Ex-DIFC chief launches Dubai crowdfunding firm

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Dr Nasser Saidi.

Dr Nasser Saidi.

Former Dubai International Finance Centre (DIFC) chief economist Dr Nasser Saidi has launched an internet crowdfunding platform designed to encourage investment into regional small-to-medium enterprises (SMEs).

Dubai-based Eureeca will offer growing businesses access to investment from a ‘crowd’ starting from $100 to more than $250,000. The platform is open to both serious and part-time investors, who will in return receive an equity stake in the SMEs in which they invest.

Saidi, who is also a former Minister of Economy in his native Lebanon, said that such SMEs have become the growth engines and job creators for Middle East economies post-Arab Spring. 

“When we think of where jobs are going to be created, they’re going to be created in the private sector,” he said.

“When we focus on the private sector, that means we need to focus on SMEs, we need to focus on family-owned businesses, because they are 85 percent to 95 percent of the businesses in the Arab world. They contribute more than 50 percent of GDP on average, and they account for 60 percent to 65 percent of the employment,” Saidi added.

Each SME that seeks funding via Eureeca will first go through a vetting process to ensure that the company actually exists, and will also have to state exactly how it proposes to use any funding it receives via the site.

The company will then list its proposal online, and will have 90 days to attract its state funding requirement. If it fails to reach this target, then it receives nothing.

Eureeca anticipates that its will attract 15 to 20 pitches per month, with an average capital raising per SME of approximately $250,000.

Saidi said Eureeca had been founded due to a lack of lending from mainstream lenders to SMEs and difficulties associated in raising seed capital through private equity and angel investors in the region.

“Our SMEs face a number of barriers. It is costly for them to do business, to establish themselves. When they go to the banking sector they find it very difficult to get loans and when they do get loans it comes at a very high rate or at difficult conditions,” he added.

“The numbers are shocking. Only 20 percent of SMEs in our region have a bank account.”

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Posted by: Farouq

I think we are all missing the point here. I would love the chance to invest in the next big thing. or even the next thing that can give me a good return on my money. if these sites can give the chance to invest in my local cafe or the nursery i send my kids to, then I'm in. they call it democratising investment. sounds about right to me!

i dont know how it works though in terms of shares in these companies

Posted by: Jimmi

Probably it is better to establish an SME Bank with add on services to plug management deficiencies in SMEs.Crowd funding although noble as it looks can go worthless in a geography with huge expat population.It is wiser to own shares in an organised bank which earns interest +profit from investee companies.

Posted by: Monkey Tennis

I wouldn't invest in listed stocks in the UAE because it is an open secret that corporate governance is woeful - the concept of minority interest is simply trampled upon again and again and some recent examples have been shocking. If I can't trust companies operating in supposidly heavily regulated environments, can I really be expected to hand money over to SMEs? Is the legal framework there to protect investors? The due diligence alone will have to be bullet proof before serious investors would even consider putting money into these companies and I simply cannot see how it could be. I like the kickstarter model, to which I contribute, but payback is in kind rather than via an equity investment which makes a world of difference. That said...I wish the enterprize luck and you never know the odd brilliant idea and even a sceptic may be tempted but this looks more like a hobby investment than a serious business proposition.

Posted by: Tia

Its not a loan its an investment. I think done properly, crowd funding is the best and in many cases the ONLY way for entrepreneurs to raise money.

Unless you have rich friends to invest where else do you go?The point of the crowd is that they are your contacts and online social and business networks that cant be reached by making calls and knocking on doors. its been done really well in the UK and some other countries and its about time Dubai businesses got a chance.

Posted by: Telcoguy

@Peter. Yes, sure. Unless of course your business model includes things like time to market. For many businesses time is of the essence and additional funding shortens time. We are in a similiar situation ourselves
@jonjon Have you ever been involved in an IPO? It is an incredibly complex process and it burdens companies with lots of reporting requirements. Then of course you have all the control issues, you may want financing but not necessarily to give away control, and believe it or not there are legitimate reasons for that
@Hisham, then I suggest you do it yourself and make yourself rich. Actually I have several friends who have used crowd funding and could not be happier. You sound like this people moaning that Applestore takes a 30% cut and they are stealing from developers... funny how most developers found it cheap. Yes intermediation is harder than you think if you know what you are doing

Posted by: Telcoguy

@Hisham, speaking of opinions I quote yours:
" for not really doing anything more than putting together a $ 2.000 website (yes, that is how much it costs to create a "crowd funding platform" if you know what you're doing)."

Well, we are a small, stingy firm. Our budget for a new website is some 10 times more. For that money ($2,000) you can get a great website... to display your cat pictures that I guess is your technical experience

Second, this "Dubai-based firm" that happens to be based in Cayman Islands actually probably spent more than that just to set up their vehicle. I guess you have never set up a firm

Finally, this is not "a kickstarter copycat" . If you think so then I think it is pointless to try to explain. There is a huge execution risk, sure. But I guess you have never been involved in raising capital neither for your own business nor your client.

So yes, opinions. Plenty of them.

Posted by: Hisham

A bit of a misplaced suggestion, a whole lot of assumptions and surprisingly enough no survey figures?! Not even on how many developers agree with the 30% VS those who disagree? Who says I have an interest in being a crowd funding shark? I have major respect for kickstarter, not so much for cheap copycats. Who says I have an interest in making myself rich? Who says I didn't "do it myself and made myself rich" already? Who says I find the fee a developer pays to Apple too high? (which I don't even have the slightest opinion about). There are indeed times when your opinion is better kept to yourself.

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