UAE _ Financing

Optins fir
Startups
01/23/2024

FIN 4103 - Entrepreneurial Finance

 Learning Objecties

Recognize the most common

methods of fnancing

Recognize the UAE Financing

Ecosystem

Realize funding local

opportunities
FIN 4103 - Entrepreneurial Finance
 Startup Financing
• You haie a fantastc business plan – now you need the
financial support to bring your plan to life.i

• But what financing optons are aiailable to entrepreneurs ?

• Are there goiernment programs for startups in your sector?

Can your concept atract strategic or angel iniestors?

N 4103 - Entrepreneurial Finance 3

 Nin-dilutie funding

Financing •
•
Usually all pre-seed
Differences in type

Methids fir
Equity
Dilutie
Funding
– Self-funding and
affordable loss
– Loans

Startups 1. Personal
resources
• Savings
– Friends and
family convertible
notes
• Bootstrappi
•There are three types ng
of funding: • Sell assets
Sometmes Dilutie
2. Friends and Funding
family
1. Equity 3. Angels
4. Angel networks

2. Debt 5. Venture capital

Non-Dilutie
Funding
6. Private equity
3. Grants
7. Public market

8.
N 4103 - Entrepreneurial Finance Crowdfunding 4
 Actiity __
Financing Methids
fir Startups
Discuss : Navigating the world
of startup funding: your path to
money
By EVA DOBRZANSKA

https://venturetrend.substac
k.com/p/cap-raising-mindmap?
utm_campaign=post&utm_medium
=web

N 4103 - Entrepreneurial Finance 5

 Financing Methids fir Startups

N 4103 - Entrepreneurial Finance 6

 Financing
Methids fir • Public Sectir ir Giiernment Suppirt
UAE Goit .iPortal for Finance -‫ريعع‬
‫لاعم اعشع‬ ‫مويل‬
‫تعع‬

Startups htps://u.iae/ar-ae/about-the-uae/leaiing-no-one-
behind/1nopoierty/financing-businesses

• The main funding optons include: • Priiate Sectir

• Personal saiings.i A common method of proiiding seed 1)Bank Lending for Startups and SMEs
capital for new businesses is iniestng your personal 2) Non- bank Lending
saiings in order to get the company of the ground.i .i.i.i • Finance Companies
• Loans.i .i.i.i • Priiate funding
• Crowd Funding ( such as P2P)
• Venture Capital.i .i.i.i
• Angel Iniestirs.i .i.i.i
• Corporate Iniestments.i .i.i.i
• Criwdfunding.i .i.i.i
• Grants.i

N 4103 - Entrepreneurial Finance 7

 SOURCES OF FUNDING

Public Sectir ir
Giiernment Suppirt

N 4103 - Entrepreneurial Finance

 Giiernment
Grant & Fund
• The goiernment support and funding
programmes proiide financing seriices
to SMEs.i
• The goiernment support programs are
not limited to business finance, but also
to achieie sustainability in the
contnuity of the business growth and
contnuous deielopment.i

N 4103 - Entrepreneurial Finance 9

 Khalifa Fund fir Enterprise Deielipment (KFED)
• The fund targets capable, young graduates as well as young
businessmen and businesswomen with creatie business ideas
• Khalifa Fund for Enterprise Deielopment (KFED) supports small
and medium-sized enterprises established and run by Emirats in
Abu Dhabi through its iarious programs and initaties
• Khalifa Fund proiides funding solutons for a iariety of feasible
projects that serie the interests of the natonal economy in
diferent sectors and project categories such as
• farming,
• fishing,
• agriculture and
• eien home-based businesses.i
N 4103 - Entrepreneurial Finance 1
 Khalifa fund Prigrams Hiw Ti apply ?

Micrifnance Hiw Ti apply ?

