Article written by Manik Kinra from Mixilion on Crowdfunding published in Qatar Today Jan 2013

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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?
by Ma ni k Kinra
even
before the term was coined, crowd funding was used
at various stages and in various forms. Electric Eel
activities, including disaster relief, citizen journal-
ism, support of artists by fans, political campaigns,
Shock, a Japanese rock band raised around 10,000 start-up company funding, movie or free software
pounds in 2004 from his fans. Franny Armstrong, a development, inventions development and scientific
British documentary film director working for her research. Crowd funding is also used to raise funding
own company, Spanner Films, and a former drummer for a company by selling small amounts of its equity
with indie pop group, The Band of Holy Joy, between to many investors.
2004 and 2009 raised £1.5 million (QR9 million) As this phenomenon grows globally, quite a few
from the film industry. There are many similar exam- platforms have opened up in the Middle East provid-
ples of people building groups to fund their ventures, ing such a service in a streamlined fashion. Alflam-
interests and businesses. nah is one of the first such platforms in the Middle
Crowd funding is described as the collective ef- East. Launched during the Cannes Film Festival,
fort of individuals to pool their resources to support Aflamnah focuses on projects for the Arab world cre-
efforts initiated by other people or organisations. ated by Arabs, or by individuals or organisations that
Crowd funding is used in support of a wide variety of care about culture, society, and people or residents
74 Qatar Today january 2013

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of the region. Equity crowd funding was in the news raise money quickly and much easily. However rais-
couple of months ago in the US when Obama signed ing investment is not just about raising capital. Build-
the Jumpstart our Business Start-ups (JOBS) act, ing a successful company is more about the people
making it easier for emerging growing companies to and how they contribute to the success of the compa-
secure seed capital taking online investments from ny. The people matter, more than just the funding. As
the public in exchange for slices of equity. Eureeca, a the model doesn’t allow much interaction, the ability
platform which works on crowd sourced investments to know about each other is missing.
has attracted over 100 applications from business Investors who are on the other side of such plat-
owners in the last few months. There are similar forms have varied views of the model being a “non-
other platforms like Entelak, Mawwell and a few serious” version of angel investment to an enabler
more which focus on providing a channel to busi- to access good businesses. However most feel that
ness initiatives through the model of crowd sourced crowd funding will open a parallel avenue for inves-
investments tors to route their investments in parallel with the
Most of these sites work on two models – All or traditional way.
Nothing (AoN) and Keep it All (KiA). When the fund- As any new model, it has its own takers and detrac-
raising period is over, the pledged money is collected tors. Also like anything innovative, it will take its own
from the contributors if the fundraising goal is met. time to mature with more processes and laws com-
If the goal is not met, no money is collected. In KiA ing into the picture. But as the association with the
whatever money is collected, is used as funding. financial authorities becomes stronger and the pro-
cess gets more streamlined, I feel crowd funding will
The pros and cons provide a lot of entrepreneurs with the much-needed
From an entrepreneur’s perspective, theoretically the angel funding support for various business activities
model looks wonderful as it allows the companies to 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.
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