Global عربي
KSA عربي
Global عربي
If you’re an SME in Saudi Arabia looking for fresh financing, crowdfunding offers a ton of exciting options. But before you jump in, you’re going to want to know the basics of the legal and regulatory environment you’re dealing with.
Luckily, Saudi Arabia has built up strong regulations that protect investors from issues like fraud, and businesses from the types of risks that come with non-compliant fundraising, among other issues we’ll discuss below.
In this post we’ll walk you through how the Kingdom’s regulations work, what the main oversight bodies are, and what issues to watch out for, so you can launch an airtight crowdfunding campaign and secure the capital your business needs to take off, without hitting a snag later on.
Crowdfunding in Saudi Arabia is a relatively recent phenomenon, though one that has evolved rapidly. Starting in 2018, Saudi regulators launched pilot programs that allowed for early crowdfunding, with players like Manafa and Scopeer rolling out equity crowdfunding services within a regulatory sandbox to test the market. Funding Souq was launched shortly after, with its Saudi operation opening in 2021 and specializing in debt crowdfunding.
A key regulatory moment came in 2021, when the kingdom’s central bank introduced debt-based crowdfunding rules and then, shortly after, its capital markets authority rolled out a comprehensive regulatory framework for equity-based crowdfunding, allowing licensed platforms to offer shares in unlisted SMEs, a major boon for alternative finance.
Authorities have since licensed numerous new platforms, part of the country’s drive to help SMEs tap finance and diversify the economy away from oil, a key pillar of Vision 2030.
It’s no surprise, given the positive interest by authorities, that Saudi Arabia has the fastest growing market for crowdfunding across the Middle East and North Africa. The market passed $800 million in total funding as of 2025, according to Saudi Arabia’s Capital Market Authority chairman, and platforms are doubling in size every year.
In terms of revenues, one research outlet sees the market generating $192.2 million in 2030, from $71.2 million in 2024. In short, there’s a growing pool of money to finance your business.
Read more: Step-by-Step Guide to Preparing Your SME for International Funding - Funding Souq
Now it’s time for the nitty gritty: the governing bodies and their rules. These are the players who shape how you can legally raise funds. The main players are the Capital Market Authority (CMA) and the Saudi Central Bank (SAMA). They have different mandates and rules, so let’s take each in turn.
The Capital Market Authority is the key oversight body for equity-based crowdfunding. If you’re a platform seeking to offer equity crowdfunding, you must be licensed by the CMA.
Besides issuing rules related to equity crowdfunding, the CMA has also taken an innovative approach with initiatives like its FinTech Lab, a regulatory sandbox where it has allowed both local and international firms to test various financial services.
Bottom line: if you’re an SME, you won’t be engaging directly with the CMA to launch a campaign. Instead, you should simply make sure that the platform you’re running a campaign on is CMA-licensed.
The Saudi Central Bank, or SAMA, oversees the debt side of crowdfunding. It sets the rules for licensing platforms as well as the standards for the players involved, meaning the borrowing businesses as well. SAMA decides things like how much to cap financing at (currently SAR 7.5 million per deal).
As an SME, you won’t deal with SAMA directly, but indirectly you will, since the platform is required to follow Know Your Customer (KYC) rules to obtain information about the business and its creditworthiness. In other words, your SME’s financial health will be scrutinized before a fundraising deal can go live.
When launching a crowdfunding campaign, there are some basic legal requirements that any business working in the kingdom will face. To name the essential ones:
Company must hold a valid Commercial Registration issued by Ministry of Commerce
Business activities must operate in accordance with Shariah principles
Business adheres to Anti-Money Laundering (AML) regulations
Business adheres to Countering the Financing of Terrorism (CFT) regulations
Keep in mind that the crowdfunding platform is largely responsible for ensuring much of this compliance, while you the SME owner are tasked with providing accurate and current documentation.
Read more: SME Crowdfunding Agreement: Explained & Key Clauses
Platforms looking to offer crowdfunding services must apply to the relevant authorities to get licensed (SAMA, for debt-based, and CMA, for equity-based).
The SME looking for funding does not need to be licensed by them directly, but below we’ll go through some of the obligations you should consider as you navigate the fundraising process.
Platforms are required to disclose detailed information to regulators about every project raising funds. In practice, that means the regulator must know about the financial health of the business, the terms of the loan being sought, and any risks.
As an SME, you’ll have to submit records about revenues, repayment capacity and detailed financial history. This information will be made available to prospective investors, so you are legally required to provide complete and accurate information.
Much of the regulation we’ve been discussing is ultimately meant to protect investors, who have imperfect information about the businesses they’re investing in.
Among the key provisions that protect investors, crowdfunding platforms are required to have what are known as business continuity plans, which basically outline how they will deliver promised returns in the event that deals fall through.
