The Dubai International Financial Centre (the “DIFC”) has secured its position as a global financial hub by introducing a groundbreaking initiative: the Venture Studio License. This new license, introduced in 2023, as well as the Venture Studio Regulations, issued in 2023, provide a framework for incubating and accelerating new businesses within the DIFC’s dynamic ecosystem and attract tech startups and investors to the region.
A. Overview of the Venture Studio Regime:
The Venture Studio license is a commercial license allowing the incubation of new business ideas and ventures for limited time periods to test the Minimum Viable Product (“MVP”) of such businesses.
The Venture Studio is basically a company incorporated in the DIFC for the sole purpose of (a) Sponsoring Ventures and/or (b) Establishing Venture Studio Companies (as elaborated below).
The Venture Studio would be able to provide services to its underlying (a) Ventures and (b) Venture Studio Companies, such as, but not limited to, treasury services, IT Services, administration services and intra-group, corporate and advisory services.
Accordingly, the Venture Studio would be able to create:
Option (1) Creating a Venture:
The Venture Studio would create this Venture which would not have a legal personality separate from the Venture Studio. Please note the following:
- There will be in place a Venture Sponsorship Agreement entered into between the Venture Studio and the Venture as per the DIFC template.
- In all times, the Venture Studio may not sponsor more than twenty (20) Ventures.
- The Venture Studio would have to make a separation (separate books and records) between the funds of all Ventures.
- The Venture would have a permission to remain in the same status as a Venture for a maximum period of 24 months (can be extended by the DIFC upon request). Afterwards, it either automatically converts into a Venture Studio Company or it ceases to work altogether.
- The Venture Studio can raise only a maximum amount of USD 10 Million per each Venture. This amount includes raising both debt (includes convertible notes and SAFEs) and equity.
AND/OR
Option (2) Incorporating a Venture Studio Company:
This Venture Studio Company would have a separate legal personality from the Venture Studio. In this regard, please note the following:
- In all times, the Venture Studio may not incorporate more than ten (10) Venture Studio Companies.
- The Venture Studio Company may not have more than ten (10) shareholders.
- The Venture Studio Company may not have more than twenty (20) employees.
- The Venture Studio Company would have a permission to remain in the same status as a Venture Studio Company for a maximum period of 24 months (can be extended by the DIFC upon request). Afterwards, it either automatically converts into a Private Company or it ceases to work altogether.
- The Venture Studio can raise only a maximum amount of USD 20 Million per each Venture Studio Company. This amount includes raising both debt (includes convertible notes and SAFEs) and equity.
B. Venture Studio License Fees:
The Venture Studio license fee amounts to USD 25,000 annually which includes the Commercial License, 4 Commercial Permissions, Co-working space for 2 persons and 2 Visas.
Please note that additional fees may apply as well depending on the number of Ventures and Venture Studio Companies to be created under the umbrella of the Venture Studio. In addition, additional fees might apply depending on the number of Visas needed to be issued by the Venture Studio for its employees.
