The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian financial services provider yesterday said it aims to fill "a big hole in the market" through this week's launch of its ArawakX crowdfunding platform.

D'Arcy Rahming Jr, MDollaz Technology's chief executive, told Tribune Business that the company had spoken to more than 30 businesses and entrepreneurs about using its initiative to raise equity capital from Bahamian investors to finance their ambitions.

Revealing that the response had been positive, with an entity called Bahamas Olympic Museum set to be the first to list on ArawakX and pitch to potential investors, Mr Rahming said The Bahamas had to-date lacked a formal, transparent mechanism to "link up" the two sides and create a winning situation for both.

He added that MDollaz Technology and ArawakX were working "hand in hand" with the Securities Commission on the initiative to ensure that the platform complied with the regulator's proposed crowdfunding rules, which were first unveiled in 2017 but have not been brought into effect.

Mr Rahming explained that ArawakX would behave as a regulated exchange in full compliance with the Securities Commission's existing rules so that it could "transition" over smoothly once they were brought into effect.

"We're going to launch within this week. Our first project is being launched on it this week," he told Tribune Business, describing MDollaz Technology as ArawakX's parent company. "We view this as a big hole in the market that we're trying to solve; solving problems through the use of technology. It's exciting and new.

"We have all of this money sitting in our banks not being worked properly. You have investors wanting a better rate of return, and have all these potential entrepreneurs to grow that money into something else. There's no way of the two linking up, and that's the hole we're trying to fill.

"We believe there's at least an $180m financing gap [for entrepreneurs and small businesses], but probably even larger as a large portion of it is underground. We want to bring all that up so people do more with their money."

Mr Rahming's father is former BISX chief operating officer, D'Arcy Rahming, who chairs MDollaz Technology. Other directors include ex-Securities Commission chief, Hillary Deveaux; Open Systems Technology chief executive, Peter Bridgewater; and Doug Kryzan, a US technology entrepreneur, who is vice-chairman.

Mr Rahming Jnr said MDollaz Technology had been careful to "work hand in hand" with the Securities Commission on its plans, explaining: "What we decided to do is work with them and act as if there are regulations because at some point they will be our regulator...

"In the draft rules there's something called "in transition", so when they pass their rules we'll be called to transition into them. They've [the Securities Commission] written that in because they realise companies like ourselves are trying to move and help wider society."

Crowdfunding involves financing a project or business venture by raising small amounts of money from a large number of people, typically via the Internet. It pools money from friends, family and investors.

Bahamian entrepreneurs and small and medium-sized enterprises are especially familiar with this, as it is typically the mechanism they have employed to raise start-up and expansion capital. Crowdfunders take equity stakes in the businesses they finance, appointing directors to the Board to safeguard their interests, rather than offering debt financing.

Besides crowdfunders earning a higher return on their investment, via dividends and share price appreciation if the business prospers, this financing method also enables start-ups and entrepreneurs having to take on a heavy debt financing burden than can often cause their idea to fail.

Mr Rahming Jnr said ArawakX will be totally Internet-based, with a physical location for participants to co-pay. Revealing that the platform has taken three years to develop, he added that inspiration for its creation dates to his time studying robotics as an electrical engineer at Northwestern University in the US.

After graduating seven years ago, he recalled how many of his fellow former students became entrepreneurs and raised capital for their ideas via crowdfunding. After returning to The Bahamas to be an entrepreneur, he said: "I attempted several businesses but always seemed to be capital constrained.

"It was then I noticed that several of my contemporaries with brilliant ideas and good work ethic were either underemployed or had never returned to The Bahamas because of the lack of capital to develop their ideas."

While initial crowdfund investors will be restricted to Bahamians-only, Mr Rahming Jnr said his ambition was to eventually broaden it to international businesses as regulations allowed. He added that the primary ambition with ArawakX is to create a transparent, regulated environment for capital raising.

"It's only in the sunshine that people will be able to trust each other," Mr Rahming Jnr told Tribune Business. "We've had conversations and personally spoken to 30 [potential entrepreneurs seeking finance] since April. There's a lot of meat out there. We look at it as something people need, and from everybody we've talked to in business and finance this is exciting."

He added that work had already taken place to educate businesspersons on how equity crowdfunding works, and how to prepare their firms. Financial seminars for investors have also been held at the University of the Bahamas, and private and public schools, for potential investors and several hundred persons and firms have been registered.

ArawakX is short for Arawak Exchange. Its offices are located at 107 SandyPort.