INSIGHTS ON ANGEL INVESTING, CROWDFUNDING AND TOKENIZATION
Bambucorn conducted a webinar on: “Insights on Angel Investing, Crowdfunding and Tokenization” on the 2nd of November 2020.
Some of the key take-aways from our webinar are as follows:
1. The Innovator:
“The average time taken for a start-up to raise funding in San Francisco (from meeting the investor for the first time, closing the deal and then getting the funding dispersed) is almost a month, but in the MENA region, it takes almost 8 to 9 months!” – Hussain Haji, the CEO and Co-founder of Inagrab
• It is equally important for a founder to select investors for his/her start-up rather than just allowing investors to select the start-up that they want to invest in.
• Founders should not just be looking for money but also strategic advice, inputs and network.
• The support from equity crowdfunding platforms could significantly reduce the 9 month long fundraising period to just a couple of months!
2. The Provider:
“And all I need from you is the money, and those are the start-ups that I have to unfortunately reject.” – Khaled AlFahim, Board member, Al Fahim Group
• There is scope for improvement in terms of commitment, basic knowledge and the drive. Founders are sometimes too involved in the concept rather than the details and are not willing to go the whole way – as they probably have a regular job whilst also being a founder!
• The key aspects for choosing a start-up include:
a. Who is driving the company?
b. What are they willing to put into that company?
c. Are the founders flexible and willing to listen?
• Apart from the team and concept, being able to understand the business also plays a vital role in selecting the start-up for investments.
• The younger generation of family businesses seem to have a bigger risk appetite compared to the traditional older generation.
3. The Ecosystem Builder:
“The Central Bank of Bahrain and Bahrain EDB have been really working hand in hand to set up the right kind of set-ups and regulations, with the crowdfunding regulations being pushed out as early as 2018” – Yasmeen Alsaffar, Financial Services, Bahrain EDB
• A pro-innovation regulator playing the role of an eco-system builder ensures that the environment is feasible and inviting to FinTechs, with EDB playing the role of the facilitator to let collaborations happen.
• Some of these examples include:
a. Introduction of Bahrain Fintech Bay to carry on innovation
b. Launch of the regulatory sand box in 2018 having now established their space in open banking and digital banking
c. Revolution in the InsureTech space
d. Launch of Finhub 973 to test products and proof of concepts
• Regulators at the end of the day want to ensure the consumer’s protection – understand concerns and match appetite!
4. The Crowdfunding Player:
“Its not like you buy Apple stocks on the public market and then go to sleep for another 5 years – you have to be aware of the company, be educated on the company and also need to have access to information about the company to even know that you want to invest in it – that’s where crowdfunding platforms come into play.” – Shelly Hod Moyal, Founding Partner of iAngels
• Crowdfunding platforms create the opportunity to democratize early stage investments in addition to conducting due diligence, analysing the team and understanding how the team complements each other, speaking to references, doing psychological assessments, connecting to their networks and building the consumer base for founders.
• They act as eyes and ears for investors abroad and investors that are incredibly sophisticated in the MENA region
• Investors and entrepreneurs both need to know and understand what they are getting into and also that things will go wrong (if you are investing in start-ups and you are successful 20% of the times then you are a good investor and that’s actually okay.)
5. The Regulatory Landscape of Security Tokens:
“The regulators don’t want to fall in a situation where there is a lack of control in terms of consumer protection and structure. On the other hand, they also want to ensure that the liquidity issues are fixed with the issuances of digital securities, so currently it’s a very balancing act” – Akshata Namjoshi, Fintech Lead at Karm Legal
• In the region, ADGM has already come up with a regulation that is up and running when it comes to issuance of digital securities being at par with the existing shares and bonds
• DFSA has also given out many sandbox licenses within which they are testing various models of digital securities to assess whether they are essentially at par with regular share issuances
• Crowdfunding is now going hand in hand with tokenization, where start-ups can leverage on security tokens and blockchain to raise funding
In case you missed our webinar, click here to watch it.
We look forward to your participation in our upcoming events as well. Stay tuned!