Search in MENA joins the crowd investing game
Q&A with virtual marketplace founder Salim Akil.
September 24, 2013 12:18 by Muhammad Aldalou
Earlier this month, Search in MENA, a Silicon Oasis Founders company, became the latest to list itself on Dubai-based Eureeca, a crowd investing platform with a regional focus that accepts funding from members (as small as $100) in exchange for equity.
Founded by Salim Akil, Search in MENA is a virtual marketplace that helps small-to-medium businesses (SMEs) create new channels to attract clients online and build a vast network of product and service providers. The portal has more than 14,000 companies listed in its B2B directory and receives more than 1,500 visits daily.
The investment they are after is $140,000 and, so far, the campaign has raised $12,740. As with all crowd investing platforms, if a company fails to raise the decided amount, it will receive none of the funding.
We speak to Akil about the potential and challenges of this up-and-coming form of funding in the region, the company’s expansion plans once the investment has been secured and the digital presence of businesses in the Arab world.
Was listing on Eureeca your first attempt at raising funds?
No, we secured our first $100,000 from Dubai Silicon Oasis’ incubator, The Dubai Silicon Oasis Incubation Center, which supported the venture throughout the incubation period and helped us reach our ‘proof of concept’ stage. We are now ready to raise five times that amount from Eureeca and venture capitalists to expand.
Why the decision to use crowd investing, rather than single investors as companies traditionally do?
Eureeca offers more than just money from investors. The website creates awareness about our venture, offering a very efficient platform through which investors can invest, saving us a lot of time, while also supporting us in getting the documentation in order. Having said that, we will also be reaching out to individual investors.
A secondary effect is the benefit all of the above has on our sales. We will have our best month in terms of revenue this month.
What do you think is next for crowd investing? Do you believe it to be a model that will truly ‘take off’ in the Middle East region?
What we are seeing now is just the beginning. I truly think crowd investing is here to stay, because it is a very transparent and effective way of raising funds, while allowing SMEs to reach more investors investing in both small and large amounts.
Eureeca also solves the problem of there being only a few active venture capitalists and angel investors in the Mena region, but of course we still need to build awareness, which we hope to foster with our funding proposal.
Obviously, the benefits of crowd investing are apparent, but are there any challenges that make you believe that a lot more regulation is necessary first?
There is no significant difference between crowd investing and regular funding models offline, other than the fact that the former is done online.
In fact, Eureeca has been set up to ensure that it meets a very high threshold for regulators. They conduct due diligence on every company through a third-party international compliance organisation and require documentation that allows investors to gain a full perspective on every business on their platform.
Furthermore, Eureeca’s model is completely transparent and investors have the same information. It remains to be seen where the weaknesses of the model are and where litigation will take place. Eureeca is having deep conversations with entities across the region to consult on regulation, as this is a new global industry and the rule book on how it should function will be outlined soon.
Are you confident that you will be able to raise the entire amount?
I am quite confident we will make it. We are reaching out to many potential investors from the crowd and in our wide network across the whole of the Mena region. We have seen interest in investing from a variety of members, clients and partners. It has never been easier to invest in a startup company and SearchinMENA.com is something companies can benefit from.
Once Search in MENA has secured funding, what is the next step for the company?
In essence, we want to build up the company in terms of manpower, specifically in sales and product innovation, to continue improving the product and adding great new features to increase our reach in the Mena region. This entails closing partnerships with resellers across the region.
How will you go about your goal of increasing the online presence of regional businesses from 15 to 30 per cent?
There is a big trend towards listing your company online. The driver is the economy as a whole and technological developments in telecommunication. To not lose out on potential customers, businesses need to list online. We benefit from that trend and the faster it is implemented the more business we expect to get. SearchinMENA.com will act as a driver too, but on a smaller scale.
When it comes to digital presence, are companies in this region lagging behind?
Compared with Europe, the US and China, yes, this region is lacking. Only 15 per cent of companies in the Mena region are online, with KSA at the top, followed by Egypt, Morocco and then the UAE. Interestingly, Turkey has a much larger online presence, compared with any Mena country, with 1,274,900 companies online. However, we are making the most of the gap in the market and hope to change this through our initiative.