Abstract

Crowdfunding is an innovative form of financial support that is increasingly used around the world. Crowdfunding can provide a new investment channel and help those with innovative ideas and start-up businesses to circumvent traditional financing struggles and secure alternative finance. This paper presents an overview of crowdfunding, its fundamentals, and its main participants. Specifically, it explores the characteristics of crowdfunding in Saudi Arabia by examining the first and successful crowdfunding platform (Manafa) to be licensed by the country’s capital market authority. This paper shows that the sole applicable model in Saudi Arabia is equity-based crowdfunding, and this is significantly controlled and operated under a more efficient legal framework than much foreign crowdfunding. However, the Saudi market would benefit from greater awareness of crowdfunding as a new investment channel, and from the introduction of the debt-based crowdfunding model in accordance with Saudi market regulations.

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