Rooted within the Honeycomb of the Collaborative Economy is the world of P2P (peer-to-peer) finance. Within that world is Beehive, a Fintech (financial technology) startup based in the UAE, that is building the first online curated P2P investors colony in MENA.

Beehive directly connects smart investors with creditworthy businesses to build mutually beneficial partnerships for growth. Moreover, the platform applies proprietary digital technology to eliminate the cost and complexity of conventional finance for SMEs and adds unique benefits for investors. 

Since its inception in November 2014, Beehive has vetted and registered over 2,000 investors and channeled AED 25 million to more than 50 SMEs, including 12 companies in the Dubai 100. At the moment, most investors and startups on the Beehive platform are from the UAE while some come from the UK. In September 2015, Beehive became the world’s first independently certified, Sharia-compliant P2P finance platform.

How does Beehive’s platform work?

Beehive’s P2P finance model offers unique benefits to both SMEs and investors. (Image via Beehive)

Cheaper and faster capital for SMEs

Craig Moore, in the picture below, is Beehive’s founder and CEO. He's no stranger to the process of growing a company. Prior to Beehive, Moore founded Butterfly Software, a data analytics and migration software company, which was acquired by IBM in September 2012. 

On Beehive's value to SMEs, Moore told Wamda that creditworthy businesses that would normally go to a traditional bank come to Beehive for two main reasons: (1) the cost of finance is cheaper, and (2) the time to finance is shorter. According to Moore, on the Beehive platform, “SMEs save an average of 25-35 percent on the cost of finance, and they can get their cash in a matter of days.”

Moore added, “banks want collateral, and with today’s disruptive digital businesses, things are asset lite, so often these younger companies can’t put up the collateral.”

What this means is that, “really, banks want to finance startups but it can be expensive, and risky, for them to lend at lower levels. So working with a platform like Beehive makes a lot of sense because we can do it more efficiently and with less risk.”

Taking this idea further, Moore noted, “a couple of really smart 25 year olds with a game-changing digital-product may just have some laptops from Apple, and are therefore not suitable for collateral-backed bank financing. You need products in finance that can support these kinds of people, that’s what Beehive is trying to do.”

Beehive also offers “smart working capital” for SMEs in the form of invoice financing.

Unique services for investors

Investors have multiple options to exit on Beehive. Moore explained, “if you look at it from an investor’s perspective, some of your capital is coming back so you make money, but you can also trade with other investors on Beehive, this means six months into an investment you can post part of the deals you’ve made into a secondary market, that then gives you a liquidity option for selling off parts of the deal.”

Investors that want a low-touch scenario are welcome too. Beehive has developed an algorithm that allows investors to set personalized parameters around desired risk and returns that allows them to sit back while the platform automatically makes bids on a secure, trackable account. The platform also links the dirham to the dollar, which is attractive as well.

Regarding the process to become an investor on Beehive, Moore said, “once you’ve been on-boarded and passed our checks, you put some cash in your account and you can start making investments.”

Awareness and regulations are important steps for P2P lending in MENA

Beehive is a first-mover in MENA, amongst only a couple of other Fintech startups with curated finance platforms like: VentureFin, just launched in the UAE, and Liwwa in Jordan. But a lack of awareness for the financial-gaps they address and the benefits of P2P financial technology can be a challenge for these startups to overcome, especially in such a nascent ecosystem.

In Beehive’s early days, Moore recalled, “the natural response from most people was that they didn’t think we could do it. We had to reference other Western markets and the rise of Fintech as a proof point to offer some awareness and education about this new P2P finance concept.”

To further spread awareness and educate the market, Beehive and Thomson Reuters teamed up to publish a Whitepaper, “Spotlight on SME Innovation in the UAE”. The paper found that for SMEs in the UAE, “Gaining access to the appropriate funding to finance an innovation strategy is also a barrier to optimum execution.”

On the regulations governing P2P finance in the UAE, Moore said, “there isn’t any regulation specifically on P2P finance or crowdfunding in the UAE right now, and there wasn’t when we launched in 2014. But there is an increasing desire for regulators to get involved in the Fintech space in the UAE.”

He added, “We are working with government entities now and there is a positivity that they want this type of industry to start flourishing in the UAE. In fact, Abu Dhabi wants to be the Fintech industry leader in the region, you’ll hear lots more on this, this year.”

For Beehive, this is a very exciting time. In Moore’s mind, “Fintech in particular is going to make some huge changes in the next three to five years.” He believes, “the smart banks will start teaming up with young Fintech platforms because they have to hedge against startups attacking their traditional profit pools.” He added, “you’re seeing a lot of this already happening in the US and the UK.”

What’s next for Beehive?

Beehive is expanding into new markets, including a beta launch in Thailand and exploring the UK. Moore said, “We are keen to go into Southeast Asia and have been working on bringing up regulations there with the government.”

P2P finance is still a young market in most places, but this doesn’t deter Beehive. As Moore said, “We take a calculated risk and rest on the fact that ultimately we are a force for good, and something that people will want to encourage. We want to continue to help support knowledge-based SMEs to help grow the economy around innovation and around ideas.”

Feature image via Fei123: Beehive’s online curated funding platform guides both SMEs and investors to a profit.