Dubai is a city on the rise. In the first nine months of 2023, gross domestic product (GDP) grew by 3.3%, while the information and communications sector grew by 4.4% over the same period. In addition to its continued economic success, the city has also become a haven for startups and the tech sector in general.
A large part of this is due to the country's commitment to boosting the economy, something that many believe Europe has not focused on in the same way. While the continent still has a strong global presence with a large market and highly skilled workforce, many complain about the costs of doing business and the numerous strict regulations.
This can be daunting for European startups looking to expand and grow. Fortunately, there are now more options than ever for companies in this position – and one of them is Dubai and the United Arab Emirates.
Why should startups seriously consider Dubai?
“We are seeing more and more founders and startups looking at the Middle East as a credible growth opportunity,” says Peter Brady, assistant vice president of Dubai World Trade Centre.
He believes there are several reasons for this, but one of the most important is that Dubai acts as a geographical hotspot for global expansion. “Dubai is a hub,” says Brady, “we have access to about four billion people within a four-hour flight.”
This means companies can operate and expand not only within the Gulf Cooperation Council (GCC), but also across the Global South.
However, this is far from the only reason for European startups to consider expanding into the UAE. Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, says Dubai has ambitious plans for the future that can directly benefit companies across various industries.
In our conversation, Rashed Lootah brought up the Dubai Economic Agenda (D33), an “ambitious roadmap”. [that] The aim is to double the size of the emirate’s economy in the coming decade and place Dubai among the three largest cities in the world.”
What is particularly interesting for European start-ups is that a key tenant of this plan is the focus on and investment in pioneering technologies such as “artificial intelligence, smart city solutions and fintech”.
This is not the only initiative in this direction either. The launch of the UAE's Green Agenda 2030 and Net Zero by 2050 strategy means there are also huge opportunities for companies operating in the sustainability sector.
European startups in each of these sectors will have access to funding, networking and broad market opportunities that could take their business to the next level.
While this expansion into the UAE could be resource-intensive, there are other benefits that will make this move relatively smooth.
How European startups can land softly in Dubai
“Dubai offers a business-friendly regulatory environment,” Rashed Lootah tells TNW. “The emirate’s numerous free zones, tailored to the needs of specific industries, offer significant tax benefits, streamlined regulations and access to specialized infrastructure.”
Business-friendly regulation of the area is also a topic Brady addresses. “The government here is a very active supporter of entrepreneurial investment and creating an environment where startups can thrive.”
This is done through specific investments and initiatives – some of which we have already mentioned – but also takes a positive regulatory approach. One example Brady points to is the “world’s first” virtual asset regulator. This body oversees the supply, use and exchange of digital assets and ensures that crypto and blockchain companies have a strong regulatory environment in which to operate.
Compared to Europe, Dubai has lower taxes, less complex regulations and a government that invests heavily in the economy. This can significantly reduce the difficulties for European startups landing in Dubai, as the costs and effort in the region will sometimes be lower than in other parts of the world.
But let’s say this all sounds like an excellent idea and your startup is seriously considering moving to the UAE. What then? How do you know your business is in the right position for the move?
Expand North Star Dubai 2023
At what stage of growth should startups consider moving?
Rashed Lootah was unequivocal about this, encouraging startups to “consider expanding into the UAE and Dubai at any stage of their growth journey.”
However, some startups will be in a better position to succeed than others. “Companies that have achieved great success [in Dubai] are those that have shown a scalable business model and some success in their home market,” says Rashed Lootah.
This view is supported by Brady, who states that companies with pre-Series A, Series A or Series B funding are often in a good position to move to Dubai. “Those are the ones that seem to have the most appeal and success when you look at the UAE as a scalable market,” he says.
The key factors that both Brady and Rashed Lootah see for European startups to thrive in Dubai are those that have a solid foundation and a flexible structure. In other words, the companies that perform best have already achieved some success and are positioned to handle change.
As Rashed Lootah puts it, startups need to be mature enough to have “a high level of adaptability and ensure that their solutions are tailored to the regulatory and market requirements of the region.”
Fortunately, regarding the second half of this statement, there are numerous initiatives that make the transition to another part of the world easier.
Facilitating moving to UAE
There are a number of programs designed to help European startups adapt to life in the UAE. One example of this is the Business in Dubai platform, which offers companies practical support as well as matchmaking services that can connect them with partners.
Additionally, there are a number of events that can not only help companies prepare for doing business in the region, but can also serve as a launching pad for growth.
For example, Expand North Star, hosted by the Dubai Chamber of Digital Economy, is the world's largest gathering for startups and investors. In 2023, the event was attended by over 33,000 visitors, and over 1,600 startups and 1,000 investors were also present. This year's edition is expected to exceed that, with 70,000 visitors, 1,800 startups and 1,200 investors flocking to the emirate from October 13 to 16.
“Events play a critical role in helping founders and startups grow,” says Brady, “not least by connecting them to capital, but also by connecting them to customers.”
If a startup is in the right place, the combination of hands-on support and a thriving events culture can help them get off the ground quickly and succeed in Dubai.
Expand North Star Dubai 2023
Open an office? Or move the headquarters?
At this point, if a European startup decides to grow by moving to the UAE, there is another question that needs to be answered: should it open an office or move its entire headquarters to the region?
According to Rashed Lootah, opening an office in Dubai acts as a “strategic springboard” that allows companies to test the waters and “gain a foothold in the market.”
However, moving its headquarters to the United Arab Emirates could “unlock a wider range of benefits” – such as full access to Dubai’s talent pool – and “potentially more favorable tax structures”. However, it is important to note that this requires larger investments and a deep understanding of the local business environment.
For most startups, the best route is to first open an office, explore the market and, if all goes well, consider moving the headquarters later.
Ultimately, there are huge benefits for European startups looking to the UAE. If these companies want to expand, secure more investment and grow into the Global South, then Dubai is an excellent location to do so.
Comments are closed, but trackbacks and pingbacks are open.