Crowdfunding creativity

The creative industries in Jordan are about to receive a boost in terms of access to finance from a very new source, crowdfunding, which stands for gathering financial backing for the backers — the “crowd” — to fund an initiative, a process that usually occurs on Internet platforms.

Crowdfunding can be a lifesaver for creative workers and their projects. Here is a tale of one success story. Hope many more will follow.

Banks in Jordan follow a very tight approach when it comes to funding. One has to own real estate and have a guarantor with a salary from a large business entity in order to receive the high interest, short repayment period loan, and usually the process takes forever.

In other words, you can be creative, but if you want to start a business based on your creativity, you have to be rich.

Typically, the alternative funding source could be a few well-known financiers who are usually swamped with requests to share in investment.

Such a mismatch between demand and supply of capital can lead to abuse and dominance by the capitalists, making it a buyers’ market, which is unhealthy.

Alternatively, one has to be the child of wealthy persons and receive financing from family sources, which does not make for a creative economy.

Given that the supply chain of creative industries is plagued by weak links, such as weak protection of Intellectual Property Rights and lack of properly developed industry clusters, among others, the quest for capital for expansion and growth is extremely important. 

Consequently, without domestically generated sources of funding, one comes to believe that most of the creative economy is bound to remain nascent and underdeveloped or is better off migrating to the rich Gulf. 

Comes a saviour, and from outside the economy — crowdsourcing — which is fine.

The idea of crowdfunding or crowdsourcing is not new. In the 17th century, people used subscriptions to finance the printing of books.

Joseph Pulitzer used crowdfunding to raise $100,000 (most donations were $1 or less) in 1884 for the pedestal of the Statue of Liberty.

The phenomenon has really taken off in recent years; crowdfunding took off from having under $100 million raised in crowdfunding worldwide to over $2.66 billion in 2012, and the phenomenon is growing.

Therefore, instead of seeking local sources, one can approach a crowd of investors and collect small investments from a large group of people, instead of just one of the few local venture or equity investors.

This is what Jobedu, a company that delivers modern Arab pop culture as portrayed through the different styles of creative Arab designers, illustrators, writers and artists did. 

The two young entrepreneurs, Michael Makdah and Tamer Al Masri, who started Jobedu in 2007, managed to secure $108,000 (the goal was to raise $100,000) in funding from 27 investors from the region.

The investment was sourced within four days of posting the funding proposal at eureeca.com, a startup company that is based in Dubai and describes itself as “the first global crowdinvesting platform where businesses raise capital to expand and grow from a crowd of investors in exchange for shares in their business”.

The beauty of this story is that technology has enabled our creative workers access to Gulf financing, which need not be only by Gulf nationals but also from the over 1,000 Jordanian millionaires living and working there who would love to invest in Jordanian ventures. 

There are many other crowdinvesting companies, such as AFKARMENA, Zoomaal, Aflamnah and others.

The abundance provides options to an industry that is thirsty for financing.

For example, I was approached for advice a few weeks ago by a young moviemaker who could not find funding for a brilliant script that won pecuniary and non-pecuniary awards throughout the world. My advice was to crowdfund the film through a blog; the practice has been used in countries with mature film and banking industries, such as the US and the UK with great success. I hope she reads this and uses one of these options.

A typical advice used to be to go domestic first before going regional. Technology has turned this paradigm on its head: to succeed locally, go regional.

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