‘Raising awareness’ in the greater Middle East is something often associated with social and political issues. When you look closer, preferably with a focus on business, a relatively tiny yet flourishing startup scene will catch your attention mainly thanks to fresh SMEs’ highly progressive impact on forthcoming generations. Enabling platforms of crowdsourcing has been playing their roles even more effectively, particularly in comparison to voluminous US market.
That’s the driving force behind, as well as the basis of the unfolding power of, Eureeca, a crowdinvesting platform that operates with a special focus on MENA. Shortly after its launch in May 2013, it has become a magnet for Arab region startups and investors equally.
Joanne Kubba, the head in charge of strategy, partnerships and outreach, said they have piled more than 300 applications in such a short period of time and the figures is exponentially growing. She told me they had to narrow them down to about 70 businesses to take through the pipeline. As of today, 11 businesses have been promoted on the platform to raise funds and 4 have been funded so far by a total of 4000 registered investors.
Why do these ‘tiny’ figures matter. First, it is the region which is over-neglected and underserved by so-called global funding networks. Secondly, it’s the difference from major global crowdfunding platforms; It mediates the online exchange of equities of a business against the funds collected via the platform. And it is able to do this on international level, mostly thanks to enabling legal environment in UAE and Lebanon.
So, let’s not confuse it with Kickstarter or Indiegogo (or regional players like Aflamnah and Zoomal), where the supporters of a project receive ‘rewards’ for the money they put, or with some crowdinvesting platforms like Seedrs, who often have difficulty in exchanging equities internationally due to strict brokerage rules in Europe. Most of these are permitted to operate within the borders of their respective countries.
Eureeca, on the other hand, is an offshore, online, closed platform – therefore the crowd is able to participate only after coming and agreeing to the terms of business. When, for an example, Harir launched their funding campaign late 2013, they were the first business in the world to have an international funding campaign on Eureeca. In fact the business ended up with investors from Jordan, UK, UAE, Norway, France, Singapore, Japan etc.
The trust issue
That’s not all; it also ensures the compliance of every single investor and SME coming to the platform, with thorough background checks for both the company and the investors. So by the time they are on the site, they are already clean and fit for investing or funding, says Kuppa. You need to be an existing business – basically post operational – in the first place. The ideal candidate is 1 to 3 years old and has started generating revenue. However, these are not set in stone and they evaluate each business as it comes to the platform.
Eureeca allows overfunding as well, and 3 of the fully funded businesses are still accepting investments. To date the largest investment in one campaign was $51,000. Kuppa says businesses from Jordan, UAE and Egypt have been listed so far, but they work hard on allowing businesses from around the world to be able to raise money on Eureeca. This, of course, requires thorough studies of local legal structures to see how the platform might fit in.
Bear in mind that crowdinvesting is a lot more than the money – there is validation from the crowd, transparency, raising awareness and hardwiring the investors into a business. Tough tasks, particularly when the Middle East is concerned, and Eureeca seems having started to lay the foundations already.