Dubai SME, the agency of the Department of Economic Development (DED) in Dubai mandated to develop the small and medium enterprise (SME) sector, has launched a report on the ‘State of SME Equity Investment in Dubai,’ the first initiative of its kind in the Gulf region, 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.
The report was released during the first ‘SME Equity Financing Forum,’ organised by Dubai SME today at the Armani Hotel, Dubai.
Launched as part of the Dubai SME 2021 Strategic Plan, the report is well-aligned with the strategic economic direction of the UAE, particularly the focus of Dubai on innovation and investment towards building a knowledge economy. It also falls the first-ever authentic 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.
The report provides for the first time a comprehensive picture of the state of investment in SMEs in Dubai, along with inputs from all stakeholders in SME equity financing, including entrepreneurs, investors, venture capitalists, legal institutions, SME development entities and academic institutions, as well as government organisations.
Dubai SME launched the Equity Investment Initiative in 2014 with the goal of unlocking investment and funding in SMEs and entrepreneurial projects. The equity investment landscape was studied in the first phase of the initiative and the recommendations in the report formed the basis of actions plans in the second phase.
The second phase of the initiative will witness the launch of Dubai Ventures Network to raise awareness on the importance of equity investment in SMEs, to create an ecosystem for equity investment in SMEs by involving all key players (Angel Investors, Venture Capital Funds, SMEs, Entrepreneurs, incubators, accelerators, Universities, Policy Makers, .. etc), to improve capabilities of investors, and to facilitate and advocate developing a supportive regulatory framework for SME equity investment.
“The ‘State of SME Equity Investment’ report represents an ideal opportunity in the medium to long term, not only for SMEs in Dubai, but also for those across the region. The estimated total investment in small businesses in the region is about three billion dirhams, and with clear strategies these funds can be channelled into sectors of vast growth potential,” said His Excellency Sami Al Qamzi, Director General of DED.
“However, 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,” Al Qamzi said, adding that addressing market gaps and channelling investments into SMEs is critical to Dubai’s knowledge economy initiative. “Based on the findings in the report, Dubai SME has formulated strategies and initiatives to improve SME performance in the years ahead, facilitate SME access to financing, and enhance SME competitive as well as their value-add to the UAE economy,” he said.
Al Qamzi emphasised that Dubai has become an internationally reputed entrepreneurial hub with a distinct group of SMEs in vital sectors. “We continue to develop these distinguished SMEs and enable them to grow and expand to neighbouring markets. It’s a top priority for Dubai to build an integrated support system for SMEs and quality them to meet the diverse challenges of going global.”