Crowdfunding – The Key To Inclusive Investment In MENAPT

Crowdfunding is a fundraising practice to collect chunks of funds from a large pool of individuals who come together and support a specific aim or project, mainly through electronic portals, and involving various sectors, including seeking capital for startups, political and social campaigns, and charity works. 

In recent times, crowdfunding has emerged as one of the effective tools to prevent innovative ideas with the potential to shift paradigms into vain. This financial tool is transforming the landscape of fundraising for startups, especially in the MENAPT region (Middle East, North Africa, and the Persian Gulf).

In tough economic situations and declining interests of VCs in early-stage startups, this innovative method gives breathing room to small self-started ventures by gathering financial support from a large group of individuals through electronic platforms, enabling entrepreneurs to turn their ideas into reality.

This article aims to help early-stage startups and entrepreneurs learn and explore diverse options of fundraising in the form of crowdfunding, its increasing popularity, and how FinTech, EdTech, HealthTech, LogTech, Sustainability Tech, and some other booming trends of tech startups in the MENAPT region can leverage this option to ensure survival and accelerate growth.

The Rise Of Crowdfunding

The surge in crowdfunding’s popularity is apparent in the overwhelming number of campaigns conducted in recent times. However, for startups in the MENAPT region, crowdfunding has emerged as one of the most promising options for early-stage startups to build the prototype of the solution and early revenue plan around the idea. This helps in building enough support to garner the attention of the potential investment from Venture capitalists or Angel Investors.

Diverse Methods Of Crowdfunding

Crowdfunding has become a particularly attractive avenue for securing the necessary capital to bring innovative ideas to life. Following are some of the most recommended options for crowdfunding for startups:

Debt Crowdfunding

It consists of Peer-to-peer (P2P) lending or invoice financing, where contributors are in one way or the other, lenders to a project or business. 

Equity Crowdfunding

It is different from traditional crowdfunding in that by investing their capital, individuals get a real stake in the ownership of the business. This is a higher level of commitment than regular crowdfunding transactions. Startups often resort to equity crowdfunding because this option is popular with businesses aiming to raise funding and develop their equity ownership structure. 

Reward-based Crowdfunding

This type of crowdfunding is a different approach where supporters contribute to a particular project or event and are awarded with non-monetary items. Instead of financial returns, backers get something that they will enjoy. This form of crowdfunding can mostly be found in creative projects and product launch cases, which allows creators to connect with their supporters by providing valuable gifts.