Crowdcube – the British regulated crowdfunding platform – is reading to make a move into the Middle East and North Africa.
Crowdcube has raised more than £9.5 million for start-up businesses in Britain, and is now looking to expand.
The organisation sees the next big crowdfunding market as the Gulf area and entrepreneurs across North Africa.
The crowd funder’s Omar Rana explains that around two-thirds of businesses in the MENA region are less than 30 years olds.
“These young businesses are full to the brim with ideas and passion and they don’t want to go down the old paths of waiting for government support,” he said.
“We want Crowdcube MENA to act as a catalyst for speeding up development and to provide a focus for growth and innovation.”
Outside investors are presented with some ownership issues in the Gulf Co-operation Council (GCC) nations – including Saudi Arabia and the United Arab Emirates.
Some have strict rules about foreign companies and organisations owning businesses, but Crowdcube hopes the benefit of FCA regulation with help cut a swathe through the red tape to open the GCC for investors.
“Working in the region will be a challenge,” said Rana. “However, we feel working with a tier 1 regulator like the FCA will stand us in good stead in the region. We also propose to work closely with governments, which is something many crowd funders have not had to do in other regions.”
Crowdfunding is a concept of a large group of small investors pooling resources to finance a business.
Crowdcube’s statistics show the platform has almost 36,500 members who have contributed an average £2,427 each to 54 projects.
Start-ups make up 23% of the funded business and early-stage firms 45%. The rest was funding for growth.
The most popular sectors for investment are retail, food and drink, professional services and the internet.
In the UK, all Crowdcube’s invested businesses have tax break advantages offered by the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS).
“MENA entrepreneurs need help raising money for their ventures as they have fewer options than their counterparts in Europe or America, while they are often bogged down in out-of-date rules about how to involve shareholders,” said Rana.
Crowdcube has a project team working on developing the platform for the MENA region, which is looking at two key issues – compliance and regulation to protect investor’s money and a well-established online platform.