Using the equity crowdfunding concept, a duo of ex-investment bankers and entrepreneurs, Christopher Thomas and Sam Quawasmi, founded this year an online marketplace called Eureeca.com, where Middle East businesses can source capital from the general public.
Eureeca is encouraging everyone to invest as little as $100 in a business and earn equity in return. Since their launch in July, Eureeca has received interest from 240 business owners and entrepreneurs looking for funds.
Quawasmi, the managing director and co-founder, tells us more about what they’re doing and how interested investors can join:
What types of investors are you looking to attract in the region?
The minimum ticket value for investment in any business on Eureeca is US$100. This low barrier to entry means that investors don’t need to be multi-millionaires to invest in a business. It is the first time that individuals can invest in a business they like and want to be a part of for such a minimal amount of cash. They can discuss the business pitch with other members of the crowd, validate the business idea and, have transparent discussions with the business owners.
Traditionally as well, entrepreneurs approach their first degree connections such as friends and family for funding. Eureeca makes it easier for entrepreneurs to tap into this existing pool of potential investors and even beyond by offering a professional, sophisticated and far-reaching online platform. Investors also include a company’s existing customers, partners, members of its social network and simply those who believe a business has growth potential and want to benefit from it.
Why should small investors invest through Eureeca?
The early-stage business funding market is dominated by institutional investors and venture capitalists that are looking to make large investments and earn big returns fast. With a significant equity stake in the business, these investors also undertake some responsibility to grow and manage the businesses they invest in. Eureeca demystifies the world of venture capitalism for small investors by offering them increased investment opportunities in different business sectors.
The collective wisdom of the crowd also makes it easier to find lucrative business investment propositions on Eureeca. While it is recommended that investors carry out their own due diligence before investing in these businesses, the costs of finding these opportunities is greatly reduced.
We vet the businesses that apply for funding, conduct compliance checks through a third-party provider and facilitate open and transparent communication via the site. With angel investing, the costs of these formalities are undertaken by the investor and can be excessive.
What policies have you put in place to protect investors’ money?
We use recognised and approved lawyers to oversee operations, global administrators and recognised banks for our cash movements to ensure maximum protection for entrepreneurs and investors. They ensure that the share swap takes place before the money is transferred to the entrepreneur’s bank account. This is also how it takes place offline.
Any investor on Eureeca has the same contractual rights and protection as any other private equity investor in the world. If fraud does occur, it will be a criminal offence that investors can pursue recovery for through the courts. It is exactly how it would happen with any kind of fraud taking place online or offline. Eureeca’s collaborative model also demands high standards of corporate governance and full transparency.
What rights do investors have if a company fails?
Every business pitch will be accompanied with an investment term sheet that defines what rights an entrepreneur can offer to potential investors. The crowd is able to ask questions, discuss, peer review and challenge entrepreneurs online and other potential investors can view these conversations and learn from them.
We encourage entrepreneurs to be very transparent with the “crowd” in order to garner and maintain investor trust and keep them updated on the running of the business. The more transparent and responsible a business is, the better its chances of receiving funding. Eureeca doesn’t guarantee the performance of these businesses but provides a platform for these transactions to take place online.
How do I become a member to invest in a business?
Individuals interested to invest in businesses can register as an investor via the website for free. Following our official launch, investors will be able to view all business pitches online. A one-off fee of US$15 is applicable once an individual has decided to invest in any of the businesses on Eureeca. This is used to facilitate know-your-client and anti-money laundering compliance checks on investors to ensure they are legitimate.
Is there a maximum investment per member?
The minimum investment required in any business on Eureeca is $100 and there is no maximum amount.
Where do investors’ money go? Will the funds be used to support only small businesses and startups?
Eureeca facilitates funding for small businesses by providing them a comprehensive, convenient and transparent platform to source investment. Businesses at any stage of their business cycle can apply for funding on the website. We have received interest from both startups that are looking for seed funding as well as established small and medium enterprises (SMEs) looking to scale.
Entrepreneurs who register prior to our launch receive additional support on getting “fit for funding” while early investors get exclusive access to funding pitches before they are listed online.