The Revolution of AI in Businesses

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I happen to travel a lot and I mainly do it for business. As this is a business blog, I assume you might be interested in tips on the economic environment of the places I reach. For starters, I believe that Dubai is not only a tourist destination, but also a business one. Here are at least three reasons for this:

1. Legally: you can do business without any local partners

They say that anywhere you go to do business in a foreign country you need a local partner with connections and understanding of the market specificity. In the Arab countries, this not only goes without saying, but it has become law, as companies cannot be incorporated unless in partnership with citizens of those countries, which is not quite desirable. In Dubai, however – and in the United Arab Emirates, in general – this obligation has been recently cancelled. It has ceased to exist in the case of the companies having their registered offices in the so called free zones. If you are interested, you may see a list here. The benefit of the so called free zones is that they include business facilities especially designed for the foreign investors, from the ease of incorporating a company to the benefits regarding the recruitment of local personnel, the legal services and others. English and general business knowledge will do.

2. Financially: the taxes are low

This is a well-known fact: in the Emirates, taxes mean the 5% income tax and the 0% tax on dividends. It is true that they are considering introducing a tax on dividends, but for the time being taxation is low.

3. Operationally: the real estate market is dramatically collapsing, but…

If you are interested in the real estate business, you might have heard that the real estate market in Dubai is collapsing. This is somehow true, but lately the collapse has stagnated. The crisis is less and less severe, which suggests a future recovery might be underway. In other words, from my point of view and from the point of view of others, such crisis is a good opportunity for purchases. That is to say that the real estate market in Dubai looks like the Romanian one during 2010-2011, the period when we were all recovering from the real estate boom in the first part of the years ‘00. There are reasons to buy, as we have pointed out and, if this is so, you should wait until such time as the assets recover. An interesting feature of Dubai is that, as a rule, tenancies are signed for one year and the rent is paid in advance. In other words, if you have invested in a building, you may now proceed to make it cost effective. A building with firm tenancy agreements is worth by far more than an empty building. From my point of view, these three are reasons enough to consider Dubai very attractive. To start with, an analysis of the real estate market in Dubai can be read here in English.
This is the second part of my presentation of the GDPR (General Data Protection Regulation), adopted by the EU on 24 May 2018. You can read the first part here. No matter the size of the companies, small, medium or big, the new provisions shall apply to all the institutions and companies that process personal information of the consumers in the EU. According to a survey conducted by MKOR Consulting, more than one third of the Romanian companies were not familiar with GDPR at the beginning of the year. On the other hand, however, almost two thirds of the Romanian companies had already updated their internal processes or were in the process of updating with GDPR before the deadline. According to the size of the company, the budgets allocated to the implementation of the new provisions vary from EUR 1,000 to EUR 10,000. According to the new GDPR provisions, many marketing strategies, such as the use of cookies (codified texts withholding the users’ preferences for a certain website) or pre-checked cases allowing the receipt of promotional materials will have to be adapted to observe the privacy and confidentiality of the consumers. Another major implication is that enterprises will have to use SSL certificates (protocols encrypting the exchange of data via the Internet) to increase consumer security in the online environment when they enter personal information on the company website. Also, certain aggressive methods of direct marketing, such as the abusive sending of newsletters or text messages without the users’ prior consent, may generate legal problems to the company, besides affecting the brand image. Therefore, personalized adverts will become less accessible marketing actions given the increase in the budget necessary to their implementation; however, on the other hand, the quality of the personalized messages will considerably increase and will become a premium category for many traders. Increasing data security will also require renewing or changing the data storage infrastructure, which will lead to increasing user costs. The relation between marketing and data security will substantially determine the evolution of the budgets and the traders will have to come up with innovative ideas of promotion and to adapt to the new requirements.

What Needs to Be Done?

Of course, these provisions have crucial implications to Romanian companies, especially startups, which, the same as their EU counterparts, are not fully prepared to get in line with GDPR. Although this new law, which is one of the most important decisions by the European Parliament over the last 20 years, does not stand for a radical change in respect of consumer protection, fact is that its implementation will require many resources, both financial and human.
This article is a continuation of my series on crowdfunding, started with a general description and a list of pros and cons. Read the following to get advice of successful campaigns.

