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.”