Crowdfunding key to supporting SME growth

MUSCAT, OCT 1

Crowdfunding has emerged as a key financing tool for local SMEs in Oman. According to data from the Financial Services Authority (FSA), over RO 5.8 million was raised through crowdfunding campaigns from 2022 to the first half of 2024.

This week, in the ‘Observer Podcast’, we are joined by Saleh al Tamami, CEO and Co-Founder of Omani fintech company Mamun, who has raised over RO 1 million in less than a year.

Highlighting the significance of crowdfunding, Al Tamami said: "Crowdfunding has emerged as a game-changer for businesses and investors alike because it provides an alternative to traditional financing, offering businesses much-needed funds while allowing investors to support local enterprises and earn returns." Al Tamami explained how the process works. “Crowdfunding is really in the name, so it's crowdfunding where a crowd of people both come together. The crowd will sign up to a platform similar to us or come to the Mamun, and on it they will find different investment opportunities to invest in and together as a crowd, they will fund these businesses.” According to the CEO, the company currently offers three main types of crowdfunding. The first is reward crowdfunding, where businesses seek funding in exchange for perks rather than returns on investment.

Another option is equity crowdfunding, which the company launched for the freelancing platform Zameeli, raising $50,000. According to Al Tamami, this type of crowdfunding allows companies to offer shares to the public, similar to an IPO, but on a smaller scale. Mamun is presently the first platform to offer this in Oman.

The third type of crowdfunding is short-term financing, which makes up the majority of campaigns on the platform. According to the CEO, this allows businesses to obtain funds for purchasing items like raw materials or equipment, with repayment terms ranging from three months to two years.

Speaking about the platform's performance, Al Tamami said, "Mamun boasts an impressive average internal rate of return of 20 per cent. Even the lowest-risk campaigns or investments that we’ve done outperform fixed deposits, the stock market, and a lot of other forms of investment, including real estate." The company has launched around 31 campaigns since its inception in October 2023, with investments exceeding RO 1 million. According to the CEO, investors can start investing with as little as RO 50.

Furthermore, the company’s investments are Sharia-compliant, ensuring that all transactions adhere to the company’s values. "Sharia compliance is a choice we made because it aligns with our values. It’s much harder than conventional finance because of its stringent requirements, but it promotes real economic development. There’s a direct link between what we’re financing and the outcome of that financing," the CEO shared.

Commenting on the outlook for this method of fundraising, Al Tamami said he believes that crowdfunding will serve as a key source for both SMEs and investors. "Crowdfunding will become a key source of financing for SMEs and a wealth-building tool for investors. It’s not just about raising funds; it’s about supporting real economic activity and contributing to Oman’s Vision 2040."