Funding options for start-ups in the UAE are on the rise.  Traditionally, most start-ups in the UAE have tended to be bootstrapped or financed by conventional lenders such as banks and financial institutions.  However, over the last few years, business incubators and accelerators have flourished in the UAE, creating a conducive and cost-effective environment for entrepreneurship in the UAE.  This has led to a gradual upsurge in activities in the angel investment, crowdfunding, private equity and venture capital space. Notably, the technology space has seen a boost as the UAE government has announced various initiatives for entrepreneurs and has been actively promoting the fintech space.

The UAE government has also been supporting and financing local enterprises owned by UAE nationals through government funds such as the Khalifa Fund for Enterprise Development and the Mohammed Bin Rashid Fund for SME, which is encouraging for the home-grown talent.

This article sets out below the key avenues through which a UAE start-up may be financed.

Avenues to Fund Your Company


A majority of start-ups in the UAE tend to be bootstrapped, i.e., the promoters of the company finance the business with their own funds, or through funds from family and friends.

In this regard, note that, in the UAE, the UAE Central Bank regulates financial activities surrounding the granting of loans, and only licensed bank and financial institutions are permitted to grant loans.  Besides, under the UAE Penal Code, private individuals are prohibited from providing loans with unreasonably high interest which is against Sharia law (Article 409).  This could make taking loans from private individuals or unregulated entities problematic because there may be limited legal recourse in the event of a dispute.

SME lending

According to the UAE Ministry of Economy, the small-and-medium enterprises (SME) sector represents more than 94% of the total number of companies operating in the country and provide jobs for more than 86% of the private sector’s workforce.  That said, conventional lenders are sometimes reluctant or unable to support SMEs given their limited assets or lack of a proven record of company operations. This makes it difficult for SMEs to do business and finance provisions can be expensive or inflexible. Data from the Khalifa Fund for Enterprise Development indicates that conventional banks reject approximately 50-70% of SMEs applications for funding. In addition, loans to SMEs account for just 4% of the outstanding bank credit in the UAE, below the MENA average of 9.3%.

Despite the credit crunch, SMEs contribute nearly 60% of the UAE’s GDP and this is estimated to grow to 70 % by 2021. Consequently, other means of raising funds such as crowdfunding, angel investment, and private equity and venture capital funding are gaining traction.


Crowdfunding is a practice of raising funds from a large number of people by way of an electronic platform for a business venture or a project.  The two relevant models of crowdfunding in the case of raising funds for a company include loan-based crowdfunding (or peer-to-peer lending) and equity crowdfunding.

There are no specific crowdfunding regulations in onshore UAE, although UAE start-ups may resort to using crowdfunding platforms in the DIFC which are regulated by the Dubai Financial Services Authority (DFSA), the financial regulator in the DIFC.  For instance, DFSA regulated Beehive is a regulated peer-to-peer lending (P2P) platform, under which investors provide finance to businesses without the use of a conventional intermediary, such as a bank – P2P lending uses the internet as a platform to reach a crowd of hundreds of potential investors. In addition, UAE start-ups may also access funding through regulated equity crowdfunding platforms. Currently, Eureeca is the only such platform in the UAE, which is regulated by the DFSA.

Angel Investors

The thriving entrepreneurial ecosystem in the UAE has been accompanied by a rise in the number of angel investors.  Angel investors (generally high net worth individuals) provide investment against an equity share in the company. A useful list of angel investors in the UAE can be accessed here.

In addition, there are various angel investor networks in the UAE such as the Dubai Angel Investor network, the Women’s Angel Investor Network, and the Falcon network which have fostered the angel investment scene.

Private Equity and Venture Capital

Private equity (PE) and venture capital (VC), as sources of funding, are slowly picking up in the UAE. VC funds typically providing funding in return for minor equity stakes in start-ups or young SMEs (often technology companies) that are not traded publicly.  On the other hand, PE Funds often take a majority stake in mature companies in traditional industries.

Not too many PE and VC funds are located onshore owing to the licensing process, which can be burdensome. Challenges also include legal and regulatory restrictions, uncertainties of the legal system, and difficulties in structuring investments inside the UAE.  As such, PE and VC investors generally structure their funds in the DIFC or offshore in a jurisdiction where there is more certainty surrounding enforcement of their rights.

Strategic Investment

UAE companies can also be funded through strategic acquisitions, particularly in the case of a foreign investor trying to enter into the UAE market and grow inorganically. Recent deals in the UAE, such as the acquisition of by Amazon and the Uber’s acquisition of Careem, are key examples.

Business Incubators and Accelerators

Although most business incubators (and accelerators) do not offer funding, they provide various packages and facilities which would eventually be of financial benefit to start-ups and entrepreneurs. Some of the key business incubators in the UAE include the Dubai Future Accelerators, In5, Dubai Technology Entrepreneur Centre (DTEC), Hub71, ImpactHub, TechStars Dubai, and Fintech Hive.  A useful guide on business incubators can be accessed here.

 Support for local SMEs

SMEs owned by UAE nationals may access funding through government initiatives such as the Khalifa Fund for Enterprise Development and the Mohammed Bin Rashid Fund for SME. As such, the Khalifa Fund was established in June 2007 to help develop local enterprises in Abu Dhabi. Khalifa Fund started with a total capital of AED 300 million, which was gradually increased to AED 2 billion now covers all of the UAE.  In the emirate of Dubai, the Mohammed Bin Rashid Fund for SME aims to finance innovative pilot projects initiated by UAE nationals.

Initial Public Offerings (IPOs) in the UAE

The issue of securities of an onshore company is regulated under the UAE Companies Law (Federal Law no. 2 of 2015 on Commercial Companies) and regulations issued by the Securities and Commodity Authority (SCA).

Under the UAE Companies Law, only public joint stock companies may offer securities by way of a public subscription through a prospectus; other companies, whether incorporated in the UAE (mainland or in a free zone) or in a foreign jurisdiction, are prohibited from advertising including the invitation to a public subscription without the approval of the SCA (Article 32).  As such, limited liability companies (LLCs), the legal form adopted by many start-ups in the UAE, are prohibited from raising funds from the public.  Owing to this, coupled with a capital market that is not mature in the UAE, it is rare to see local start-ups reaching the IPO stage.

Debt Instruments

Under the UAE Companies Law, only public or private joint stock companies can issue bonds or sukuks (including instruments convertible into shares) in the UAE (Article 31), subject to shareholder approval.  The issue of such bonds and sukuks will also have to comply with the Companies Law and the regulations of the SCA.  As most start-ups are not incorporated as public or private joint stock companies, most start-ups do not have access to this option.

How Can We Help?

Fichte & Co regularly advises start-ups on how to structure their company to maximize chances for investment.  We draft founders’ agreement, advise on equity splits, review commercial contracts, and draft investment documentation for our start-up clients. We also put promising companies in touch with the right partners for attracting investment from high net-worth individuals and family offices.

If you have any questions related to this matter, please email us at or call +971 4 435 7577

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