Crowdfunding can be a 'catapult for innovation' in the Middle East

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Rafat Abushaban, a business development specialist from Gaza, was first introduced to crowdfunding in 2011 when someone told him to check out a website called Kickstarter. He explored the platform and his interest was quickly piqued.

“I was amazed, astonished even, by the amount of funding that went to projects from all around the world. I thought this is really something unique and could potentially be very useful, especially in cases when people aren’t easily able to travel and meet large-scale investors, such as here in Palestine and other parts of the Arab world.”

“The more interested I became in crowdfunding, the more I witnessed its rise. Nowadays I’ve mostly stopped hearing people speaking about getting venture capital and angel investor funding and people are now saying I raised three, four, five million on Kickstarter. It’s the new hot topic.”

He soon developed a Crowdfunding 101 course, which he delivered to students at five universities and institutions in Gaza, and began working on a research paper that analyzed the region’s crowdfunding environment.

In his paper, titled Crowdfunding as a Catapult for Innovation in the Middle East: Obstacles and Possibilities (paywall), Abushaban collected quantitative and qualitative data on 255 MENA-based campaigns from three platforms serving the region: Indiegogo, Zoomaal, and Eureeca. For comparison, he collected the same data on 419 Indiegogo campaigns from countries outside of the region.

The paper was selected for presentation at the 2014 Global Humanitarian Technology Conference in Silicon Valley last October. Although Abushaban was unable to attend due to border closures resulting from the conflict in Gaza last summer, he was able to prerecord a presentation on YouTube that was played for the audience, with which he interacted live via Twitter.

Here is a breakdown of some of his major findings from the study’s sample of campaigns, all of which concluded between May 2010 and May 2014:

Indiegogo

  • Indiegogo was the most popular crowdfunding platform in the region, with 204 of 255 analyzed regional campaigns raising funds on this platform.

  • These 204 campaigns came from 15 MENA countries. Ninety-eight percent of them were either successful (hit their target amount) or partially successful (managed to raise funds totaling less than the target using a flexible model, which allows the such funds to be received by campaigners).

  • $1,033,054 was raised out of a collectively target of $5,407,125.

  • Palestine had the highest number of campaigns with 68, a result that Abushaban partially attributes to both the increased need for crowdfunding resulting from its particularly dire economic and political conditions, and the high number of activist projects conducted in Palestine, especially the West Bank. (See a breakdown of successful Indiegogo campaigns by MENA country at right).

  • Community was the most popular category with 43 campaigns ($260,400 raised), followed by Film with 35 campaigns ($180,400) and Education with 30 campaigns ($140,600). While Technology finished in 12th position with four campaigns, it was the fourth highest grossing category with $69,300.

Middle East comparison with international sample of Indiegogo campaigns

Data was collected from a nine developed and developing countries, forming a global sample with two countries from the following: North America, Latin America, Europe, East and South Asia, plus Australia.

  • The United States and Germany each exceeded the total raised by the Middle East sample in a single campaign.

  • Canada (four campaigns), the United Kingdom (four campaigns), Australia (12 campaigns), and India (39 campaigns) all exceeded the total funds raised by the ME sample.

  • Brazil, China, and Mexico failed to exceed the total raised by the ME sample.

  • For developed countries, Technology was the most popular category with seven ($1.5 million), while Film was the highest grossing with $2.3 million.

  • For the developing countries, Film had the highest number of campaigns with 80 ($384,000), and Technology was the highest grossing with $2 million raised. 

Zoomaal

  • Zoomaal only offers a fixed funding model (all or nothing), and out of the 37 campaigns analyzed, 21 were successful and 16 failed, yielding a 56% success rate (see graph at right).

  • The 19 successful Middle East-based campaigns raised $245,894.

  • Lebanon had the most campaigns (17), the highest average of funders per project (88), and the highest total of funds raised ($175,631).

  • The UAE had the second highest total of funds raised with $22,726, followed by Morocco with $20,655.

Eureeca

  • The crowdinvesting platform, which uses a fixed funding model, had seven successful campaigns from two countries that raised $858,476, exceeding the collective target of $672,900 by $185,576. (The Eureeca website does not provide information about failed campaigns.)

  • The UAE had four successful campaigns that raised $456,233, while Jordan had three campaigns that raised $402,243.

  • The seven successful campaigns had an average of 30 investors each and all were from the Technology category.

Conclusions

  • A number of countries in the region including Palestine, Lebanon, the UAE, Jordan, Egypt and Morocco demonstrated significant potential to raise funds on crowdfunding platforms, which could result in the development of local projects and businesses, despite the less-than-conducive political and economic conditions in many of these places.

  • Over $2 million was raised in the region across the three platforms over the four years in question.

  • ME-based campaigns tend to focus on the necessities such as Community, Education and Health, but the study’s results suggest that the categories of Technology, Design, and Film have high potential in the region.

  • There was no clear correlation between the number of campaign team members and the amount raised. There was, however, a direct correlation between the number of funders and the amount raised, as campaigns with more funders typically raised more funds.

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