Finding a way to stand out from the crowd

Dubai: After what might seem a slow start, crowdfunding ventures are starting to populate the region’s financing landscape. So much so, promoters are now working on ways to help them stand out from the rest of the crowd.

The recently launched online funding platform Eureeca believes it has got one by offering equity in the start-ups that it hosts. “There a number of types of platforms that allow businesses or projects to gain funding from “the crowd”,” said Chris Thomas, CEO and co-founder. “Eureeca is an equity-based crowdfunding platform which means that the crowd can receive an equity stake in a business they invest in through eureeca.com.

“By allowing individuals to earn equity in a business for as little as $100, Eureeca empowers the crowd to fuel the growth of SMEs and earn returns on their investments. The online platform facilitates funding for SMEs and, at the same time brings more investment opportunities for the average investor.”

It is a fact that most crowdfunding platforms active in the region have called on “donations” from a pool of small investors. But this does not translate into a direct stake in the venture, which means the concerned business has no ironclad obligations unlike those to a shareholder.

Thus, with equity being offered, the stakes for the investor and the concerned business is ratcheted up by a bit.

“Eureeca facilitates funding for SMEs that are already established and need capital for growth; this gives potential investors the assurance that the funding proposals listed on eureeca.com are not business ideas that need funds to come into fruition but real businesses that have a track record of performance,” said Thomas.

“Typically, investors want to see an operational business when investing in return for equity and that’s why we focus on businesses that are in operation. While Eureeca is now focused on SMEs, in the near future we aim to enable funding for entrepreneurs with innovative business ideas.”

Since Eureeca’s beta launch, it has received enquiries from ventures in tech, retail and F&B.

Businesses that get listed on eureeca.com have 90 days to reach their set funding target. Funding proposals must include an investment term-sheet that describes estimated returns for investors, timelines and other details potential investors need to know. Over the 90-day period, prospective investors – or the crowd - can discuss business assumptions, suggest ideas and discuss concerns with the business owners via the platform.

“The level of transparency and direct communication between business owners and investors provides a new model of due diligence and corporate governance that is currently missing in the region,” said Thomas.

“While SMEs in this region have tremendous potential they also face an equally large funding void that needs to be filled. Following the crisis, banks have become more risk-averse and institutional investors often require a significant stake in the business leaving SMEs with few alternatives for capital.

“The region also has a large pool of potential investors with high disposable incomes that is looking for alternative investment opportunities. Eureeca connects this crowd of investors with the region’s young entrepreneurs and business owners.

“Ultimately, crowdinvesting helps to fast-track the growth of SMEs by enabling the easy flow of cash from investors to business owners in exchange for real returns.”

Now, let’s leave it to the “crowds” to play their part.