1. Convince Your Folks to Be the First to Invest

To convince the public that your idea deserves financing, start with promoting it to your friends and family. If they believe your project is innovative or has potential, they will be the first to support it. This will also be an indicator of success.

2. Prove That Your Project Adds Value to the Community

As those who will support your idea are members of a local or global community, they need to understand very clearly what exactly you intend to launch and, furthermore, what its real value is. If you succeed in explaining clearly all these aspects, the public will adhere to your plan and will contribute financially to its putting into practice.

3. Choose the Spot as Presentation Method

According to recent studies, the general public responds better to audio-visual content than to written content. To present your project, make short spot showing in a creative, authentic and personal manner how your project differs from everything else that exists on the market.

4. Offer Rewards to Supporters

The crowdfunding platforms offer the entrepreneurs the possibility to reward the financing community according to the support received. Considering the financial contribution, the rewards may be price discounts or the product itself, once it has been created. In case of musicians, for instance, according to the value of the financing, a reward may consist in the album in digital format (mp3), the CD, or vinyl edition, or various “deluxe” packages.

5. Invest in Promotion

Any new business idea requires a promotion strategy. Crowdfunding, however, takes lots of attention dedicated to the community members in order to create long lasting connections or to answer questions related to the product. And this means interaction on the social media that are popular in Romania. The more you succeed in communicating efficiently to the general public, the better chances you stand to raise the funds necessary to launching your business.
The rapid adoption of the digital technology has changed the way we interact. Although according to some specialists the effects are not entirely positive – massive layouts further to upgrading production processes, the lack of human interaction – digitalization has improved productivity, communication, has simplified processes and managed to reduce bureaucracy. This background is favorable to the development of startups or small and medium size businesses, including with regard to obtaining financing, although, according to surveys, 96% of entrepreneurs go bankrupt within the first two years as a result of scarce funding. In this respect, one of the most intrinsically technological ways of financing a business is the so called crowdfunding that is small amounts obtained from a big number of investors, as it is almost unconceivable in the absence of an online platform.

Evolution of the Financing Methods

To understand how we have got to crowdfunding, we should go through the various types of financing accessible to startups.
  1. By the year 2000, the newly launched businesses obtained financial resources from banks or investment funds, if they had employees, proved to be profitable or offered collateral to secure the loans. Getting a loan or attracting investments involved, as same as in any other type of financing, the existence of a well-structured business plan, which guaranteed the multiplication of the initial investment or the return of the loan. Any financial institution would analyze the file and try to assess how well the business worked, in order to make sure that, besides covering operational costs, all shareholders should make a profit.
  2. After the year 2000, the innovative startups in the field of technology have changed not only the way we communicate, work or live, but also the conditions for obtaining financing. It is in this period that more and more Business Angels have come up to encourage the launching and development of startups, choosing to believe in the potential of a business against the background of the digital technology development. Business Angels or Angel Investors allocate smaller financing as compared to investment funds, but the financial support is obtained in simple contract terms (they choose not to interfere with the operational management), irrespective of the financial results or number of employees.
  3. Currently an innovative idea may be supported financially by each of us by means of crowdfunding.
Specifically, crowdfunding, as a method or raising funds online, by means of communities, came out in 1997 and has gained scope after 2009. Currently, this financing form for an innovative product gets new dimensions, thanks to the existence of cryptocurrencies.

A Very Brief History of Crowdfunding

  • In 1997, a British rock band financed their concert by raising funds from fans. 
  • In 2000, ArtistShare platform was launched on the market and, shortly after, the concept has started to attract the public attention.
  • Crowdfunding has gone full-fledged and tripled its financing the financing from 2009 to 2011, from $ 530 million to $ 1.5 billion.
  • In 2011, President Obama approved a law called JOBS (or the crowdfunding law), which allowed the entrepreneurs to disclose to the public that they were raising money.
  • Fundable has been the first business platform, launched by Will Schroter, after the adoption of the JOBS law, meant to help the entrepreneurs raise funds. 
  • In 2013, Mastercoin was the first cryptocurrency financed by crowdfunding (ICO – Initial Coin Offering)
  • In 2017, 18 platforms promoted ICOs, such events becoming more and more popular.
I’ll continue the crowdfunding series with Platforms, pros and cons and tips. 
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