Crowdfunding in the Arab region and beyond
Crowdfunding is the act of obtaining money for a project or endeavor from a large number of people who each donate a little amount, usually but not necessarily using the internet.
A common feature of crowdfunding is that the funds are earmarked to a specific action. An action is characterized by a minimum amount of capital that must be raised by the crowd in order for a project to get off the ground. In most cases, the funder publishes an open call through a platform. A significant part of the success of Internet-based crowdfunding campaigns is due to social media, through which a large proportion of the backers are reached.
There are four different variants of crowdfunding:
- Donation-based crowdfunding or crowd donation is a donation without material consideration.
- In reward-based crowdfunding, those who have contributed financially to a project receive a thank-you of a non-financial nature. This can be, for example, the placement of the logo on printed materials, a copy of the created product or similar.
- Lending-based crowdfunding refers to money that is later returned to backers.
- Supporters of equity-based crowdfunding or crowd investment receive shares in the project.
Don't believe in crowdfunding success yet? Then take a look at some examples of successful crowdfunding campaigns:
Star Citizen is a multiplayer space simulation game still in development. It was announ-ced in 2012 on a private crowdfunding page. Since then, private donors have contributed over $2 million to the game.
In 1885, work on the pedestal of the Statue of Liberty in New York had to be stopped because the funds were no longer sufficient. Government agencies were unable to agree on further funding, so the publicist Joseph Pulitzer called for a crowdfunding campaign to finance the pedestal. He used advertisements and articles in his newspaper The World. In this way, he was able to raise $100,000, which today is roughly equivalent to $2 million, from 160.000 people. Thanks to crowdfunding, the pedestal was completed.
A crowdfunding campaign with the sole purpose of market research? There is. In 2018, the U.S. company Nomad Trading Co. launched a campaign to see whether a new energy drink, free of chemicals, would be bought or not. The idea was to release the Nomad Energy Drink, which is made from the leftovers of coffee beans, without much marketing. The company only shared its ideas on Facebook and Instagram. In addition, the company used the crowdfunding platform Kickstarter to bring in $5,000. As a reward for top backers, they offered a trip to Costa Rica trip worth $1,800. The proud result of the campaign was $16,500 in crowdfunding.
Coolest Cooler are coolers with integrated USB charger and Bluetooth speaker. In 2013, they launched their crowdfunding campaign, which to date is one of the most successful in the world with $10 million raised. Despite the huge sum, they struggled with getting started.
Below you find some programs and organizations for crowdfunding in the Arab region and beyond.
DubaiNEXT is the first official governmental online crowdfun-ding platform for startups in the UAE. They aim to foster an entrepreneurial culture and develop a competitive SME sector for the Emirate of Dubai.
Chriky is the first equity crowd-funding platform in Alge-ria. They offer young and not so young project leaders a financial study, a crowdfunding campaign and support after the launch of the company
Liwwa is an online credit marketplace where businesses can borrow capital and inves-tors can earn monthly returns.
Fundahope was created by Lebanese youths to serve primarily the Lebanese com-munity. Any Lebanese citizen, company or NGO with a valid Lebanese bank account can start a campaign or create a permanent fundraiser.
Cotizi is the first free and secure service dedicated to collecting donations in Morocco.
BuildPalestine works with local changemakers and nonprofits to help them launch crowdfunding campaigns in Palestine.
Madad’s mission is to support the development of Egypt in a sustai-nable and strategic manner by directing donations towards sustai-nable development causes that will have long-term impact and contri-bute to the development of the country.
SmartCrowd focuses on making real estate investments accessible to the masses using an award-winning crowdfunding model. It is the first fully regulated digital platform for real estate investments in the Arab region.
Zoomaal is the Arab world’s leading crowdfunding platform supporting the regions creatives. Funds can be raised on Zoomaal for projects and initiatives in the creative, innovative, or community-related sectors.
Scopeer supports Saudi start-ups in crowdfunding and installing brand ambassadors.
Based in Dubai, Beehive is the first peer to peer (P2P) lending platform in the Arab region to be regulated by the DFSA.
Raqamyah is a crowdlending financing platform by Saudi Central Bank under the Regula-tory Sandbox. As a Fintech company, Raqamyah uses innovative technology to directly connect small busines-ses seeking fast, affordable finance with financers who can help fund their growth.
YallaGive is the first licensed online donation and crowd-funding platform in the Middle East. They offer personal crowd-funding and online fundraising for members around the world.
Yomken is a crowd-solving plat-form for industrial, environmen-tal and societal challenges.