The UAE offers the perfect ecosystem for Tech Start-ups to develop and expand
In recent years, the Middle East has experienced a surge of tech-related development. Rapid ideation is common in tech firms, which is followed by similarly rapid implementation. Another thing that most Tech firms have in common is that they start small and then swiftly scale up once they have secured funding. However, controlling expenditures early on is crucial, particularly in the first year, to ensure that the tech business does not go bankrupt before attracting its first round of seed/angel funding.
The Dubai International Financial Centre (“DIFC”) and the Abu Dhabi Global Market (“ADGM”) have recognised the challenges faced by early-stage technology businesses and have created the DIFC Innovation license and the ADGM Tech Start up license respectively. These licenses are special licenses offered to foreign and local tech start-ups wanting to develop and expand their businesses through access to finance and infrastructure, and through operating in an adequate and safe regulatory environment. All this at a relatively low cost.
About the DIFC
The Dubai International Financial Centre, or DIFC, is a leading financial hub in the region for business, fintech, and lifestyle. Setup in 2004, the DIFC has grown to be one of the top 10 onshore financial centres in the world. It brought in a paradigm change in the region, by adopting a Common Law framework, with an independent regulator (DFSA) and an independent English language Common Law judiciary – DIFC Courts.
About the ADGM
Abu Dhabi Global Market is a broad-based international financial centre for local, regional and international institutions. ADGM has three independent authorities, Financial Services Regulatory Authority (FSRA), Registration Authority and ADGM Courts. These three authorities ensure that ADGM offers a professional yet business-friendly environment operating with the best practices and recognised by all the major financial centres across the world. ADGM develops and supports its clients with a recognised regulatory framework, Common Law legal jurisdiction and an attractive business environment. ADGM is recognised as a Tier 1 Financial Centre
A comparison of the DIFC and the ADGM tech startup licenses
Below is a comparison of the salient features of the two licenses:
| DIFC Innovation license | ADGM Tech Startup license | |
| License fees | US$ 1,500* | US$ 700 |
| Tenure of incentives | 4 years | 2 years |
| Incorporation and registration fees | – | – |
| Minimum share capital requirement | – | – |
| Co-working desk space | US$ 500 per month, payable monthly | from US$ 440 per month, payable monthly |
| Visa quota | 4 visas | 1.5 visas per desk space |
| Subsidised visa costs | Yes, up to 50% | No |
The reduced license fee may be valid for two years only in some cases (regulated fintech licenses for example).
Who should Apply for the tech startup licenses
- Local, regional and international startups.
- Startups with an innovative tech business model that leverages technology as the main platform to solve customer challenges and provides products and services that meet specific market needs.
- Tech startups that have the potential to scale regionally (or globally).
- Tech startups with product/market fit that support sustainable economic development.
Conclusion
The DIFC and the ADGM are two world class financial centres and are home to the major financial institutions as well as venture capital organisations. The two financial freezones also have their own regulatory bodies, with regulations which are aligned with international standards and which provide a safe regulatory environment. These important features, i.e. access to finance, and safe regulatory environment, together with the access to world class infrastructure, provide the perfect ecosystem for tech start-ups to thrive.
How DTOS Group can help
DTOS has a team of experts in the UAE that can assist you with the application for the registration and the licensing as well as the ongoing post registration compliance and administrative support required.
Please reach out to our team on uae@dtos-mu.com or on +971507954345 for more information.