Ethereum Blockchain enabled platform for SME deal making launches in UAE
Maksab a digital smart Blockchain enabled platform launches as deal making platform for SMEs
MENA based startups have raised $659 million in the first six month of 2020, representing a 35% increase in total funding compare to the first half of 2019, however the number of investment deals dropped by 8% compared to 2019, with March and April seeing the largest drop of 66% and 35% respectively. (Source MAGNITT).
Interestingly there has also been increased later stage investments with larger round sizes which highlights more interest from investments in established companies, better known as SMEs (Small and Medium Sized) SMEs in the MENA region represent 96% of registered companies , 50% of employees and 52% of non-oil GDP.
However many SMEs have a lack of access to bank lending where lending to SMEs accounts for only 7% of total bank lending the lowest level in the world, and fund raising usually takes six months to fundraise. In addition Covid 19 has had strong effects on the economies in GCC and MENA region. OECD believes that the Arab region is likely to lose 45% of FDI inflows in 2020.
According to the Arab Monetary Fund, while SMEs make up 80% of businesses in the Arab regions, only one in five has a loan or line of credit. The International Finance Corporation (IFC) estimates the SME funding gap in the Middle East and North Africa (MENA) to be around US$260 billion.
This has trickled down to new funding mechanisms for SMEs that include P2P lending (Peer-to-peer), Sharia compliant Bonds, profit sharing agreement, crowd funding and there are increased mega funding, sovereign wealth funds and initiative being deployed in UAE and Saudi Arabia. One example is Saudi Arabia’s Public Investment Fund (PIF) aimed at investing in venture capital and private equity funds geared towards small businesses.
According to Ali Maabreh, Head of M&A at KPMG in Saudi Arabia, “Merger and acquisition (M&A) activity in Saudi Arabia and other Gulf countries are expected to increase amid the Covid-19 pandemic as small and medium enterprises (SMEs), and several large corporates will look for equity via capital injections to satisfy working capital needs.”
In the recent Life After Covid-19Innovation and Entrepreneurship survey of the startup community in the MENA region, companies have reported that the Covid-19 crisis is affecting their business, with revenue generation, fundraising and burn-rate being the most significant concerns.”
With all this in play Mohamed El-Masri, Founder and CEO of MAKSAB ( www.maksab.io) , an Investment Consulting company, which incorporate the Maksab platform, a secure digital smart virtual deal making marketplace that will allow investors to access off market and exclusive emerging transactions. MAKSAB, an Ethereum Blockchain digital platform hopes to empower SMEs to improve transparency while ensuring the mandates that fall under a list of strict criteria. The platform will connect advisors and private investors with Small and Medium Enterprises that are seeking growth capital.
Maksab Platform users consist of three different categories that are (1) corporate finance consultants and transaction agents (“Advisor”), SME business owners (“Sell-Side”) and private funding partners (“Buy-Side”) (collectively the “Platform Prospects”).
The Maksab Platform uses the Ethereum blockchain to allow confidential, secure, streamlined, efficient and reliable transactions between Platform Prospects. The platform generates Ethereum Based token standard contracts that facilitate bridge financing and selling of SME Companies (MXAB Token)
Buy-Side and Sell-Side users have the ability to work with the Advisors on the platform that structure hybrid solutions that combine debt and equity offerings in a tokenization model that is streamlined on the on the Maksab Platform.
In short Maksab is working to match investors with companies using the power of the internet, disclosing information and deal terms and facilitating the investment transaction all online. What usually would take 8 to 12 months, can now take weeks or even days on equity on Maksab platform.
As El Masri states, “ Maksab platform creates an opportunity to widely address the significant financing gap that SMEs are facing through a streamlines, efficient, reliable, and transparent trust and transaction protocol using blockchain and MXAB Token which has never been possible before in the history of capital markets.”
Utilizing Maksab platform SMEs can communicate directly with market counterparts without the need for brokers, bank intermediaries and lawyers reducing transaction timelines and costs from entry to exit.
El Masri adds, “The adoption of blockchain and smart contracts allows for the facilitation and allocation of interest-free financing and direct equity investments towards SMEs on a digital platform without the need for brokers and intermediaries. This platform is essential given that the global credit gap for formal SMEs is estimated at $1.2 trillion with the total credit gap for both formal and informal SMEs is as high as US$2.6 trillion.”
The Maksab platform will also allow SMEs to get access to qualified resources that assist them in accelerating their business and expanding operations.
El Masri concludes, “ In the end Maksab platform is all about community, users can earn rewards in the form of MXAB tokens for their participation while they directly manage prospects, track deal flow, manage offerings, send and receive offers and more… in short we are making it easier to share and negotiate deals by connecting accredited investors with high growth companies seeking direct investments. We got you covered from entry to exit.