Enerwhere raises $940,000 through crowdfunding
Source: The National
Dubai-based solar company Enerwhere raised Dh1 million ($940,000) in less than a week via a crowdfunding platform tapping unconventional investors amid tight small to medium sized enterprises (SME) lending from local banks.
The three-year-old company decided to test the crowdfunding site, Beehive, to secure financing for operational expansion including solar hybrid power generators as well as solar rooftop systems.
Daniel Zywietz, chief executive of Enerwhere, said that the company turned to crowdfunding as a result of a lack of available bank financing for SMEs in the UAE.
“Banks aren’t providing [attractive rates] for the type of company that we are, which is young, fast-growing and without a local backer,” he said. “The only offers that we saw from banks were double-digit interest rate offers which is unattractive.”
Enerwhere asked for a Dh1m loan with an 18-month tenor using Beehive’s 14-day reverse auction system, where investors bid against one another to fund a company’s financial request driving down the cost of borrowing.
Within five days, the amount had been funded with a 15 per cent interest rate. However, as investors kept bidding in a show of interest for the renewable energy sector, that rate dropped by over 27 per cent by the final close with 130 investors on board with the average pledge totalling around Dh7,700.
Beehive was launched in 2014, and has helped to facilitate Dh68m in funding, according to Francesca Moore, its chief marketing officer.
While the financial facilitator makes it easier for SMEs to register, the company still uses the same credit criteria as conventional banks. Despite having 150 businesses currently listed on the site, Beehive turns down 80 per cent of the applicants.
