Why European startups should consider moving to Dubai

Dubai is a city on the rise. The first nine months of 2023 saw its Gross Domestic Product (GDP) increase by 3.3%, while in the same period, its information and communications sector shot up by 4.4%. Alongside its prolonged economic success, the city has also become a haven for startups and the tech sector in general.

A big part of this has been the country’s dedication to stoking business, something many feel Europe hasn’t focused on in the same way. While the continent still has a strong global presence with a large market and a highly skilled workforce, many complain about the cost of doing business and its array of strict regulations.

For European startups looking to expand and grow, this can be off putting. Thankfully, there are more options now than ever for companies in this position — and one of these is Dubai and the UAE.

Why should startups seriously consider Dubai?

“We’re seeing more and more founders and startups look at the Middle East as a credible opportunity for growth,” says Peter Brady, assistant vice president of Dubai World Trade Centre.

He posits there are multiple reasons for this, but one of the most important is how Dubai acts as a geographical hotspot for global expansion. “Dubai’s a hub,” Brady says, “we have access to something like four billion people within a four hour flight.”

This means businesses can not only work and expand within the Gulf Cooperation Council (GCC), but also the global south as a whole.

This is far from the only reason for European startups to consider expanding into the UAE though. Mohammad Ali Rashed Lootah, the president and CEO of Dubai Chambers, says that Dubai has ambitious plans for the future that can directly benefit businesses from a variety of sectors.

In our conversation, Rashed Lootah raised the Dubai Economic Agenda (D33), an “ambitious roadmap [that] seeks to double the size of the emirate’s economy over the coming decade and position Dubai among the top three global cities.”

The part that’s particularly interesting for European startups is that a core tenant of this plan is a focus on, and investment in, future-gazing technologies, such as “artificial intelligence, smart city solutions, and fintech.”

This isn’t the only initiative in this vein either. The launch of the UAE Green Agenda 2030 and Net Zero by 2050 strategies mean there are huge opportunities for companies working in the sustainability sectors too.

European startups in any of these sectors will have access to financing, networking, and broad market opportunities that could help drive their business to the next level.

While this expansion into the UAE could be resource intensive, there are other benefits that make this move relatively seamless.

How European startups can land softly in Dubai

“Dubai offers a business-friendly regulatory environment,” Rashed Lootah tells TNW. “The emirate’s numerous free zones, which are tailored to the needs of specific industries, provide significant tax advantages, streamlined regulations, and access to specialised infrastructure.”

The business-friendly regulation of the area is a topic Brady brings up too. “The government here is a very active supporter of entrepreneurship investment and creating an environment in which startups can thrive.”

It does this through specific investments and initiatives — some of which we’ve already mentioned — but it also has a positive approach to regulation too. One example Brady points to is the “world first” Virtual Assets Regulatory Authority. This body oversees the provision, use, and exchange of digital assets, ensuring that crypto and blockchain companies have a strong regulatory environment in which to work from.

Compared to Europe, Dubai has lower taxes, less complex regulations, and a government that is investing very heavily in business. This can hugely reduce the difficulty for European startups landing in Dubai, as some of the costs and outlay will be lower in the region than other parts of the world.

But let’s say this is all sounding like an excellent idea and that moving to the UAE is something your startup is seriously considering, what then? How do you know your business is in the right position to move?

At what stage of growth should startups think about moving?

On this, Rashed Lootah was unequivocal, encouraging startups “to consider expanding into the UAE and Dubai at any stage of their growth journey.”

However, some startups will be in a better position to thrive than others. “Companies that have achieved great success [in Dubai] are those that have demonstrated a scalable business model and a level of success in their home market,” says Rashed Lootah.

This viewpoint is supported by Brady, who states that companies with pre-Series A, Series A, or Series B funding are often in a great position to make the move to Dubai. “These are the ones that seem to be having the most traction and success when they’re looking at the UAE as a market to scale,” he says.

The key factors both Brady and Rashed Lootah see in European startups thriving in Dubai are those that have a solid foundation and a flexible structure. In other words, the businesses that do best have already had some success and are set up in a way to deal with undergoing change.

As Rashed Lootah puts it, startups must be mature enough to “possess a high degree of adaptability, and ensure their solutions are tailored to meet the regulatory and market requirements of the region.”

Thankfully, regarding the latter half of that statement, there are plenty of initiatives that’ll make the transition to a different part of the world simpler.

Making the move to the UAE easier

There are a gamut of schemes geared to help European startups adapt to life in the United Arab Emirates. One such example is the Business in Dubai platform, which provides practical support to businesses, as well as matchmaking services that can connect them with partners.

There are also a range of events that can help companies not only prepare for doing business in the region, but can provide a launchpad for growth too.

For example, Expand North Star, hosted by Dubai Chamber of Digital Economy, is the world’s largest gathering for startups and investors. In 2023, the event was visited by over 33,000 attendees, and also had over 1,600 startups and 1,000 investors present. This year’s edition is expected to top that with 70,000 attendees, 1,800 startups and 1,200 investors flocking to the Emirate for the event from 13-16 of October.

“Events hold a critical role in helping founders and startups grow,” Brady says, “not least by connecting them to capital, but also by connecting them to customers.”

If a startup is in the right place, the combination of practical support and a thriving event culture can help them land on their feet and begin thriving in Dubai almost immediately.

Opening an office? Or shifting headquarters?

At this stage, if a European startup has decided to grow by moving to the UAE, there’s another question to answer: should they open an office, or move their entire headquarters to the region?

Rashed Lootah says that opening an office in Dubai functions as a “strategic stepping stone,” allowing businesses to test the waters and “establish a foothold in the market.”

Moving their headquarters to the UAE, though, can “unlock a wider range of benefits” — such as full access to Dubai’s talent pool — and “potentially more favourable tax structures.” Yet, it’s important to note that doing so will require more significant investment and a deep understanding of the local business environment.

For most startups, the best route is opening an office first, exploring the market, and, if things go well, look to move headquarters later.

Ultimately, there are huge benefits for European startups looking towards the UAE. If these businesses want to expand, secure more investment, and grow into the global south, then Dubai is an excellent location to do so from.