New funding rules to ‘revolutionize’ traditional Saudi banking models

New funding rules to ‘revolutionize’ traditional Saudi banking models

Crowdfunding, a process whereby a large group of people invests small amounts of money to collectively fund a project, has been popular since the turn of the century and took off with the launch of platforms such as Kickstarter, in 2009. According to database company Statista, in 2019 the global crowdfunding market was valued at $13.9 billion, and that figure was forecast to triple by 2026. In January, the (SAMA) issued new regulations for debt-based crowdfunding in the Kingdom. The framework provided more opportunities for startups and small and medium-sized enterprises (SMEs) in the country to access capital and source funding to expand. The rules provided a licensing structure for crowdfunding activities and outlined the minimum requirements for crowdfunding players wishing to enter the , Kayrouz said. He pointed out that the main benefit for SMEs was being able to raise funds and gain access to capital without having to give up a stake in their business to investors, a situation many smaller firms had been struggling within the Saudi market. The new regulations would also increase competition between venture capital (VC) organizations, and crowdfunding platforms themselves, he added, meaning improved interest rates and terms for startups. “With the rise