In the same way that many of us are unable to imagine the world without the omnipresent influence of social media, Chris Thomas believes that, in 10 years time, we’ll look back and wonder how we’ve managed to survive without crowd investing.
The industry, even on a global scale, is still in its teething phase. In fact, he says that we’re on page four of a 1,000-page novel, but it’s here to stay, people need to get used to it and he believes it will be the de facto mechanism by which people raise money in the future.
As the founder and chief executive officer of Eureeca.com, the recently launched crowd-investing platform in the Middle East, it’s not his job to confirm the viability of any business that chooses to sell equity to the masses.
“That’s entirely for the crowd to decide,” he tells Kipp during ArabNet’s Digital Summit in Dubai. It is his job, however, to guide SMEs through the process and ensure that they are both ‘investor-ready’ – with all the necessary funding documents and background checks – and legally compliant.
“Many people see crowd funding and crowd investing as being very similar, precisely because they use the same technology and method,” explains Thomas. “The most significant distinction between the two is compliance.”
It’s relatively easy for any person to get on a crowd-funding platform such as Kickstarter, he says, where you’d ask for funding in the form of donations commonly in exchange for a tangible good or credit.
In Eureeca’s case, since the company deals with people’s money and proper investments, there’s a deep and long-compliance program for companies to be fit for investing. “Our job is to hold the hand of the SME through the process,” he says.
The investment platform, like the existing six or seven (as Thomas estimates) others around the world, all follow an all-or-nothing model; either a company successfully raises its investment target within the allotted 90 days or keeps nothing. This rule ensures that companies set reasonable targets and convince enough people to invest in it in exchange for equity.
“It’s entirely up to the company how much equity they want to sell,” explains Thomas. “But the money invested is meant to help the company hit its next milestone. We don’t want a situation where they would throw in any old number to try and raise as much as possible.”
The platform is currently younger than 90 days, so we have yet to see whether the listed companies have managed to successfully achieve their target investment. Less than a week ago, virtual skills marketplace Nabbesh, founded by Loulou Baz in Dubai earlier this year, became the third company to use Eureeca in its quest for capital. The company hopes to raise a total of $100,000 and, within a matter of six days, has already been able to hit roughly 65 per cent of its target.
Thomas says that Eureeca.com, having already set up in the United Arab Emirates, Lebanon and Jordan, will be focusing on the Middle East. So far, they’ve been “inundated and overwhelmed” with requests, but before they branch out, they want to get it right here first.