• Khutwa • KFED proiides funding

seriices up to AED
• Bedaya 10,000,000 and fexible
repayment periods
• Zeyada • To apply for a project
• Tasnea funding, applicants need
to fill a registraton form
• Zaarie and submit it at any of
the Fund’s branches.i
• Al Hasela.i

N 4103 - Entrepreneurial Finance 1

 Muhammed Bin Rashid
Fund fir SME
• MBR Fund for SME aims to fnance innovative
pilot projects - both small and medium
enterprises - for Emirati investors through
dedicated eforts and devoted focus
MBR FUND - 6 Steps in
• LINK : https://www.thefund.ae/ getting Funds
Documents Required 1- Applicaton- Eialuaton by Fund Team
• A copy of the passport 2- Credit Report- Post Project Feasibility &
• A copy of the Family Book risks eialuaton
• Detailed resume 3- Presentaton- ProjectCost and Credit
Report to und Commitee
• Establishment program model
4- Recommendatons by the Commitee
• Executive Summary/Action Plan for the project
5- Follow Post Commitee Approial
6- Fund disbursement
N 4103 - Entrepreneurial Finance 1
 • Seed capital loan: To reduce inital costs of startng
up a business project by funding part of the capital.i Dubai SME Intelaq
• Intelaq is a licence for residents of Dubai, to run a
business from home in iarious fields, for a small fee ( Hime based
paid annually.i

Lian Value
business)
Maximum of 1 million dirhams

Terms and cinditins

▪ The enterprise shall be 100% owned and managed
by UAE natonal(s).i
▪ Enterprise to be located in Dubai.i
▪ The age of the enterpriser shall not be less than
21 years and not more than 65 years at the tme of
payment.i
▪ The minimum financial contributon of the
applicant to the funding shall be 20%
.i
Hiw ti register
thefund.iae
N 4103 - Entrepreneurial Finance 1
N 4103 - Entrepreneurial Finance 1
 Dubai Startup Hub- Dubai Chamber if Cimmerce- Funding siurces
& success Stiries

• https://www.dubaichamber.com
/dubaistartuphub/articles/fundin
g/

N 4103 - Entrepreneurial Finance 1

 SOURCES OF FUNDING

Lians|Banks| Financing
Cimpanies

N 4103 - Entrepreneurial Finance

 DEBT FINANCING
- Equity makes the investor an owner
of the business for better or worse.
• Debt is an obligation to return
principal and interest.
• Debt is usually senior to equity – it is
paid back before equity.
• Debt is often secured by assets – the
collateral.
• Examples:
• Trade debt (i.e., payables due
suppliers).
• Bank loan
• Credit card balance.
• Debtor funding (i.g. Factoring, Invoice
fnance
• Equipment fnancing (e.g., leases for
machines).
• Bank line of credit.
N 4103 •- Entrepreneurial
Government loans.Finance
Issues with Debt
• If things go well, generally less costly to
founders than equity.
• Typically have to pay interest from cash
flow, which will be diffcult for most
start-ups.
• Typically requires personal guarantees
of management team, so
unattractive to those with signifcant
personal assets.
• If genuinely secured by valuable assets
(e.g., receivables, inventory, equipment)
then may be a good alternative to equity
fnancing during
growth phase.
1
 FINANCING WORKING CAPITAL
WITH DEBT
• Working capital is the cash you need to operate
the business, eien when it is profitable.i
– Cash tied up in inventory.
– Receivables you are waiting for customers
to pay.
• Banks will ofen proiide a line of credit
collateralized by receiiables and inientory.i
– Loan covenants specify the ratio of debt to
collateral. For instance, the bank may be
willing to lend up to 70% of the value of
your receivables and inventory.
– Often still requires a personal guarantee.
• Specialized financial insttutons may factor
receiiables from your financially solid customers.i
– Expensive! Sometimes as high as 24% annual
interest.
N 4103 - Entrepreneurial Finance
CONVERTIBLE NOTE _A SPECIAL
KIND OF DEBT
• It is a form of temporary debt that will eientually
coniert into equity.i
• It isn't typically guaranteed, personally.i
• It doesn't typically haie interest payments, and the
expectaton is that it will in the end, coniert to equity.i
• Used as a quick, inexpensiie way to raise a
(relatiely) small amount of capital without setng a
ialuaton.i
• More like equity financing than typical debt
financing.i
Example:
• Investor puts in seed capital as a loan – e.g.,
$100,000.
• Loan converts to equity when and if an
institutional investor (e.g.,a VC) provides more
capital – e.g., $1 million.
• Usually converts at a discount (e.g., 20%) and
usually has a “cap” of some amount (e.g., $41
 GOVERNMENT LOAN PROGRAMS.

