Peer-to-peer finance gains momentum

Dubai — As the economy continues to gain momentum in the UAE, small and medium-sized enterprises (SME’s) have managed to account for 95 per cent of all businesses in Dubai.

And peer-to-peer financing, which is the practice of connecting individual lenders with credit-worthy businesses, has just been introduced to the region, making the process of financing more streamlined and effective.

A panel discussion on this subject was recently held at Capital Club, Dubai’s premier private City Club and member of the Enshaa group of companies. It was led by three high-profile members of the financial, digital and legal communities: Rick Pudner, chairman of Beehive Group DMCC, Dany El Eid, founder of pixelbug, and Patrick Rogers, lawyer at Jones Day. Capital Club Member and Founder of Envestors Mena, David Moleshead, moderated the panel.

Beehive Group DMCC, UAE’s first online peer-to-peer marketplace, saw an opportunity for a digital financing platform in the region when it realised that the government sought to increase its support of SMEs and give them alternate methods of financing. Customarily, companies turn to banks for their business request, however SMEs often find that peer-to-peer financing is quicker, more flexible and more profitable. By allowing individuals to invest in the grassroots of the UAE economy, all parties involved benefit.

Rick Pudner stated: “[Beehive] offers SMEs a really efficient turnaround time in terms of time-to-market, and very efficient pricing. The savings that we’ve seen on the platform so far have been quite remarkable from traditional bank financing.” Dany El Eid, who in 2012 created tech startup, pixelbug, with the aim of sharing innovative digital ideas with blue-chip multinationals, highlighted the pros of the lending platform, stating that the benefits are more cost effective financing, the chance to be part of something constructive, and the ease of access to those who are a part of it. This method of financing is most prevalent in the UK, US and Canada – the UK model being the one Beehive bases itself on.  In terms of his own company’s needs, Dany El Eid said: “As a business owner, my priority is to make sure we have a healthy cash flow. On the entrepreneur side, we have a gap called the “Valley of Death”. That’s a very critical gap…about 80 per cent of startups disappear. That’s where we feel that Beehive was able to secure us quick access to capital and give us more breathing space while we raise more long term investment from venture capitals.”

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