Software Business in the Middle East

It is actually pretty easy to start your own IT company in Dubai. There are basically two options:

1). If you want to start your own company in Dubai or any other Emirate in UAE, you would need to have a local sponsor. This is a guy, who is citizen of United Arab Emirates and who, by law, will own 51% of your company. Normally, there are legal regulations that restrict this person from making any decision or affecting your company daily work. You simply pay this guy a certain amount like $3’000-4’000 per year for the sponsorship. As we knew later, this way to start might have very large advantages if your sponsor is an active guy with contacts and he can open many doors for your business. But as a standard case, you will see your sponsor once a year to pay him his money. I heard scary stories about dishonest sponsors, who had cheated the real company owners taking all their money, but I am not sure if it is true or just rumors.

At the moment we started the company this option was not considered seriously – giving somebody 51% of our company sounded just wrong.

2). Option 2 is to open the company in one of the Free Zones in UAE. This is the only way to open a company in UAE and own it 100% for the foreigners. Since we wanted to open IT company, the logical choice was Dubai Internet City. The procedure of getting the Trade License was pretty formal: they asked us for the business plan, certificate about our education etc. I guess they could deny our application at any step, but fortunately we finally got the license. Maybe later I can tell in more details how the whole procedure of license issuing looked like.

Another interesting opportunity opening the company might be to go to Ras Al Khaimah Free Zone. It is much cheaper to open the company there, and if you plan working alone you can easily do it from home as your virtual office will be in the Free Zone anyway. This way you might save some cash on your office space.

Everything started in February 2005 when a colleague of mine from one of the previous jobs, let’s call him Tom, asked me about what I thought starting up my own business.

It was Friday, wet evening, as it is normal in Gothenburg, Sweden. We were sitting with Tom in a coffee shop chatting about everything. Suddenly he asked me if I was interested to start up our own business. I thought why not, it sounded like something really cool. The only question was what to do.

I thought Tom was talking about our own business in Sweden, but he went much further – he was talking about starting up a company in Dubai, United Arab Emirates. At that time I was not sure I knew exactly where Dubai was located geographically – somewhere in the Middle East. The only thing I knew about Dubai was rumors about booming development and growing opportunities for any kind of business. I got a week-end to think about Tom’s proposal.

Over the week-end I realized I got nothing to loose. Even in case of total failure, I would be probably paying my debts for several years, but the experience we were about to get might be considered as the second high education.

So we started to learn about how to start the company in UAE and more important – what we want to do in Dubai.

Finally, after 16 months living in Dubai and running my own company I feel it is time to start telling other people about my experience. It might help you to avoid mistakes we have made, or just learn (I hope) some interesting stuff about running software business in the Middle East.