I’ve been getting more interest and generating more informal discussion on the Startup Visa Dubai so I thought I would do a bit of objection handling. I lean toward the tech-side so that will come out in my answers. This is a work-in-progress and I look forward to contributions and contrarians:
Q: What is a Startup Visa for Dubai?
A: A Startup Visa for Dubai is a class of visa that allows entrepreneurs of any nationality who secures verified Dubai-based funding (institution or resident/citizen angel) that enables them to establish a business in Dubai and issues visas.
Q: It can’t be that simple, so what are the finer points?
A: The startup founder is required to secure the support of an investment body (vc, pe, etc) or resident/citizen angel who co-applies for the Startup Visa and commits to providing a minimum of $250,000 of investment capital and the founder maintains a minimum of 20% equity. A government body with advisory from credible VC’s, entrepreneurs and lawyers vet the applicants and issue the visas. The Startup Visa allows the founder to issue up to 5 additional visas (open to ideas here of course), and includes milestones for growth and profitability to issue additional visas. The founder can also setup either inside or outside a free zone and requires no “local” partner. The Startup Visa has a standard 3-year term.
Q:What if the business fails?
A: “The founder gets to keep the Visa. Startups fail. That’s part of the experience. Some of the greatest companies were not the “first” that an entrepreneur did. If the entrepreneur doesn’t start another company with a year, then the Visa expires.” Feld
Q: Is it legal/advisable to “fail” in Dubai?
A: Insolvency laws need revision and updating in Dubai to encourage risk taking. This is a key parallel requirement.
Q: Why would Dubai want this?
A: The list of reasons is long: increase GDP, put local money to work, attract the best-and-brightest, grow investment and jobs at the sme level, increase ancillary spending on cars/homes/food/etc, build an ecosystem for new businesses to spawn new businesses, give attractive opportunities for Emiratis to work and invest, diversify the local economy, keep expats here who want to start businesses but who opt to move back home, attract global VC’s to setup offices here to invest and bring entrepreneurs to Dubai, put positive pressure on the inventory of office space and residential space coming online, and create a roadshow climate where Dubai-based capital can travel the world and offer attractive investment and relocation opportunities to entrepreneurs at leading tech events. This can jump start an ecosystem for a knowledge economy. Entrepreneurs create jobs. Great ideas bring great talent.
Dubai is also at a relative disadvantage to regional neighbors like Egypt and Jordan. These countries are the beneficiaries of demographics: with a majority of residents being citizens not limited to maintaining an active residence visa, entrepreneurs are free to start businesses from their bedroom without the race of an expiring credential. In Dubai, the entrepreneur must race to get started and potentially funded within the visa grace period, with many entrepreneurs choosing to return to their home countries to start their business in more stability. By creating a climate where strong entrepreneurs who can secure local funding can effectively germinate their businesses do not completely close this gap – since the bootstrapped entrepreneur is free in Egypt and Jordan, for example, to take their time – this does make Dubai more competitive of an ecosystem. We have the money, agencies, exposure, and infrastructure…we should be leading.
Q: Why would an entrepreneur choose Dubai over starting a company in the U.S., Europe or elsewhere.
A: Dubai is at the crux of east and west. Dubai is the most progressive and dynamic city in a rapidly growing region that still has nascent teleological entrepreneurship – it is ripe with opportunities. Also, with access to Europe, Africa, India and China, Dubai makes a great base to expand in either direction as a startup goes global. There is a growing finance industry, good infrastructure, modern technology usage, access to foreign and domestic talent, and a history of leveraging the talent of multiculturalism. Internet penetration in the UAE is among the highest in the region and will reach globally-leading standards by 2013. Add to that the tax-free environment and modernizing business laws and financial courts and Dubai makes a compelling case.
Q: How do you determine a qualified investor or angel that is not just paying for someone to enter the country and setup a shell company?
A: I don’t have all the answers here, but the vetting panel and documentation to support requirements for qualified investors is a certain requirement.
Q: What are the milestones and renewal criteria?
A: For the StartupVisa to be renewed, the company needs to either (a) create 5 new jobs every two years, (b) raise at least $1m every two years, or (c) generate at least $1m in revenue and be profitable. Feld
Q: Wait a second…don’t we have free zones for this?
A: We do. The free zones have enabled many companies to form here, but more so, for international companies to setup sales and marketing arms in Dubai. With free zones the issues are many. If the company is registered outside the UAE, that company has to have been in existence for 2 years to qualify for registration in Dubai Internet City. The issuing of visas is linked the square footage of office space rented, making the free zones conspicuously real estate plays rather than entrepreneurship accelerators. With more access to office space inside and outside free zones, entrepreneurs will benefit from downward pressure on office rents. Also, technically free zone companies are not supposed to enter into contracts with non-free zone companies in the UAE.
In many cases it is the perception rather than the rule for free zones in Dubai that they support and favor large international companies rather than entrepreneurs. The Startup Visa is almost as much about perception. Dubai free zones have had years of boom times to attract entrepreneurs – but where are they? It is time to liberalize the startup ecosystem and make Dubai an internationally-recognized startup center and retake the term Silicon Wadi.
Q: What’s the big deal. No one else is doing this so there is no undue competition?
A: If the US – the undisputed power in technology startups and growth – is able to generate significant interest and awareness in the need to attract the best and brightest from around the world to start tech companies there, then it must be a serious issue for the rest of us. We will be left even further behind. Let’s use our strengths: location, tax-free, cultural diversity, high-growth, need for economic diversity and history of high risk-tolerance to compete rather and create a hub. It has already started: Chile has the right idea and the Canadians are buying the video game industry.
The main issue for Dubai is that once I get my business started in the US, I don’t need to issue visas – everyone is able to work there who is there (for the most part). In Dubai, I need to issue visas to most all staff, hence the added complication with this idea here.
What do I really want? I want a Dubai- or Middle Eastern-based company on the 2010 list of the Top 10 International Web Products (click through to the 2009 list).
In summary, I’m open to why and why not, but I’d really like to hear ideas for how we can implement the Startup Visa in Dubai. Please leave your comments.
