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By WM Staff
May 22, 2016 | 10:25 | Dubai
Dubai SME, the agency of the Department of Economic Development (DED) in Dubai launched a report on the ‘State of SME Equity Investment in Dubai,’ to encourage investment in the sector and attract direct capital into areas with vast potential for entrepreneurial and start-up growth, from private equity (PE) investors, venture capitalists (VCs) and angel investors. Launched as part of the Dubai SME 2021 Strategic Plan, the report presents an estimate on the market size, scope and potential impact of equity investment in SMES, in addition to overall state of equity investment in SMEs across the UAE.
Here are some highlights:
Limited sources of Financing: Sami Al Qamzi, Director General of DED, highlights, “Limited source of funding to start businesses is a major gap in our SME ecosystem, which is underlined by the finding in the report that 80% of the start-ups relied on self-financing as a source of capital,” adding that addressing market gaps and channelling investments into SMEs is critical to Dubai’s knowledge economy initiative.
Primary reason for SME’s availing Equity Finance was to manage operational costs rather than funding of strategic growth/ expansion plans. The typical tendency is to bring in own funds, set up operations and subsequently approach angel investors to finance operational expenses and cash-flow requirements. Majority of those surveyed indicate funding from multiple sources (angels, incubators, VC funds) across the start up phase.