In the United States, the main goiernment

loan program at the federal leiel is called the
SBA or the Small Business Administraton.i

SBA guarantees the loans that

local banks make to small
businesses.i

N 4103 - Entrepreneurial Finance 1

 FINANCING BY UAE BANKS
BANK FINANCE -REQUIREMENTS
• Banks in UAE proiide diferent financing
• Business to haie been operatng for at
facilites that suit the needs of large least two years before they apply for a
businesses as well as small and medium-sized loans
enterprises.i • Haie a minimum annual sales
• Among the ofered seriices, are turnoier, defined by each bank
• business loans, • Valid documents include:
• a trade licence copy,
• secured loans (disbursed against some type of
collateral such as house, land or any other type), • power of atorney,
• a memorandum of associaton,
• oierdrafs,
• partnership agreement,
• credit cards and • bank statements for the last 6 to 12
• leter of credits (issued by a bank on behalf of the months,
buyer to pay the seller for products or seriices).i • passport and iisa copies.i

N 4103 - Entrepreneurial Finance 2

 FINANCING
COMPANIES
• Dubai & Abu Dhabi are home to
multple finance companies that
proiide financial loans and seriices
for trade and business.i
• Around 27 financing companies
are proiiding financial solutons
throughout the Abu Dhabi
emirates.i

N 4103 - Entrepreneurial Finance 2

 SOURCES OF FUNDING

Criwdfunding

N 4103 - Entrepreneurial Finance

 CROWDFUNDING AS A NEW WAY OF
FUNDING
Only used in addition to an
ongoing raise.
The full cost makes it an
expensive process.
Criwdfunding
N 4103 - Entrepreneurial Finance
Criwdfunding
• Crowdfunding is the practce of
funding a project by raising money
from a large number of people
through licensed online platorms.i
•There are many ways to proiide crowdfunding or
lending in solidarity, so it is recommended to
choose the right funding for your business needs.i
•It is recommended that you register your business
idea through patents and intellectual property
protecton before obtaining crowdfunding
2
 CROWDFUNDING
_-Equity Examples if criwdfunding platirms in
the UAE are
2- Peer-ti-peer lending
•There are many ways to proiide crowdfunding or
lending in solidarity, so it is recommended to
3- Reward based choose the right funding for your business needs.i
•It is recommended that you register your business
4-Patrinage/Charity idea through patents and intellectual property
protecton before obtaining crowdfunding

Fiur kinds if criwdfunding

https://www.zoomaal.com/
N 4103 - Entrepreneurial Finance 2
 P2P LENDING : BEEHIVE
❑ Dubai SME and Beehiie are
working together to proiide a
capital guarantee scheme for
Dubai-based SMEs that are
owned or managed by an
Emirat.i P2P lending uses the internet as a
platorm to reach a crowd of
❑ Link : htps://www.ibeehiie.iae/ hundreds of potental iniestors.i

htps://www.iyoutube.icom/watch?i=t
w0MIzEgcJmg&feature=tyoutu.ibe

N 4103 - Entrepreneurial Finance 2

 SOURCES OF FUNDING

FinTech

N 4103 - Entrepreneurial Finance

 FINTECH STARTUPS IN THE MIDDLE EAST & UAE
Overview
FlapKap Fast. Flexible. Friendly. SME Financing Get funding
for Retail, Ecommerce, Restaurants Get Funded in
• Fast. Flexible. Friendly. SME 48hrs
Website
Financing http://www.flapkap.com
Industry
Financial Services
Company size
11-50 employees
27 associated members
Founded
2021
Specialties
SME, Startup, Financing, RBF, MEA, Ecommerce,
Growth, and Founders

N 4103 - Entrepreneurial Finance 2

 FINTECH STARTUPS IN THE MIDDLE EAST & UAE
• Helping Small and Medium
Businesses Unlock Growth
• Get funds in 24 hours to invest in your
business growth, manage your liquidity
and alleviate your fnancial stress

• https://efunder.ai/

• eFunder is a leading digital fnancing

platform that provides small and
medium sized businesses with instant
cash and consistent cash flow against
their receivables.