The platforms must also regularly submit financial statements in order to retain their licenses, and regulators can appoint external auditors if needed. If your business is being subject to comprehensive due diligence, it’s a mark of a strong regulatory environment that has the investor’s interests in mind, which is a long-term boon for attracting investors.
As an SME, you should be prepared to have the following on hand:
A valid Commercial Registration (CR): this is required to open bank accounts, sign contracts and issuing invoices.
Up to date audited financial statements for last 2-3 years
A clear business model
A Use-Of-Funds Plan
Ownership structure documentation
Adherence to AML and CFT
In order to avoid your campaign being held up by the platform’s compliance team, you should have a mental map of what needs to be done before the campaign launch. Essential steps include:
Ensure your selected platform is either CMA-licensed of SAMA-licensed
Conduct an internal audit to make sure your books are accurate and up to date.
A proposal that clearly outlines:
The purpose of the raise
How the funds will be used
Projected returns or repayment timelines
Key risks
All corporate governance documents are in order, such as:
Commercial Registration
Clear ownership structure
Company resolutions authorizing the fundraise
For SMEs raising funds, compliance obligations continue even during the campaign. Most importantly, any material changes to the business must be disclosed, especially anything that may alter the information disclosed to investors for the campaign.
Beyond that, monitoring the actual fundraising progress is critical. Some platforms operate on an all-or-nothing basis, or a minimum-viable-raise. Since this implies that funds must be returned if a threshold is not met, collected funds have to be held in segregated accounts.
Pro Tip: Platforms typically have an assigned relationship manager, and any issues or concerns can be flagged to that person.
Once a campaign comes to a successful close, new regulatory obligations begin.
With debt-based campaigns, the repayment schedule must be strictly adhered to. Missed payments will hurt your ability to raise again in the future.
On the equity side of things, SMEs must disclose everything from material developments, ownership changes, and financial performance as it compares to campaign projections. No matter the type of campaign, borrowing SMEs will have to submit updated financial and operational information on a regular basis.
In Saudi Arabia’s crowdfunding ecosystem, non-compliance has serious consequences. For platforms, non-compliance with regulatory rules can mean getting a license revoked and facing hefty fines.
For SMEs, disclosing false information can result in a campaign being cancelled as well as legal liability. In general, Saudi regulators have been cracking down on non-compliance with disclosure, banning companies and individuals from the market place and levying hefty fines.
The specific fines and sanctions for non-compliance can be quite substantial. Non-compliance with AML/CFT laws, for example, can carry a fine of up to SAR 5 million. Money laundering can bring imprisonment and a fine of SAR 7.5 million.
To give you a sense of how serious the CMA takes this, in 2023 they imposed SAR 4.2 million in fines against two companies for unlicensed securities activities. Violations of privacy data carry similarly large fines and suspension of licenses.
Bottom line: follow the rules carefully.
In the event that a dispute emerges, or a legal issue emerges between business and investor, platform agreements typically lay out dispute resolution mechanisms. In other words, before pursuing a costly legal battle, there should be some attempt to work out any issue via the platform itself.
Beyond that, the CMA has a Committee for the Resolution of Securities Disputes (CRSD). Investors can file suit for compensation here in the event of a loss that relates to a violation (e.g. if an SME misrepresented information during a campaign). Investors and businesses can also pursue legal remedies via the kingdom’s court system.
Even though the Saudi crowdfunding ecosystem is relatively young, there’s numerous examples of highly compliant, and successful, platforms.
While Manafa was among the first to be licensed for crowdfunding, since then a slew of others have entered the scene, offering a stream of successful and well regulated campaigns, such as Funding Souq.
Others, like Lendo, have rolled out additional services, like invoice financing. Tameed specializes in government purchase orders. And Forus offers a cost-plus, or Murabaha, structure. Together, the platforms show how strong regulation has allowed for a diverse ecosystem to safely emerge.
Saudi Arabia’s strong regulatory environment is a signal that its authorities are taking crowdfunding seriously, and are committed to building a booming ecosystem.
As with any young ecosystem, we can expect the rules to keep changing, if only in order to keep up with the rapid pace of developments. As an SME, it’s an exciting time to raise funds and grow your business. But as with any opportunity, you should be mindful of the cost involved in playing. In other words, keep up with the rules and stick to them, if you want to float with the rising ride.
An SME looking to engage in crowdfunding in Saudi Arabia must have a valid Commercial Registration, be compliant with AML and KYC requirements, and work with a platform licensed by either the CMA (for equity-based raises) or SAMA (for debt-based raises).
In Saudi Arabia crowdfunding platforms are overseen by the Capital Market Authority (CMA), which supervises equity-based crowdfunding, and the Saudi central bank (SAMA), which supervises debt-based crowdfunding.
Yes, foreign investors are allowed to participate in crowdfunding platforms in Saudi Arabia, as long as they pass KYC and AML checks.
Disclaimer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
