In addition to a good business idea with a product suitable for sale, the start-up scene relies on uncomplicated and risk-taking corporate financing. Successful start-ups go through several stages of financing with ever-increasing capital requirements. In the early development phase, the founders first put their own money into their business idea and then get financial support from relatives and acquaintances. In the third Financing phase, private investors invest in the start-up and receive company shares. This money is used, for example, for the creation of prototypes and market analyzes. In order to develop the product to market maturity and to prepare the market presence, further capital is needed. Venture Capital companies, which receive further shares in the company for their financial commitment, are often involved here.
Such companies provide risk or venture capital in the form of equity. This financing model differs from the usual bank financing in that the venture capital company assures the equity capital of the target company mostly without the provision of collateral. Thus, venture capitalists as liable partners carry both the risk of loss and the opportunity for market success and expansion. Professor Ann-Kristin Achleitner from the Technical University of Munich states in this context: „Venture capital companies finance especially companies of the early stage or expansion stage. To reduce the risk of loss, the venture capital firm secures control and voice-over rights, which in most cases significantly influences the design of the growing company invested in. Thus, in addition to financial resources, venture capital companies also provide non-financial resources.“
The Dubai-based Aras Group DWC LLC also specializes in venture capital investments. In addition to investments, the group is active in the areas of merchandise trade, logistics and real estate. The Aras group of companies includes Aras Investment and Participation Ltd., Aras Logistic and Distribution Ltd., Aras Trading and Services Ltd., Aras Consulting and Advisory Ltd. and Aras Properties Ltd. Of particular note is Aras Investment and Participation Ltd., which claims to invest in a variety of corporate projects with potential returns, through a large network of refinancing investors, banks and funds. For investors, an individual investment plan is drawn up, which takes account of the equity ratio and personal financial capacity as well as the call for state subsidies. The investments then take the form of subordinated loans.
Looking at its commercial financing and investment offerings, the Aras Group emphasizes: „We have access to a variety of lenders in different lending markets, so we can find the most competitive solutions for each business. Our network of financiers includes banks, mutual funds, partners and several government agencies. We have received subsidies to fund different projects and promote start-ups. Over time, we have invested in several international projects that are today success stories.“ The project financier from the United Arab Emirates (UAE) has discovered the financing of German and European start-ups. Because it is increasingly difficult for innovative business founders to get simple bank loans, the rapid provision of venture capital has long become a must for start-ups.
Frank Kahn is considered the man who procures venture capital from the Arab world for the Aras Group and makes it available to the European start-up scene. The German key account manager is considered to be well connected with rich families from the Middle East and is sometimes referred to in professional circles as the „Witcher of Dubai“. Whether that is meant more admiringly or contemptuously, can not always be said. At any rate, Kahn is regarded as an experienced investment broker who has helped many a young entrepreneur financially on the jumps. He also allegedly wants his Euro-Arab business contacts to play in order to raise the necessary capital for the ambitious Dubai real estate projects Pulse-Project and Warsan Village. Otherwise, not much is known about the media-shy corporate strategist.
Commenting on how risk capitalization works, Aras Financial Expert Ibrahim Saadi explains: „The value of the Aras Group's risk loans is in the tens of millions to hundreds of millions in most cases, even though it is not a bank but a bank an investor. Through a subordinated loan agreement, which in the meantime also meets the requirements of the German BaFin, the investments make the Aras Group a silent partner in the respective company. In this way, large-scale projects can be financed in a transparent and cost-effective manner, whereby there are no restrictions on the location and industry of the credit-seeking company.“ Saadi specifies that the borrower concludes the financing agreement directly with Aras and not with the respective active refinancing company.
The financial strength of the project supporter and investment provider seems to be substantial. As reported by several media, the Aras Group brokered $ 816.5 million in investment capital for nearly 100 projects in the United Arab Emirates by the end of last year. The money should primarily be used for real estate, renewable energies, the hospitality industry, the shipping industry and start-ups. The spokesman for the board of the German Association of Private Equity Companies (BVK), Christian Stoffel, recently commented on the development of the German private equity market: „Investment companies in Germany invested a total of 9.6 billion euros in 2018. After the record year of 2017, the German equity capital market once again underlined its strength.“ The role played by the Aras Group was not said.