Since its launch four years ago, crowdfunding platform pioneer Kickstarter has earned a reputation as the place where creators can realize their dreams by tapping into funding outside of traditional industry sources.
Last week, a Singapore-based company Pirate3D launched its kickstarter campaign The Buccaneer, in hopes to raise US$100,000. In just 10 minutes, the company managed to reach its funding goal, and with more than 2 weeks until the campaign ends, it has raised over US$800,000 from interested parties globally.
This success is a subset of the bigger global phenomenon happening right now: people are already embracing the idea of crowdfunding worldwide.
Which brings me to my main question: Would Pirate3D achieve the same result if they are using Kickstarter alternatives in Asia?
Let’s take a look at the stats of Kickstarter.
In 2012, more than two million people pledged over US$300 million and successfully funded over 18,000 projects. These backers came from some 177 countries from all over the world. Kickstarter also had over 700 million annual page views in that same year. According to Quantcast, the platform bagged itself nearly 100 million page views last month.
The numbers not only showed that Kickstarter has a huge global audience, but more importantly, it revealed that the platform has managed to attract users who are willing to spend money to back projects. These are often projects with a huge potential to become the next big thing. Now this is valuable: these users are most likely early adopters of new ideas and technologies, and they all have the spending power. Most of these guys are on the Kickstarter platform with a clear purpose to back new cool technologies. If you ask me, it definitely makes much more sense for new products to be launched on Kickstarter based on its potential reach alone (disclaimer: this only applies to products with a global nature).
If that’s the case, will there be a successful crowdfunding platform from Asia? While there have been several platforms trying to fit in that shoes, there are unfortunately none that can be truly called a success yet.
Here are some of the crowdfunding platforms in Asia:
- Crowdonomics (Singapore)
- Togather.Asia (Singapore)
- pitchIN (Malaysia)
- Wujudkan (Indonesia)
- PerdMuak.com (Thailand)
- ZecZec (Taiwan)
- FlyingV (Taiwan)
- ArtisteConnect (Philippines)
- IG9 (Vietnam)
- FringeBacker (Hong Kong)
- Campfire (Japan)
- Ready For (Japan)
The list is not exhaustive and I probably missed out a handful of other crowdfunding platforms. As you can see, there are definitely no lack of crowdfunding platforms in Asia. A quick look at all these different companies would reveal that they have yet to achieve the tipping point that Kickstarter is currently enjoying now. Here’s some of the reasons why they have yet to take off in Asia:
Currency fragmentation and payment infrastructure in Asia
Similar to many companies in Asia looking to expand regionally, crowdfunding platforms in Asia might be limited to their own geographies. A project looking for a minimum pledge of SG$60 (US$50) might be too expensive for a backer in Vietnam. Other than that, while Singapore has a matured online payment infrastructure which forms the backbone of crowdfunding platforms, locals in Indonesia might not be too comfortable in online payments, while more than 40% of e-commerce transactions in Thailand are done through brick-and-mortar services such as 7-Elevens. All these causes problems and hinders a truly regional crowdfunding platform in Asia.
Other than that, several other bottlenecks include the different taxes and regulations in Asia. While Singapore claims to be the most business-friendly, the government will always keep a close lookout of any platforms which acts as a monetary holding intermediary. Countries in Asia also have different tax and law structures which govern business transactions. This lack of transparency in certain countries means that approval processes might be slow and painful. Of course, stay in Asia long enough, you are bound to hear about the logistical nightmare countries such as Indonesia is facing. Fulfillment of successfully backed projects such as the Buccaneer might then be another challenge.
Couple this with the huge audience base on Kickstarter, it does make sense for companies and projects to launch on Kickstarter.
But does that mean the Kickstarter model won’t work in Asia?
Certainly not, but due to all the challenges here, that’s probably the main reason why Kickstarter is currently only available for companies registered in Europe and the US.
How can crowdfunding platforms in Asia stand out?
The key for crowdfunding platforms to stand out in Asia is, of course, to localize: Taiwan’s FlyingV and Japan’s Campfire are currently witnessing some traction in their home base because they offer a clear and customized platform to their countries. Both FlyingV and Campfire have language localization (as of other platforms) as well as local payment integrations.
Similar to startups looking to expand in this region, one of the way to grow is to partner with regional players. We have yet to see these crowdfunding platform in Asia consolidate and leverage on each other’s strength. Even when Kickstarter has a huge market to begin with: the 300 million US market, they still took four years to grow to its two million backers today. Southeast Asia is home to more than 600 million people, and is a region where it is slowly gaining its recognition as a viable market.
For any Asian crowdfunding platform to stand a decent chance in growing to where Kickstarter is now (two million backers), targeting the whole Southeast Asian region makes much more sense. This is simply because they are only a small fraction of internet users. To effectively address and face all the country-specific challenges, individual crowdfunding platforms should realize that they can leverage on each other’s knowledge and work together.
Why is it important and why do we need them?
Slowly but surely, crowdfunding platforms will become the “traction” or proof of concept venture capitalists need. Traditional methods and proof of concept will be replaced by actual commitments from crowdfunding platform campaigns. Soon, email signups or letters of interest will no longer suffice as smart venture capitalists will demand “real interest” from your potential customers. This is because there are so many options out there right now and startups are springing out like nobody’s business, thanks to the significant cost reduction of Internet businesses. These “real interest” from your potential customers can be fulfilled by monetary commitments through crowdfunding platforms.
An Asian (or Southeast Asian) crowdfunding platform is something that I personally hope to see happening in the next five years, and I truly believe that it has to come from Asia. Only local companies and folks on the ground understand the real challenges here, and are in the best position to offer solutions. These solutions will not come from foreign players such as Kickstarter and Indiegogo.
Maybe then, we will see more projects from Southeast Asia such as the Buccaneer being crowdfunded on a Southeast Asia-based crowdfunding platform. And only then, we can have a platform to really discover all the amazing works by hidden talents around in Southeast Asia.