N 4103 - Entrepreneurial Finance 2

 FINTECH STARTUPS IN THE MIDDLE EAST & UAE
• Beehiie
• Established in 2014, Beehiie is the first P2P lending platorm in the MENA
region to be regulated by the DFSA.i The leading fintech company uses
innoiatie technology to directly connect businesses seeking fast and
afordable finance with iniestors who can help.i
• County: UAE
• Funding: US$15.i5mn
• Iniestors: Riyad TAQNIA and Mohammed Bin Rashid Funds
• Founder: Craig Moore

N 4103 - Entrepreneurial Finance 2

 SOURCES OF FUNDING

Incubatirs |
Acceleratirs

N 4103 - Entrepreneurial Finance

 Business
Incubatirs
•Business incubators sometmes proiide direct
business financing in the framework of grantng
financing facilites to establish businesses.i
•Business financing seriices may iary based on
diferent business incubators, as in exemptng
the businesses from profits, bank fees or
interest, as well as grantng the entrepreneur a in5
mutually agreed period of tme to pay back the
amount of financing.i
Program

N 4103 - Entrepreneurial Finance 3

 Hamdan
Inniiatin
Incubatir (HI2)
• Oier 600 innoiatie projects incubated at HI2,
and seien specialized business accelerators
accredited

• 200 projects in iaried sectors brought to Dubai

under the Innoiaton Atracton Program.i

- Dubai has the first business incubator in a

school and the Higher Colleges of Technology
(HCT)

N 4103 - Entrepreneurial Finance 3

 Netwirking and
Partcipatin in eients ti
meet Iniestirs
HSBC C3 Sicial Impact Acceleratir Prigram 202_
This eient proiides selected partcipants with:
• Months of one-on-one expert support
• Accelerator workshops
• Netwirking eients with iniestirs

N 4103 - Entrepreneurial Finance 3

 SOURCES OF FUNDING

Angel Iniestirs

N 4103 - Entrepreneurial Finance

 https://basher.gov.ae/invest/sta
tic/images/funds/Angel_IO.png

Angel Iniestir
•An angel iniestor is an indiiidual who proiides
capital to startups ofen in exchange for coniertble
bonds or capital shares in the business.i
•Seieral iniestors sometmes come together to form
an iniestment group in which they partcipate in
iniestments and research.i
•Angel iniestors get iniolied with businesses
because they expect to see a return on their
iniestment.i They are going to set the bar high for
your success.i If they make a large iniestment, then
https://basher.gov.ae/invest/static/images/funds/See
they’re going to expect your business to perform to d_Group.jpg
their expectatons.i

N 4103 - Entrepreneurial Finance 3

 SOURCES OF FUNDING

Venture Capital |VC |

N 4103 - Entrepreneurial Finance

 Equity and
ienture capital
• Equity and ienture capital financing helps startup
businesses achieie goals faster than self-financing
and puts entrepreneurs in touch with experienced
entrepreneurs.i
• stopIn exchange for equity and ienture capital
financing, you will lose some ownership of the
business according to the amount of funding
proiided.i
• stopIt can take six months to a year to obtain
funding before making an iniestment decision.i

N 4103 - Entrepreneurial Finance 3

 Siurces if Funding

THINGS TO CONSIDER
Area What it is
Funding Who proiides the funding?
Stage if interest Pre-seed (sometmes “friend and family round”): build MVP
Seed: show tracton or build prototype
A round: start to scale or build final product
Amiunt if iniestment Pre-seed: under $500k, usually
Seed: under $1.i5M, usually
A Round: under $5M, usually
Value-Add What do iniestors add, if anything, to your business?
Fund Size How much money can they deploy?
Hiw they make miney What’s their motie?

