ARAB CROWDLENDING ARAB CROWDFUNDING PLATFORM تمويل الجماعي
Arab Crowdfunding is the first site dedicated to Arab crowdfunding. With Arabcrowdfunding.com invest or obtain funds from Arab investors or lend to Arab borrowers.
Arab Crowdfunding is an alternative financing option to the major arab banks and financial institutions which have remained biased only in favor of larger and less risky borrowing companies. Crowdfunding in arabic is translated تمويل الجماعي.
Arab Crowdfunding is now rising in the Arab world since it acts as filling the financing gap and supporting a creative entrepreneurial scene of a new generation which is highly internet connected and tech oriented.
The Middle and East and North African crowdfunding market is estimated at USD 7 billion in the region. This specific lending segment is still facing two main obstacles: the lack of clear regulations and the absence of reliable online payments in the Arab world, both domestic and cross-border.
Crowdfunding in the Arab countries should now consist of a huge opportunity to solve the unemployment problems and give the young Arab entrepreneurs to raise money easier so that they can realize their dream. Since crowdfunding is based on communities which are sharing risks and democratizing wealth, it has similar principles like Islamic Finance and thus will integrate easily with Islamic culture and law.
Arab Crowdfunding has a bright future as equity financing has been always preferred over debt financing in the region especially as Islam is prohibiting interest rates. Islamic lending deploys capital not for the sole purpose to generate dividends but mainly to impact positively the economy.
HOW DOES CROWDFUNDING WORKS
The principles of crowdfunding are mainly based in raising money by asking a large number of people (crowd) for a small amount of cash. In the past, when it came to project ventures, only few investors were involved. Thanks to internet, crowdfunding has access to a larger number of potential funders.
Crowdfunding also in the Arab world is also about persuading people to each invest a small amount of money. Once the borrower get thousands of lenders, he or she can obtain some serious cash on hand. One of the rule of crowdfunding if a borrower is not proposing an attractive project then the crowdfunding bid will become a flop. Crowdfunding plate-forms don't collect money until the fundraising goal is achieved.
TYPES OF CROWDFUNDING WITH OPPORTUNITIES IN THE ARAB WORLD
Crowdfunding takes 4 principle forms:
- a. Equity Crowdfunding: all investors receive a stake in the company.
- b. Donation Crowdfunding: contributions are dedicated to charity.
- c. Lending Crowdfunding: lenders are reimbursed for their investment after a period of time.
- d. Reward Crowdfunding: in return of their investments, investors receive a physical item or service related to the business they are supporting.
CROWDFUNDING IN MENA (MIDDLE EAST AND NORTH AFRICA
MENA is about to become a place of innovation in crowdfunding and alternative finance. The main reason is that governments and big companies are failing to generate the necessary number of jobs, many young people are starting to run their own businesses even having difficult access to capital. In this complex environment, several Arab crowdfunding platforms have been set up in the last years. Nowadays Arab crowdfunding is supporting sectors where normal funding is scarce and where there is huge demand like for culture, innovation, community projects or social entrepreneurship and women development.
The Middle East not the Maghreb region is seen the new crowdfunding place to be . Arab crowdfunding actors are importing this financing tool from the West into the region. The new Arab players offer equity investing but provide crowdsourcing for creative projects. The interesting thing is that they have found a way with regard the lack of local regulatory framework.
Some of the Arab Crowdfunding platforms have put the payment side offshore while keeping a local presence.Compliance will remain a big obstacle to crowdfunding platforms.
CROWDFUNDING AND ISLAMIC FINANCE
Crowdfunding is about to emerge as a significant tool for Muslims to channel funds for equity investment. Equity crowdfunding is likely to be first completely new form of Islamic Finance in centuries. Islamic business laws opt for equity mechanisms rather than for debt instruments. Sharing risk as well as rewards are common to both crowdfunding and Sharia compliant finance.
Arabcrowdfunding.com has selected for you the best Arab crowdfunding platforms
ONLINE ARAB CROWDFUNDING PLATFORMS