It will all add up - the Dubai Next programme allows startup founders to try and impress potential funders beyond the usual channels. Image Credit: Gulf News

Dubai: Crowdfund your startup – Dubai’s efforts at opening up new funding channels for its entrepreneurs is building up scale.

The ‘Dubai Next’ project allows these entrepreneurs to go online and make themselves seen and heard by prospective investors. More than 540 campaigns have been launched and of which 44 have gone live.

If earlier people with ideas had to secure funds from banks and specialist investors, “what we have done is somehow democratized this more,” said Abdul Baset Al Janahi, CEO of Dubai SME. Dubai Next has received Dh27.7 million in funding requests so far, along with 72 contributions from 58 supporters.

Free up funds
Startups and entrepreneurs in Dubai received over Dh192 million in incentives from Dubai SME in 2020 compared to Dh170 million in 2019. The number of Dubai SME members reached 4,786 by end 2020, of which 74% were commercial licenses and the rest in the 'Intelaq' category for home-based businesses.

Easier for talent

“In the post-COVID era, talent and capital are likely to be even more footloose, especially in target sectors such as digital and creative industries,” said Scott Livermore, Chief Economist at Oxford Economics Middle East. “Therefore, simplifying the startup process will improve Dubai’s competitiveness in this area.

“Recent moves in Dubai and across the UAE are aimed at encouraging innovation - and often such innovation is through startups and SMEs.”

Abdul Baset Al Janahi
Abdul Baset Al Janahi, CEO of Dubai SME, gives an update on the crowdfunding Next platform. Image Credit: Clint Egbert/Gulf News

Crowdfunding model used

Dubai SME has used an “all-or-nothing” model to protect campaigners and to minimize risk for everyone. By not releasing funds unless a project meets its goal, this ensures that Dubai Next sponsored entrepreneurs have enough money to do what they promised and they are not expected to complete a project without the funds necessary to do so.

What are the fees?

Dubai Next is a non-profit platform, and there are no registration fees. However, a 5 per cent service fee is charged for successfully funded projects

How is this platform different?

It is the first UAE-based crowd funding platform for startups and is operated by Dubai Government. Unlike other platforms, campaigners keep 100 per cent ownership of their project; there is no loss in equity or any form of ownership in shares or profit.

Signing up

Currently, the website only supports UAEPASS, a national digital identity solution.

Fund release

Once the funding goal reaches 100 per cent, the amount will be released through Dubai SME, which will provide the necessary support to launch and grow the business - from trade license issuance to training and incubation.

“We expect to see a flood of young creatives taking advantage of a previously unavailable stream of funding that will expedite their growth,” said Scott Cairns, Managing Director at Creation Business Consultants.

Crowdfunding way
Crowdfunding is an approach to raise capital for a business venture - or a cause - by group of people. The traditional method of raising capital allows entrepreneurs to approach only a mainstream pool of investors, thus limiting the options.

A crowdfunding platform allows entrepreneurs to reach thousands of potential investors from that single platform, drastically increasing the options.