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what is CrOwd funding?In 2006, mIchael sullIvan coIned the term “crowd fundIng” whIle descrIbIng the Process of raIsIng money onlIne for vIdeo ProJects. how PoPular Is It In the regIon?

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before the term was coined, crowd funding was used at various stages and in various forms. Electric Eel Shock, a Japanese rock band raised around 10,000 pounds in 2004 from his fans. Franny Armstrong, a British documentary film director working for her own company, Spanner Films, and a former drummer with indie pop group, The Band of Holy Joy, between 2004 and 2009 raised £1.5 million (QR9 million) from the film industry. There are many similar exam-ples of people building groups to fund their ventures, interests and businesses.

Crowd funding is described as the collective ef-fort of individuals to pool their resources to support efforts initiated by other people or organisations. Crowd funding is used in support of a wide variety of

activities, including disaster relief, citizen journal-ism, support of artists by fans, political campaigns, start-up company funding, movie or free software development, inventions development and scientific research. Crowd funding is also used to raise funding for a company by selling small amounts of its equity to many investors.

As this phenomenon grows globally, quite a few platforms have opened up in the Middle East provid-ing such a service in a streamlined fashion. Alflam-nah is one of the first such platforms in the Middle East. Launched during the Cannes Film Festival, Aflamnah focuses on projects for the Arab world cre-ated by Arabs, or by individuals or organisations that care about culture, society, and people or residents

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of the region. Equity crowd funding was in the news couple of months ago in the US when Obama signed the Jumpstart our Business Start-ups (JOBS) act, making it easier for emerging growing companies to secure seed capital taking online investments from the public in exchange for slices of equity. Eureeca, a platform which works on crowd sourced investments has attracted over 100 applications from business owners in the last few months. There are similar other platforms like Entelak, Mawwell and a few more which focus on providing a channel to busi-ness initiatives through the model of crowd sourced investments

Most of these sites work on two models – All or Nothing (AoN) and Keep it All (KiA). When the fund-raising period is over, the pledged money is collected from the contributors if the fundraising goal is met. If the goal is not met, no money is collected. In KiA whatever money is collected, is used as funding.

The pros and consFrom an entrepreneur’s perspective, theoretically the model looks wonderful as it allows the companies to

raise money quickly and much easily. However rais-ing investment is not just about raising capital. Build-ing a successful company is more about the people and how they contribute to the success of the compa-ny. The people matter, more than just the funding. As the model doesn’t allow much interaction, the ability to know about each other is missing.

Investors who are on the other side of such plat-forms have varied views of the model being a “non-serious” version of angel investment to an enabler to access good businesses. However most feel that crowd funding will open a parallel avenue for inves-tors to route their investments in parallel with the traditional way.

As any new model, it has its own takers and detrac-tors. Also like anything innovative, it will take its own time to mature with more processes and laws com-ing into the picture. But as the association with the financial authorities becomes stronger and the pro-cess gets more streamlined, I feel crowd funding will provide a lot of entrepreneurs with the much-needed angel funding support for various business activities they want to venture into

manik is co founder for mixilion. having worked for technology majors like infosys and computer sciences corporation, manik decided to start his own

venture jade magnet in 2009. jade magnet today is one of the largest creative crowdsourcing platform in the world with a unique delivery assurance model to support complex crowdsourced solutions. jade magnet ventured into middle east

as mixilion in late 2012 and has already been delivering crowdsourced marketing solutions to some of the best brands in qatar, uae and kuwait. mixilion was also

responsible for marketing support for asian champions trophy in doha which involved some of the best national hockey teams from across the globe.