Op-ed by Hisham Al Gurg, CEO, Seed Group and the Private Office of Sheikh Saeed bin Ahmed Al Maktoum
“Ideas are easy. Implementation is hard.” This saying by ace author and well-known evangelist Guy Kawasaki condenses the essence of entrepreneurship very well. As rapidly as the entrepreneurial ecosystem is growing in various markets around the world, it is also a fact that not many of the deserving ideas get to see the light of the day.
Statistics state that 9 out of 10 start-ups don’t make it, 20 percent fall apart after a year, and 30 percent close within two years. You don’t need to dig deep to find out that financing is one of the major reasons for many deserving ideas not flourishing. Going by this equation, it would not be incorrect to say that a country’s start-up ecosystem is only as strong as its options for secure and reliable financing.
It is not unknown that small and medium enterprises (SMEs) are the backbone of any nation’s economy in today’s tech-driven, innovation-centric world. So, what is it that needs to be done to strengthen this backbone? What areas should authorities and governments around the world focus on to make it possible for their country’s economy to flourish?
The United Arab Emirates (UAE) has presented the world with answers to just these questions. The UAE Cabinet’s approval of the new crowdfunding strategy last month opens avenues for the private and public sectors in the country to support the financing of innovative business ideas. The announcement, made by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE, and Ruler of Dubai, is set to play a bigger role in shaping the future of the nation’s economy.
كما اعتمدنا في مجلس الوزراء اليوم إجازة ممارسة نشاط التمويل الجماعي Crowd funding وبأن يكون له مشغلين من القطاع الحكومي والخاص .. التمويل الجماعي من أفضل الوسائل لدعم تمويل الأفكار الابتكارية التجارية الجديدة .. وسيفتح باباً للشباب ورواد الأعمال في تمويل أفكارهم .. pic.twitter.com/7PEfmozn0z
— HH Sheikh Mohammed (@HHShkMohd) March 21, 2022
As a form of alternative financing, crowdfunding will allow start-ups in the UAE with innovative ideas to raise a certain amount of capital through a larger set of investors who are interested in funding their projects or ventures online. The modern way of raising funds is so effective in the SME landscape globally that governments and big businesses around the world are now using it as a strategy for growth. Overall, the basic aim of crowdfunding is to encourage entrepreneurship and innovation.
As per the announcement, in the UAE, this will be done through a system for crowdfunding platform operators to be regulated by the Securities and Commodities Authority. The modalities have been put in place to make the UAE a level playing ground for businesses of all kinds and aspiring entrepreneurs from across the world.
This mandate on crowdfunding is a praiseworthy attempt to boost flexibility and bring about a variety of businesses in the UAE. It is a move that will further strengthen the country’s overarching goal of economic diversification. This means new business ideas are set to find strong financial backing as the liquidity pool makes the country’s economy a fertile ground for innovation—that is the power of crowdfunding.
So, if you have had an idea for a start-up, if you think you can contribute to the economy, or solve a pressing problem, you can now try out financial backing for your idea in the UAE. Not only will the country’s regulatory system ensure you get the best shot at it, but it will also ensure you get the best infrastructure and technological assistance to make your dream a reality.
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