The MENA region’s startup funding hit $1.6 billion by Q2 in 2023, with tech startups taking a significant cut of that figure. Here’s our guide to the DIFC Innovation License vs. ADGM Tech Startup License.
To support the burgeoning tech industry, regulatory authorities in the United Arab Emirates (UAE) offer specialised licenses tailored for technology-driven businesses. Two prominent options in this domain are the DIFC Innovation License and the ADGM Tech Startup License. Understanding the nuances of each can significantly impact the trajectory of a tech startup. Here, we delve into the details of both licenses to help entrepreneurs make informed decisions.
DIFC Innovation License
The Dubai International Financial Centre (DIFC) Innovation License is tailored for companies across various sectors, this license acts as a launchpad for innovation, enabling businesses to explore new horizons within the MEASA region. One of its key advantages is the subsidised fee structure, with an annual rate of USD 1,500 for a period of 2 to 5 years. This license also offers access to co-working spaces and discounted visas, facilitating a conducive environment for growth.
To qualify for the DIFC Innovation License, companies must demonstrate their commitment to innovation and scalability. Moreover, their activities should fall within specific categories such as Software House, Technology Research & Development, Information Technology Consultants, Internet Consultancy, IT Infrastructure, Portal, and Computer Consultancies, to name a few.
ADGM Tech Startup License
The Abu Dhabi Global Market (ADGM) Tech Startup License is designed to nurture entrepreneurship by eliminating cost barriers. This low-cost operating license encourages startups to thrive by providing a full operational license at an affordable rate. Successful applicants can also apply for employee visas under the license, streamlining the hiring process. However, not all startups are eligible for this license. To qualify, businesses must present a detailed business plan showcasing their technology-driven approach, innovation potential, scalability, and contribution to the local economy. The license comes in two stages: Seed and Emergent, each catering to different maturity levels of startups.
One unique aspect of the ADGM Tech Startup License is its fixed duration and stage progression. For instance, if a startup is approved for the Seed Stage Incentivised License, it will operate in the seed stage for two years and then automatically transition to the emergent stage in the third year, irrespective of the number of employees.
Choosing the Right Fit
When deciding between the DIFC Innovation License and the ADGM Tech Startup License, entrepreneurs must carefully evaluate their activity type, business models, growth trajectories, and financial constraints. The DIFC Innovation License offers a comprehensive ecosystem for innovation with subsidised fees and flexible duration. The ADGM Tech Startup License is ideal for early-stage startups seeking a cost-effective entry point into the market.
Have a big tech business idea you want to bring to life? CBD Formations can assist you with setting up your company.
For more information on ADGM and DIFC entities and the different types of set ups, email us on formations@cbdcorporateservices.com or call/whatsapp +971 56 218 4695.
