Funds invested in equity crowdfunding platforms rise to SAR 210 mln in 3 years: CMA

Logo of Capital Market Authority

he total funds invested in equity crowdfunding platforms on the Saudi Exchange (Tadawul) witnessed a significant increase to SAR 210.1 million from 2019 to the end of 2021, according to the Capital Market Authority (CMA).  
 

This included 46 offerings via the authorized crowdfunding platforms. 
 

The market regulator added in a statement today, June 6 that 2021 accounted for the largest percentage of the total invested funds, amounting to SAR 149.2 million, compared to SAR 43.6 million in 2020, with an annual growth rate of 242%. Meanwhile, the funds raised in 2019 were around SAR 17.3 million. 
 

According to the CMA, the number of offerings soared by 371% at the end of 2021 compared to a year earlier, bringing the total number of offerings to 33. The average offering size was SAR 4.5 million, while the average investment was SAR 7,433 per investor. Furthermore, the number of investment requests increased from 2,025 in 2020 to 19,933 in 2021, with an annual growth rate of 844%. 
 

The authority indicated that it has been regulating the equity crowdfunding services since 2018, allowing the capital market institutions authorized for the arrangement activity to provide equity crowdfunding service. Such institutions are allowed to provide the service on condition that they comply with the additional regulatory requirements imposed within the FinTech Lab, until the regulatory framework for equity crowdfunding is approved.  
 

The framework was presented for public consultation on April 25. 
 

The CMA noted that these platforms facilitated the sources of raising capital for various sectors. Therefore, they enhanced opportunities to provide financial inclusion for small and medium-sized enterprises (SMEs) to support their growth and contribute to the economic development, which is a key objective of Vision 2030.  
 

Industries and information technology, followed by consumer services and retail of luxury goods, are among the sectors most financed by equity crowdfunding platforms, according to the CMA. 
 

The authority also pointed out that equity crowdfunding is a major pillar of Vision 2030 as it establishes new channels of financing and investment, targeting various sectors and achieving economic depth. In addition, the service adds value to the gross domestic product (GDP) and encourages the creation of economic entities and new job opportunities.

It also achieves several economic and social benefits by supporting the financing of SMEs. 
 

Elsewhere, the CMA said it hopes that the funds invested through managed channels will exceed the size of managed assets of SAR 800 billion, whether in funds, portfolios or other innovative financial tools, including private equity funds, venture capital, and Fintech. This aims to create an effective financial sector capable of creating more jobs.