Room for more crowd funding in the UAE and the Middle East
Crowd funding has started to take off in the UAE and Middle East but there is still room for more
DUBAI: Middle East markets still have plenty of room for crowd-funding platforms despite a surge of new companies launching in the region in recent years.
“We would like a lot more competition,” said Christopher Thomas, chief executive and co-founder of UAE-based Eureeca.com, by phone recently.
While the UAE and other neighbouring countries are seeing a steady launch of crowd funding websites “there isn’t much competition right now,” said Dr. Lamia Abdul Aziz Obay, an associate professor at the University of Wollongong in Dubai whose research interest includes financial innovation.
Crowd funding offers an alternative funding stream for individuals and small and medium sized business (SMB) that may be unable to secure financing through traditional facilities.
“Financial markets [in the Middle East] are limited. For SMB’s, the rejection rate for funding in the needs is sometimes up to 9p per cent,” said Obay.
Vida Rizq, Principal Founder, of Aflamnah, said it’s “almost impossible” for creative projects to be funded by the local banks
Eureeca, one of the many crowd funding platforms, offers investors an equity stake in the company they are funding. Aflamnah, which launched two and half a years ago, has raised close to $400,000 for nearly 100 projects.
Aflamnah helps raise funds for creative projects such as independent films and offers rewards to those funding the projects. A reward could be a credit in the film.
“A lot of our participation is from the UAE and maybe the Levant. We have had some participation from abroad from the West,” said Rizq on where the funding comes from.
Other crowd funding platforms are charity, where individuals or groups donate without a return, and then there is credit-based where investors earn interest on the amount they have funded.
A major challenge for crowd funding platforms in the Middle East is potential users understanding its relative ease, accessibility and security.
Thomas and Rizq both said they each spend a significant amount of time on educating investors and fund seekers on their platform.
Obay said there needs to be an overall improvement in the Middle East’s social, income and education level to se a greater take up.
“Without this crowd funding won’t take off,” she said.
Crowd funding has so far received a relatively positive reception in the UAE and Eureeca has even stepped out to over countries in the region including Jordan.
Obay said Egypt and Lebanon are likely to be the next receptive markets for crowd funding, while eastward, India represents significant potential.
