What is Beehive about?
Beehive is the first and only P2P financing platform in the UAE (United Arab Emirates). Otherwise known as marketplace lending, peer-to-peer finance is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. Beehive bridges a significant funding gap that currently exists in the UAE market. Our platform applies the innovative technology of crowdfunding to eliminate the cost and complexity of conventional finance. Businesses bypass conventional intermediaries and receive financing directly from the crowd. This enables them to get faster access to lower cost finance, while investors get better returns. Beehive is a facilitator that enables businesses to secure the funding they need by creating the organizational framework and infrastructure required for community and financial support to materialize.
What are the three main advantages for investors?
The three main advantages for investors are:
- No Barrier to Entry: Individual investors can invest from as little as AED 100 into each business listed on the platform and receive monthly repayments currently averaging 12% per annum with reinvested returns. Investors get money transferred into their account in as little as two days.
- Diverse Portfolio: By investing on the Beehive platform, investors can diversify their risk across a number of products offered to a variety of companies operating across diverse sectors, with new companies listing on the platform every week. They are able to directly invest in a business they believe in. Investors are also able to buy or sell their finance parts to other investors on the platform through Beehiveâ€™s secondary market. This gives investors access to a market place where they can trade finance parts and allows greater access to liquidity and diversification.
- Sharia Compliant Structure: Beehive allows investors to ethically invest in some of the most innovative SMEs in the UAE. Beehive supports Dubaiâ€™s ambition to be a Global Financial Capital with its innovative Sharia-compliant platform, which helps Islamic finance customers to achieve their financial goals in a more ethical structure, and helps compliant SMEs tap sources of Islamic finance liquidity. Beehive was certified by the Shariyah Review Bureau (SRB) as a Sharia-compliant P2P finance platform in September 2015, making it the first P2P platform in the world to independently confirm its processes are compliant with Sharia principles.
What are the three main advantages for borrowers?
The three main advantages for borrowers are:
- Cost of finance: The platform offers considerable savings to businesses that need it: Businesses using Beehive save on average 30% on their financing costs. The average bank borrowing rate (unsecured) for SMEs in the UAE is over 18%, often much higher. Because investors compete for rates in a reverse auction process, business receive the lowest possible average rate from investors.
- Time to finance: The Beehive online marketplace facilitates faster, more flexible funding, with companies typically getting a decision on their finance requests in 3 days. The application process is completed online, and businesses receive funding in 14 days or less.
- Invoice Financing: Beehiveâ€™s SME invoice financing tool is designed to serve SMEs and help them manage their cashflows by closing the gap between the issue of an invoice and the receipt of actual payment. By unlocking the value of their accounts-receivable, they are able to tackle the dual challenges of rising inflation and late payments. These products give SMEs more options to plug invoice gaps, giving them greater control over their business and finances, and thus a greater opportunity for security and growth.
The average return for investors is 12% per annum with reinvested returns
Please tell me more about Islamic Finance and Sharia Compliance. Is that a main factor for attracting clients?
One of the things we are very proud of is receiving our Sharia Certification. Globally weâ€™re the first platform to be certified sharia compliant. It was our plan from the beginning to make a sharia P2P platform, because it hadnâ€™t been done before and it would open a new asset class to Islamic investors. About 80-90% of businesses on the platform are Sharia compliant. What we find is that if the listing is sharia compliant, then investors will engage with the business whether they are conventional or Islamic, so it is a very attractive feature for both investors and businesses across the board.
How did you start Beehive? Is the company funded with venture capital?
Beehive has so far received two rounds of external funding in addition to founding investment.
Is the technical platform self-developed?
All the technology on the Beehive platform has been developed using in-house capabilities. Our in-house IT development, design and creative teams allow us to be agile and responsive to market needs.
What was the greatest challenge so far in the course of launching Beehive?
As a start-up that relies on an influx of both investors and business-owners listing on the platform, it was a challenge to attract both stakeholder groups in equal measure. However our success has been truly impressive, and within our first year, we have channelled over AED 25 million ($ 5 million) to more than 50 SMEs.
How do you see the market in UAE and the Middle East? What about regulation?
Crowdfunding regulation has been an evolutionary process as it was introduced in the UK by the FCA only in 2014, following a lengthy industry consultation period since the launch of the first P2P platform (Zopa) in 2005. When there are still so few crowdfunding platforms available in the region, and only two in the UAE, it is difficult to point to any changes that have taken place since the industryâ€™s inception. In other markets we see that regulators are beginning to enter the crowdfunding conversation, but we have not seen nearly such robust activity here, and do not expect to see it for a few more years to come. When this conversation happens in the UAE we look forward to being part of it. Beehive Group is registered and licensed as a Freezone company under the Rules and Regulations of the Dubai Multi Commodities Commercial Free Zone, and the company has developed a structure together with the DMCC that follows the UK regulatory model best practices, tailored to the UAE market.
Which marketing channels do you use to attract investors and borrowers?
We attract investors and borrowers by educating them about the benefits that P2P offers though a strong presence at industry events, and regular commentary on conversations about P2P in the media. We have also invested in digital media and radio advertising campaigns, which has been very effective.
Do you plan on international expansion?
As a UAE home-grown business, we pride ourselves in sharing Dubaiâ€™s trademark ambition, and aim to contribute to the Emirateâ€™s vision of becoming a global finance hub and the Capital of the Islamic Economy. However, with more and more businesses seeking finance, we are rapidly growing and extending our footprint, and we beta launched Beehive Asia in 2015 to cater to businesses and investors in Thailand.
Where do you see Beehive in 3 years?
The UAE financial markets have improved in their sophistication and depth, and have been significantly advanced by new trends in the fintech industry. We expect our business in the region to at least double over the next 12 months, and also plan to launch in new countries. We are optimistic about the next few years as P2P benefits a wider audience, both regionally and beyond.
Beehive, utilising technology to develop innovative new finance solutions, continues to support strong businesses with the funds they need to innovate and grow their businesses and make a positive difference in the SME ecosystem in the UAE.
P2P-Banking.com thanks Craig Moore for the interview.