The nature of money and capital is changing
as quickly as everything else. Cryptocurrencies,
business funding, banking and coinage are blurring
into one big accelerated charge across the Rubicon.
Financial phenomena such as M-Pesa’s mobile
banking platform in Kenya where 42 per cent of
GNP is conducted, Bitcoin’s digital peer-to-peer
currency and even ‘old’ platforms such as PayPal
mean money is now something else. The currencies
we now deal in can range from ‘favour economies’ to
microlending and even using a (Apple) watch to
Not only is it confusing, it is also opening new
opportunities for businesses to trade in. One such
well-known platform is crowdfunding where companies
raise money from many small investors, instead of
relying on the, frankly, unreliable largesse and
blockbuster model of venture capitalists and banks.
There have been notable crowdfunding successes
such as the oft-mentioned Pebble Watch, but umpteen
fails such as those investing in games development.
However, crowdfunding seems to have hit critical
mass and looks as if it’s here to stay.
Above: the Pebble Watch was a crowdfunding success
Like anything new, crowdsourcing is beginning to
fracture into different shapes from its initial rewards-
based model. Equity crowdfunding where companies
offer equity stakes in exchange for investment, instead
of prizes, have been highly successful in the UK,
spearheaded by companies such as Seedrs and
Two months ago, there was further fragmentation
when Eureeca (terrible name, interesting business),
self-described as the ‘first global equity crowd funding
platform’ received regulatory approval from the UK’s
Financial Conduct Authority. This means UK-based
SMEs looking to enter the Dubai market can access
to capital and expertise from local investors.
Founded in Dubai by former investment bankers,
Eureeca’s FCA approval offers new geographical
opportunities for crowdfunding; a market the company
expects to reach $90 billion by 2025.
“UK- and Europe-based SMEs with ambitions of
entering the Gulf can now access capital and expertise
from investors in the region. In the same vein, businesses
in the Middle East seeking to expand into the UK will be
able to secure capital through investors there,” said
Managing Director, Sam Quawasmi.
Another interesting crowdfunding company in this space
takes Eureeca’s example further. Launched last month,
Emerging Crowd is a UK-based investment crowd funding
platform that offers users equity (and debt) investments
in unlisted emerging and frontier market companies.
The platform enables growth-stage businesses to raise
up to a maximum of £4 million in a 12-month period.
One of the earliest companies to crowdfund on its platform
is Cape Town-based company Bozza, a digital distribution
platform where artists can connect with fans who want
locally relevant content via their mobile device and desktop.
Above: Bozza used Eureeca to crowdfund on its platform
“We chose Emerging Crowd because they are the
first platform that focuses on companies that operate
out of emerging frontier markets. They are an exciting
platform that links ambitious, well-run companies
seeking finance with international investors pursuing
the potential higher returns from frontier and
emerging markets,” said Emma Kaye, CEO Bozza Media.
Crowdfunding, however, in whatever form it comes
now or is likely to transmute in, is not a panacea to
growing and funding a company. As previously
mentioned, for every Pebble Watch funded, there
will be many who fail to raise their targeted money
and will be forever associated with such a fail.
Those who do fail and go back to raising traditional
forms of funding are unlikely to be welcomed back
with big bags of money from VCs and banks if their
crowdfunding campaign was unsuccessful. In essence,
their businesses will be lucky to survive.
But like with new forms of money, new forms of
business funding will mean there will be winners and
losers, both for the investors and the ones chancing
their arm. What else would you expect if the
crowdfunding market does reach $90 billion over
the next decade?