N 4103 - Entrepreneurial Finance

 Siurces if Funding

VC VS. ANGEL VS.

“SUPER ANGEL” VS.
ACCELERATORS
VC Angel “Super Angel” Acceleratirs Criwdfunding
Stage if interest Round A Seed Seed Pre-seed Pre-seed

Amiunt if $2M+ $25,000- VC VS. ANGEL

Depends $20,000- $100-
iniestment $500,000+ $100,000 $1M
Value-Add Networks, Sometmes Networks, Inital Indirect
goiernance, goiernance, mentoring,
guidance guidance networks
Fund Size $100M+ N/A $10M- $10M- N/A
$70M $30M
Hiw they make Fees and carry Equity leading to Equity leading to 5%-10% equity They don‘t/ They
miney leading to large any exit any exit, fees will
exits
 SOURCES OF FUNDING

Inital Ciin Oferings

("ICO")

N 4103 - Entrepreneurial Finance

Inital Ciin Oferings
("ICO")
• htps://www.imondaq.icom/fin-tech/821846/inital-
coin-oferings-in-the-united-arab-emirates
• Inital Coin Oferings ("ICO") refers to the
innoiatie mechanism by which start-up
businesses and other companies can
digitally raise funds from the public.i

• htps://www.iiniestopedia.icom/terms/i/ini
tal-coin-ofering-ico.iasp

4
 SOURCES OF FUNDING

Digital Platirms

N 4103 - Entrepreneurial Finance

Actiity _ Business Simulatin

Diing Business IN UAE- Basher digital

Platirm-Startng a business inline
The UAE Goiernment introduced the Bashr seriice to start a business.i Bashr is an integrated
eSeriice, which enables iniestors to establish their businesses in the UAE within 15 minutes
through a unified online platorm.i This platorm is connected with federal and local
goiernment enttes, which proiide commercial licence seriices.i
• Basher (Diing business in _5 minutes)
• htps://u.iae/en/informaton-and-seriices/business/bashr
• Manage y iur Business
• htps://basher.igoi.iae/iniest/#/manage-your-business
• BASHER Priactie Seriices
• htps://basher.igoi.iae/iniest/#/#/
• Explire Oppirtunites
• htps://basherggiigae/iniest///pritity pe
• Business Tiils
• htps://basherggiigae/iniest///explire-business-ippirtunites/business-tiils
• Fund Explirer
• htps://basherggiigae/iniest///explire-business-ippirtunites/business-tiils/business-fund-explirer
• Business Setup Naiigatir
• htps://basherggiigae/iniest///explire-business-ippirtunites/business-tiils/Business-setup-naiigatir 4
Actiity _ Business Simulatin
INVEST IN DUBAI- A new
digital Platirm-
(launched Feb , 202_)
• Dubai has launched a new digital platorm to help
entrepreneurs with a "comprehensiie soluton" to start a
business in the emirate.i

• The digital platorms helps and guides entrepreneurs to

establish a business either in a free zine and mainland
Dubai in diierse sectors, including technology, adianced
manufacturing, finance, agriculture and food,
entertainment and media, Islamic economy, energy,
healthcare, professional seriices, electronics and maritme.i

• htps://iniest.idubai.iae/

N 4103 - Entrepreneurial Finance 4

Actiity _ Business Simulatin
INVEST IN ABU DHABI- YOUR
GATEWAY TO SETTING UP YOUR BUSINESS IN
ABU DHABI

• Setup in Abu Dhabi provides everything

an investor, business owner, or SME
requires for setting up, launching, and
growing their businesses in Abu Dhabi.
• htps://www.isetupinabudhabi.iae/

N 4103 - Entrepreneurial Finance 4

 • Many ways to get funding
CONCLUSIONS
• Each approach has pros and cons
– not always substitutes
• Early choices impact later ones
N 4103 - Entrepreneurial Finance 4
 Thank Yiu!

N 4103 - Entrepreneurial Finance 4