MUSCAT: Ahead of the first campaign on its crowdfunding platform, leading ethical investment and social finance platform operator Ethis Group says it has begun receiving a number of fundraising applications from Omani businesses, boding well for the uptake of crowdfunding services being introduced for the first time in the Sultanate of Oman.
Ever since the Group’s subsidiary, Ethis Investment Platform LLC (branded as EthisX) received a landmark license from the Capital Market Authority (CMA) to operate the country’s first global crowdfunding platform, key executives have been busy setting up the requisite wherewithal to launch fund-raising campaigns mainly through equity crowdfunding (ECF) and peer-2-peer (P2P) financing.
Notwithstanding the relative novelty of crowdfunding in the Sultanate of Oman, initial interest from prospective Omani applicants – chiefly entrepreneurs and business owners - has been heartening, according to Mohamed Shehzad, CEO, EthisX.
“In the few months since we set up our office here, we found interest to be significant and growing,” said Mohamed. “We have already started receiving online applications for funding submitted via our website (www.ethisx.co), which are then evaluated against a set of criteria as part of our due diligence process. An investment committee will also assess the suitability of the fundraising proposals, from the amount of funding sought, usage of funds, the investment ticket size, risks and mitigation measures, valuation (in the case of ECF campaigns) and so on, before a decision is taken with regards to hosting a fundraising campaign on our platform.”
However, in keeping with the company’s tagline #CirculateGood, priority will be given to “impact projects” for fundraising, the CEO noted. “Although we are largely sector-agnostic, impact is an area of significant focus for us; Our preferred projects are businesses who have tangible impacts in solving world problems and address UN's Sustainable Development Goals (SDG Goals) through technology and innovations. This also means they have a greater chance of success in years to come.”
Omani small and medium enterprises (SMEs) are expected to be the biggest beneficiaries of the platform, says Riza Ismail, Chief Operating Officer, EthisX. “Our primary focus will be on SMEs, because of their importance as employment generators. Ethis Group started out with a mission to provide an alternative funding platform to help businesses get funding, thereby complementing the roles that banks or financial institutions play. But at the same time, we will also be looking to fund corporates in terms of issuance of sukuk and so on.”
There is praise for the CMA’s “forward-looking” crowdfunding platform licensing regime that allows EthisX to facilitate both inward and outward investment – a feature that is restricted by many other regulators.
“Under the Omani CMA licensing rules, we are able to raise funding not only for Omani companies based here in the Sultanate of Oman, but also overseas. This can be indeed beneficial to Omani businesses operating abroad. Take, for example, an Omani company operating a franchise. If the franchisor sells a franchise, say, to a GCC company, then the Omani business can, with the help of our platform, raise funds for the GCC franchisee. People familiar with the Omani brand in the Gulf country can invest and be part-owners of this brand,” Mohamed Shehzad explained.
EthisX is being rolled out globally in stages, starting with Oman. The platform serves to digitally connect startups, funds and growth companies with HNWIs, the mass and emerging affluent retail segments, and corporate investors seeking to provide shariah-compliant funding, said the CEO. He noted however that the platform, while shariah-compliant, is open to businesses and investors alike of other faiths.
Significantly, investor interest in the Oman platform is anticipated to be strong and widespread, says Riza Ismail who also oversees the EthisX Oman office. Ethis Group, as a whole, has an investor base from over 80 countries, notably Malaysia, Singapore, Indonesia, Saudi Arabia, Germany, France, Australia, Brunei and UK, among others. Their investor number is projected to grow substantially as Ethis Group expands across the Middle East and EthisX ventures into other markets as well as adding more institutions to its investment base.
“We have always felt that our call is global,” Shehzad added. “We are among the pioneers in Islamic fintech in the world, recognised by various bodies. But what we are trying to do should be done on a more global basis. Indeed, aside from Oman, we are also looking at expansion not only geographically, but also across product types. Our ambition is not limited to crowdfunding, but encompasses the full spectrum of what fintechs can offer. Our ambition is huge, but we need to deliver and execute well, taking measured steps in the process.”