AngelHack) and seminars on various topics, including challenges, trends, and investment rounds.
Cribb members can also enroll in i360 Accelerator, Innovation 360’s accelerator program, an intensive 120-day “mini-MBA,” at the end of which graduates pitch to investors, including Dave McLure.
Shared working spaces like The Cribb, and accelerator programs like i360’s are bridging the gap between Silicon Valley and the Middle East.
Are You Ready?
So, Dubai hackers, let’s get building! Hack your dreams, host an event, attend a training session, and network with other entrepreneurs and supporters of the startup community. It’ll all start at our Dubai hackathon. Sign up here!
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