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Three Lessons This American Entrepreneur Learned From Dubai's Startup Scene Entrepreneurs who think Uncle Sam has the most tricks under his hat have likely overlooked the financial incentives and talent diversity of the UAE.

By Zach Ferres Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.

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I recently spent three jam-packed days meeting with VCs, angel investors, entrepreneurs, media, and passionate startup community builders, while visiting a friend of mine who runs a top-notch design studio called Slash. Sounds like just another day in Silicon Valley, right?

Only thing is, I wasn't- I was in Dubai, the Silicon Oasis.

In addition to showing me the best date of my life (I mean the fruit) and sand as white as Ohio snow, the United Arab Emirates ranks second on Agility's world emerging markets logistics index. That means out of 45 countries, the UAE has a winning combination of business conditions, infrastructure and connectedness. And it shows. In Dubai, you feel like you are in the center of growth and fast change.

In other words, it's not a bad place to build your startup.

While the entrepreneurial community in the UAE is significantly smaller than that of the US, it is growing. Combine that under-the-radar charm with its collaborative spirit, and you've got a great recipe for a place to settle in and scale up.

And that openness and collaboration is key. Brexit has dominated headlines recently- and it represents exactly what we don't want in terms of entrepreneurship. Closing yourself off to the world is closing yourself off to innovation. Few groundbreaking ideas are born in a locked room.

Related: Lessons From Brexit: How Not To Communicate Your Cause

Quite a few financial differences

Speaking of groundbreaking ideas, Dubai was the first Emirate to establish the economic free zone model, which is all about incentivizing foreign businesses to sow seeds. Startups and entrepreneurs have substantial tax incentives and support available to them, and can even be eligible for a 50-year exemption from corporate and income taxes. Obviously, Uncle Sam doesn't afford such luxuries to his bootstrapping nieces and nephews.

Free zones are great for non-native entrepreneurs because they allow retention of 100% of company ownership. If you're outside a free zone, you must have a local business partner to hold a 51% stake in your business.

Another difference: Islam teaches that no one should make money from lending money. Did someone say interest-free financing? Islamic banking also prevents liquidation preferences, preferred stock and other potentially unfavorable founder terms in venture deals. Such a system could save you from a world of hurt; just ask the founder of a $50 million Bay Area startup who sold his company and got nothing.

Dubai also has no structured bankruptcy protection, and bounced checks or lack of repayment for services are grounds for criminal charges. Sounds crazy for early entrepreneurs at first glance, but if you pay your debts and commit to only what you can afford, it makes plenty of sense.

The system is essentially "pay your debts or else," which I actually see as a positive. In the U.S., I've lost hundreds of thousands of earned dollars in my companies because of others filing for bankruptcy. Had I been set up in Dubai, chances are good this would have been paid up.

Related: Bootstrapping Startups In Dubai

An ecosystem full of inspiration

So are you ready to set up in Dubai, too? Here are three lessons American entrepreneurs can learn from our Middle Eastern counterparts:

1. Think beyond your borders. In a startup's infancy, it's easy to roll with the familiar and just focus on your backyard, despite our shrinking world. But in the Middle East, a global focus is ingrained in the DNA of almost every tech startup.

Dubai is a short flight away from almost every emerging market in the world, and that's providing startups huge opportunities. Underdeveloped regions aren't quite so underdeveloped anymore. Places such as China, emerging Asia and the Middle East have risen to 69% of the global GDP growth in the past two decades. Additionally, more economies are dipping into negative interest rates, which will fuel even more international investment.

To sweeten the pot even more, global thinking helps shape a better product and business model. It allows for countless new outsourcing partnerships and lessons about how other startups tackle the same issues you face worldwide, plus it presents an opportunity to diversify your team and foster creativity.

2. Put the cart before the horse. Traditionally in the U.S., the big thing separating the people achieving their dreams and the typical barstool hero is funding- or lack thereof. Risking everything without saving up a cushy little nest egg is pointless, right?

Well, wrong- at least in Dubai. Entrepreneurs there focus on building their companies first. While market corrections are expected to transform this model in the US, we traditionally follow the culture of "if you fund it, they will come."

Obviously, capital is of the utmost importance, and this region has plenty: on my flight home, I read that the Saudi sovereign wealth fund just made a $3.5 billion investment in Uber. But save raising capital for the right time, because your days of raising with just an idea on a hyped startup market may very well be over. Entrepreneurs in Dubai don't let funding hamstring their dreams, and neither should you.

3. Embrace the melting pot. Middle Eastern countries have the highest levels of immigration in the world. The UAE in particular has the highest proportion of immigrants in relation to its own citizens. Foreigners outnumber native Emiratis by 9 to1.

During my travels, I saw Emiratis, Americans, Portuguese, Mexicans, and even Syrian refugees all collaborating into one sweet symphony of innovation. The sight was inspiring, not just because it was inclusive, but also because the different perspectives showed in their work. The whole is far superior to the sum of its parts.

The startup scene in Dubai is setting the tone for the rest of the world. We are more connected than ever, and it's our responsibility to continue to build bridges and bring the world closer together. The entrepreneurial spirit connects us all and lets us co-create amazing things to drive our society forward.

Related: Five Business Lessons Entrepreneurs Can Learn From The UAE

Zach Ferres

CEO of Coplex

Zach Ferres is the CEO of Coplex, an interactive web agency based in Los Angeles and focused on collaborative design and development.   


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