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Wed 6 Jan 2016 12:11 PM

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“You’re dead before you start”: Top UAE start-up lashes out at local business environment

Co-founder of delivery app Fetchr says local regulations make it tough for small firms to prosper

“You’re dead before you start”: Top UAE start-up lashes out at local business environment

The co-founder of one of Dubai’s most successful start-ups has hit out at the business landscape of the region, saying that new companies are not receiving enough support.

Joy Ajlouny, who runs delivery app Fetchr, said that visa restrictions, licence fees and red tape made it tough to get businesses off the ground.

“We feel frustrated as entrepreneurs because the ecosystem here is not conducive for helping start-ups,” Ajlouny told Arabian Business StartUp magazine.

“You need to buy a licence – that’s $25,000. You need to register with the government – that’s another $25,000. How do you prosper as start-ups?

The Fetchr app, which uses the GPS coordinates in consumer’s phone to send deliveries to specific locations, instead of fixed street addresses, launched last year.

In June, the firm raised $11 million in Series A funding from investors, including New Enterprise Associates, Delta Partners, Dhabi Holdings and 500 Startups.

However, Ajlouny said that, despite the funding success, local regulations had made it hard for the company to prosper.

“It’s hard enough for companies like IBM to prosper because of the extreme expense,” Ajlouny continued. “We’ve spent half our [original] funding on just licences. I mean, give us a break – we’re not IBM, we’re start-ups.

“If there’s one message I could get to Sheikh Mohammed, it would be something like ‘please, stop investing in steel – invest in talent and innovation’.

“A country is only as good as the humanity that it’s built on. Here you come and it feels like they can’t wait to kick you out.

“Every time we hire someone there’s a visa restriction and then they’ve got to leave the country, pay for a ticket for them to leave, then another medical examination. Think about all the expenses that rack up trying to run a company like a start-up. You’re dead before you start.”

In November last year, UAE Banks Federation chairman Abdul Aziz Al Ghurair said the country’s lenders were working together to try to stem the number of small business owners fleeing the country with unpaid debt, a trend that had reached around AED5 billion ($1.4 billion) in 2015.

Small and medium-sized enterprises (SMEs) have come under pressure in recent months amid a gradual drying up of liquidity in the banking system due to the weak oil price and slowing economic growth.

As a result, some business people have chosen to "skip" the country, leaving behind unpaid debt, a situation that bankers say has grown significantly from last year, although they did not provide precise figures. In a country where, under existing legislation, a bounced cheque risks landing the issuer in jail, many of those absconding fear the consequences if they stay.

Click here to read the full interview here with the founders of Fetchr

Telcoguy 3 years ago

Funny, how some of us has been telling this for such a long time.

Abdullah 3 years ago

“You need to buy a licence – that’s $25,000. You need to register with the government – that’s another $25,000.

This doesn't make sense at all, her numbers don't add up

Mohammad 3 years ago

I think that there is a big exaggeration.

Does anyone try to get work visa in the United States, Germany or any other country!

United Arab Emirates are the easiest and fastest

You don't want to pay $25K to start company check out https://www.dsoa.ae/en/business-setup/company-types/

An_emarati 3 years ago

With a population made up of c.90% expats, visa restrictions are only natural. Re bounced cheques, people should face the consequences of their decisions.

John Doe 3 years ago

The most honest article published by AB if there ever was one, wait....is the owner of this SME business going to be deported now for saying the truth and benefitting thousands of other expats in the process??

Rahid 3 years ago

Start ups across GCC is seeking governments to liberalise the regulatory framework. BTW, Dubai is far better than any other country in the GCC for startups.

Dounia 3 years ago

Finally some one has spoken and said it all, thank you Joy and i really hope this gets read by the concerned people, because it is really expensive to start a business and the set up fees and the expenses eat up both your capital and profit until you have no option but to give up and shut down.

Kaif 3 years ago

It's so true, glad that someone has the guts to say this publicly. Hope the authorities take note and don't ignore this.

Tom 3 years ago

Would love to speak with Joy about her woes when it comes to the costs of business here. Im certain there are ways she can reduce her costs.....

FJoe 3 years ago

All this talk about lending to SME's is just that talk. A small business ask for a loan and the banks offer a personal credit card at 24%. Everyone has their hand out especially DIFC