What you need to know about crowdfunding in the UAE
what does crowdfunding mean?
In simple terms, crowdfunding means raising capital through individual investors typically through online platforms. Crowdfunding uses large networks of people either through social media or crowdfunding websites to connect both the invester and entrepreneur.
UAE’s crowdfunding policy
UAE’s crowdfunding is limited to raising funds for charities and noble causes through government registered channells. Currently crowdfunding has not been regulated for debt funds or loans but the government is keen to introduce and regulate at the earliest.The regulations are looked after by the central Bank of UAE, Securities and commodities authority (SCA), Financial services regulatory authority (FSRA) AND aAbu Dhabi Global market(ADGM) IN Abu Dhbai, Dubai Financial services authority and Dubai financial center(DIFC) in dubai.
The importance of crowdfunding in United Arab Emirates
According to the data provided UAE has over 90% of Small to medium companies operating, often get rejected by banks and lenders at times due to its limited operations, revenue and assets in order to grant funds.This increases the difficulty for these businesses to further expand their business or add to their existing operations.These SME’s play a vital role towards the contribution of the GDP growth of over 60%. This drew the government of UAE closer towards the concept of crowdfunding.
Crowdfunding platforms in UAE
Aflamnah — Founded in 2012 by Vida Rizk, helped film makers, artists, innovators and many with a creative project to raise funds for their work and get into limelight. It is hailed as one of the first crowdfunding platforms in UAE.
Beehive — crowdfunding platform following Peer-to-peer financing
Humming crowd reality — Crowdfunding platform for real estates.
Eureeca — enables members of its investor network to buy shares in growth-oriented businesses. Regulated by DFSA and has offices in dubai ,london and Kuala Lumpur.
Durise — crowdfunding platform for real estate
Zoomaal — crowdfunding for innovators in the arab world.
1. Donations based
2. Rewards based
3. Equity based
Crowdfunding is a easiest and fastest way to raise funds for your project but remember not all ideas can be put to perfection unless your project stands out convincing the investors. Its necessary to meet your fund raising targets else would be returned back to investors causing a dent on your business reputation forcing to abandon your project or search for alternative ways of raising capital. Not sure whether to go for crowdfunding or traditional way of financing your business you could look for a Business consultancy for the best suggestion.