MAGNiTT, Founder was aksed to give his views and reflection on Crowfunding in the Middle East as part of AlliedCrowds "Crowdunding for Entrerpenurship report"
With a large population of well educated but underemployed youth, the Middle East and North Africa (MENA) region is ripe for a startup explosion.
The ecosystem continues to develop with incubator and accelerator programs supporting government initiatives across the region. Three limiting factors, however, persist: the lack of connectivity across the ecosystem; the limited access to early stage nancing; and the lack of a business-friendly regulatory framework to support entrepreneurs.
Looking to solve the connectivity and funding issues, Philip Bahoshy founded MAGNiTT. The online platform allows entrepreneurs to list their startups, connect with investors, and interact with potential mentors to support them in their startup’s growth.
“Our goal is to become the go-to platform for investors, mentors, and potential co-founders to connect with MENA entrepreneurs,” Bahoshy said.
MAGNiTT does not aspire to be a crowdfunding platform. Instead, it is looking “to create a network to connect entrepreneurs to the appropriate services and channels based on their speci c needs and requirements.”
Connecting startups to the right mentors, Bahoshy believes, “is the best mechanism to support them in their business development and eventual access to angel funding.”
Bahoshy did say, however, that crowdfunding can play an important role in the region.
“Our recent statistics highlighted that 37 percent of all startups on MAGNiTT are looking to raise between $50,000 and $250,000,” he noted. “Access to early stage capital to kick start growth is challenging to source, and crowdfunding can potentially ll that gap.”
To be successful, however, Bahoshy thinks two things need to be addressed: the development of a regulatory environment that supports equity- and lending-based crowdfunding, as well as greater education of founders and investors on the mechanisms and bene ts of the di erent types of crowdfunding.
“There is an appetite for crowdfunding, but the current lack of regulation does not instill investors with con dence,” he said.
Furthermore, “crowdfunding is perceived, wrongly, as funding of last resort,” Bahoshy explained. “This points to the need for greater education around it, as well as angel investing more generally.”
Despite these challenges, crowdfunding platforms continue to gain traction in the region. Bahoshy pointed to the success of Eureeca, an equity based crowdfunding platform, and Beehive, a P2P lender that he highlighted recently won the Gulf Capital Startup Business of the Year award. These two companies have taken o despite the di culties in the region. MAGNiTT is in early conversations with both, as well as others, to recommend their services to startups listed on their platform, depending on their speci c needs.
Furthermore, crowdfunding is emerging at the right time: there is a push to spur entrepreneurship globally, and Bahoshy said he also sees strong initiatives on the part of governments in the MENA region to push entrepreneurship as a means of diversifying their economies away from their reliance on oil and as a source of job creation, training, and development.
What’s helping the e ort is the success of a number of startups that have begun to pave the way for others: Souq.com, Talabat, Souqalmal, and Careem are just four household name examples, with Careem having just raised $60 million in Series C funding.
With entrepreneurship continuing to take o in the region and strong demand for early stage nancing, expect nancial regulators to look more seriously at creating the appropriate regulatory framework for crowdfunding.
Download the report at: http://snip.ly/Rgu1