Crowdfunding is the process of raising capital by asking a large number of people, often over the internet, to give small sums of money. However ubiquitous it might be today, it has, quite literally, indie origins. According to Fundable, a major crowdfunding platform, the first successful example of its use was in 1997, when a British band used it to raise money for a tour.
It has come a long way since then, with governments and big business now using it as a strategy for growth. In 2012, former US president Barack Obama signed the Jumpstart Our Business Startups Act, which legalised equity crowdfunding. In 2018, its global market size was worth $84 billion.
Now, this modern way of raising money is set to play an important part in the UAE's economy. At the final Cabinet meeting to be held at Expo 2020 Dubai, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, announced that the government had approved the use of crowdfunding in the public and private sectors to finance new projects and encourage entrepreneurship and innovation. This will be done via the new UAE System for Crowdfunding Platform Operators, which will be regulated by the Securities and Commodities Authority.
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Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, chairs the last Cabinet meeting at Expo 2020 Dubai. All photos: @HHShkMohed via Twitter -
The meeting took place at the UAE pavilion. -
Several key announcements were made during the meeting. -
Sheikh Mohammed said the Cabinet had agreed the use of crowdfunding in the public and private sectors. -
A new system to safeguard the rights of workers who are injured in the line of duty was also announced. -
Sheikh Mohammed chaired the meeting at Expo 2020 Dubai.
The rise of start-ups and venture capital firms in modern business has shown that innovative revenue sources are perhaps as important for success as the marketability of new products. The government's decision to bring itself closer to these modern trends is an attempt boost flexibility and variety in its markets, and strengthen the UAE's wider goal of economic diversification.
Supporting the private sector, particularly small and medium size enterprises, is part of this strategy. Unlike government projects, creating this environment cannot be controlled centrally. Instead, it can only be encouraged and supported. Bridging the gap between the public sector and private firms by allowing both to access crowdfunding should help edge the UAE towards an economy where both parties work better together.
In the same session, a new law was announced that will allow many retail businesses to list on the country's financial markets to attract new commercial relationships. This comes as part of Dubai's plans to list 10 government and state-owned companies on the emirate's financial market, hoping to increase its value to more than $815bn. Just one public offering of Adnoc Drilling raised $1.1bn last October.
In a sign of quite how much it takes to build a leading economy in the 21st century, not all the announcements were about money and enterprise. The Cabinet also adopted the UAE Gender Balance Council Strategy 2022-2026, which seeks to bring more women to leadership positions. A new system to compensate victims of workplace injuries in the private sector was also revealed.
Expo 2020 Dubai is coming to a close in the Emirates, but the country's focus on some of the event's key themes, such as innovation, business and inclusiveness, is not. By holding meetings at the site – which itself will transform into a new commercial and residential district – the country's leaders are offering signs of how they plan to ensure a strong and prosperous future.
