Share
Tweet
Share
Share
When your IT business starts hitting a ceiling in the home market, expanding beyond it is the natural next step. But the pressing question for many business owners is — where exactly should you expand to?
The USA is not the answer. The intense competition there leaves little room for newcomers. China, although a powerhouse, is experiencing an economic slowdown — and in any case prefers to build up local businesses for export instead of supporting foreigners.
So what about the Middle East, then? The UAE is reinventing itself — in just over five years, the Emirates want to generate one in five dollars from the high-tech industry. And to get there, they’re offering concrete support to the most promising startups. It’s a red carpet of money.
But why the United Arab Emirates? How does residency differ between the emirates? And what challenges await entrepreneurs who come to the Middle East for a chance to make it big?
To answer these questions — and more — we spoke with Vitaliy Chiryassov, a man who has successfully helped numerous technology companies establish themselves in the UAE.
Why is the UAE positioning itself as the top regional launchpad for innovation in IT? What drives this support and how does it benefit companies?
In short, the UAE’s ambition to cement itself as a haven for foreign companies is a key part of its national economic policy.
The authorities have set a goal: to double the share of the digital economy in the country’s GDP structure, which means growing it to $140 billion in less than 10 years. In other words, one in five dollars for the Emirates will come from the IT sector.
The UAE is pulling out all the stops to achieve this goal, and they can’t do it without attracting and supporting foreign companies, without tapping into the global talent pool. The authorities are focusing on attracting artificial intelligence, foodtech, metaverse, blockchain and digital finance companies — their strategy revolves around verticals where there is still room for disruption. And they understand that to foster this, they need to provide the best conditions for entrepreneurs.
So not only do they provide an ecosystem, but they also provide financial support for IT entrepreneurs. They choose projects carefully, but if you hit the mark, that support is generous. (The average seed investment check in Abu Dhabi is $670,000).
Every emirate, every major city has its own support program. Dubai, of course, stands out. Startups based in the UAE’s most populous city attracted 96% of the total funding aimed at business growth.
But other cities are working to close the gap. For example, the government of Abu Dhabi is investing 10 billion dirhams ($2.7 billion) to increase non-oil exports by 143% by 2031. Some of that money will be invested in technology companies. Total funding for companies exceeded $735 million, and the emirate earned $1.2 billion from exits. Sharjah and Ras Al Khaimah are also building their own unique ecosystems. Overall, each city is finding its own way and offering something unique to attract entrepreneurs.
It’s clear why the UAE wants to attract IT talent, but beyond funding, what motivates expatriates to choose the Emirates?
Several factors.
Firstly , its geographic location provides easy access to emerging markets. The UAE is only a 4 to 6 -hours flight from major business hubs in Europe and Asia, and 80% of the world’s airports are within an 8-hour flight, making it an ideal base for companies looking to grow in emerging markets.
Secondly, the UAE has an easy process for starting a business – it ranks 16th out of 190 countries for ease of doing business. There is essentially no red tape. The UAE has also eliminated fees and duties on 1,500 types of government services related to business activity.
Thirdly, free zones — these are specialized areas designed to attract new businesses with favorable conditions such as duty-free imports, and some businesses can also get 50-year tax holidays. There are about 50 free zones in the Emirates, and some focus on attracting specific types of businesses: for example, a free zone focused on industrial start-ups will have light manufacturing units for rent, where a company can lease and start producing and packaging products immediately.
Finally, the UAE is very welcoming to relocators. Company owners can obtain a “golden visa,” which grants them the right to live and work in the country if they have a local company.
Let’s say I am now convinced that I want to expand or relocate my IT company to the UAE. But how? What steps should I take?
Step one — determine what your business will focus on, what product or service you’ll offer, and who your target market is. Consider whether your project aligns with the UAE’s priority sectors. If it does, you’re more likely to secure investment and support faster.
Step two — choose a legal structure: base it on your company’s development strategy. If you’re planning to raise investments or incentivize key team members, consider creating flexible corporate structures. This will allow you to sign SAFE (Simple Agreement for Future Equity) contracts. It’s a good idea to incorporate your company in an economic zone that understands concepts like stock options. At this stage, it is advisable to consult an experienced lawyer.
Step three — register your trademark. This will not only allow you to monetize your brand through royalty payments but will also protect you from imitators.
You mentioned earlier that there are about 50 free zones in the UAE. Is it difficult to say in advance what the timelines and costs will be for incorporation? How do you know exactly where to get established?
This question hits the nail on the head. In fact, this is one of the hardest things about incorporating a business in the UAE, or at least we’re trying to make it so you can say it was.
We’re currently working on UPPERSETUP, a platform that lists all the necessary documents, timelines, and fees. It also includes an algorithm to help select the specific jurisdiction. This is an extremely useful feature that can save at least a couple of weeks spent studying the nuances of each jurisdiction. It will tell you with almost 100% accuracy where you should incorporate your business based on the intended purpose of your startup.
In addition, the step-by-step wizard will help you understand if you can handle incorporating a company in the UAE on your own or if it’s better to hire a local consultant. All of it is completely free and does not commit the user to anything.
You make your living helping companies enter the UAE market. You must have seen many success stories and some struggles. Based on your experience, what are the biggest challenges newcomers face there?
The high cost of living. But it’s hard to say if that’s a con or a pro – in my opinion it has a positive side. You literally feel the value of every minute you spend here. And so it’s easier to push yourself to sleep in, to relax by the pool, to go shopping – after a while those impulses go away on their own. You are constantly in gear five, you know what you came here for. And then there are the people. You’re surrounded by successful business people. This environment has a strong influence, it shapes you as an entrepreneur, it hones your social and business skills.
The local business community’s moderate conservatism can sometimes slow down growth. What the locals say about you matters a great deal to officials and potential partners. This means that for truly serious conversations outside the IT sphere, you’ll need to build a reputation. In other words, you need to mingle in local circles for at least a year, build contacts, and find people who can recommend you. Additionally, locals prefer personal communication. To reach certain agreements, not just promises, you’ll have to smoke more than one hookah with potential partners. It’s part of the tradition. On one hand, it brings the business community much closer together. But on the other hand, it slows down the start, tests your emotional intelligence.
In closing, if you were to bring all your experience together, what advice would you give entrepreneurs wishing to enter the UAE market?
I recommend that you think carefully before pulling the trigger: ask yourself the following questions:
First, why leave your current jurisdiction? Carefully consider the potential benefits of relocation. Quantify the benefits as much as possible to properly weigh them against the disadvantages of such a move.
Second, what exactly draws you to the UAE? Perhaps you are looking to expand into African or other emerging markets. Or maybe you need the backing of an influential financial partner.
Thirdly, does the UAE offer the best support for your specific business? Mind you, there are over 50 free zones, all focused on specific industries and business needs. I recommend researching the best fit. By the way, our system, which uses neural network models to search and match data, can help you figure this out by offering the most appropriate option.
In general, Dubai and the other emirates of the UAE are a magnet for investors and entrepreneurs from around the world. This creates fierce internal competition, but at the same time opens up unprecedented opportunities. Therefore, when you have defined your development strategy and your own goals as an entrepreneur, I recommend that you ask yourself the most important question: Why am I not there yet?
