Cashing in on crowds

Crowdfunding sites catch on in Asia, helping projects develop through online contributions

It may still be in its infancy in most of Asia, but crowdfunding could generate more than $96 billion from around the world over the next decade?- and $50 billion from China alone.

The idea is to reach out to large groups of people to raise money for entrepreneurial, charity or artistic ventures. Investors can contribute cash to projects of their choice through a number of crowdfunding websites.

By the end of 2013, there were 45 countries worldwide with active crowdfunding platforms. Campaigns raised $2.7 billion, most of that in the United States and Europe.

Only a fraction came from Asia, but the growth is visible. The World Bank says that as well as China there are a number of rewards-based portals under development in Singapore with increasing interest in places such as South Korea and Malaysia.

With its massive population and already huge market, China is one of the most attractive marketplaces for crowdfunding sites — and those who use them to raise funds.

Projects in China remain relatively small. The most successful project to date, a cartoon series called A Hundred Thousand Bad Jokes on the Demohour site, raised $200,000. That is only a fraction of the $10 million that some projects in the US have managed to raise, but the numbers are growing fast.

The World Bank estimated in a report in November that crowdfunding in China alone could generate as much as $50 billion by 2025. Half of that money would go to startups and businesses from around the world.

In South Asia alone, there was one new platform launched every year between 2006 and 2010, but then seven surfaced in 2011 and a few more appeared in 2013.

The first successful site in the region was Singapore's ToGather, which is similar to Kickstarter — the popular US-based site — but is available to projects in 18 regions including the Association of Southeast Asian Nations (ASEAN), Australia, China, India, Hong Kong, Japan and South Korea.

Even as the use of crowdfunding across the region expands, the focus is firmly placed on China and its potential to generate both projects and funders. Some of the most successful sites from Asia and around the world are looking toward China for much of their future growth.

An example is Australian crowdfunding site Pozible, which has gathered more than 108 million yuan ($17.7 million) from more than 104 countries and territories over the world in the last three years. Pozible has launched a version of its site in Chinese and recently launched its first project from China. Pozible has already expanded to Singapore and Malaysia as it seeks to take a greater share of the Asian market.

"Singapore and Malaysia are … a great bridge into Asia and the amazing potential that comes from the Asian markets," says Rick Chen, Pozible's cofounder. "After all we've been through, Pozible now enjoys a high reputation. I've always wanted to bring it back to China."

Since visiting Shanghai last October, Chen found many Chinese inventions don't have any access to international platforms. So he decided to partner with Ask Lab, a Shanghai social enterprise.

"We were launching our first major Chinese campaign last week actually," he says.

Crowdfunding has increased globalization and helped drive development across ASEAN.

In North America and Western Europe, it is already mainstream. In Asia, it is still a fairly new concept but will continue to grow if it can overcome challenges such as rigid regulations and language barriers across the many markets in the region.

One challenge that sites have to overcome is the fear of copyright infringement. The likes of ToGather.Asia have tried to turn this problem into an opportunity to spread the word about crowdfunding.

Having expanded rapidly around the world over the last few years, there are now more than 800 online crowdfunding platforms.

Perhaps the world's largest is Kickstarter, which began in the US. Over the past couple of years it has broadened out to also include the United Kingdom, Canada, Australia and New Zealand. Three million funders from every continent pledged $480 million last year.

Famous sites such as Kickstarter and Indiegogo from the US, or Demohour and Dreamore from China, have helped millions of people and companies raise funds.

Kickstarter, for example, raised more than $480 million in 2013 and helped 3 million people from 214 countries contribute funds for 19,911 projects.

Demohour, founded in April 2011, is one of the best-known Chinese crowdfunding sites with 146 successful projects in 2013. Most of the backers are young people with no shortage of creativity and passion.

Dreamore is another successful example. It was founded in September 2011 and now has more than 500 projects, 40 of which have been successfully funded.

The growing use of crowdfunding in the region has led to a number of local sites popping up. Several such sites have emerged in Singapore.One of the most popular is Crowdonomic.

Other major crowdfunding sites include Wujudkan and KitaBisa in Indonesia, ArtisteConnect in the Philippines, pitchIN in Malaysia, Perdmuak in Thailand, ZecZec in Taiwan and Nboon in South Korea.

Besides the domestic platforms, there are 64 projects from the Chinese mainland on one of the most visited global crowdfunding sites, Indiegogo. There are another 54 projects from Hong Kong.

As one of the financial centers in Asia, Hong Kong has its own group of crowdfunding platforms tailored for equity, real estate and loans among other things.

"I believe Hong Kong, as the Asian financial center, has its advantages in equity crowdfunding," says Charlie Sheng, a technology blogger who has worked with many crowdfunding companies in the special administration region. "Investors and customers are more confident in doing financial investments here than in any other type of investing."

Bigcolors, a Hong Kong crowdfunding site founded in January, aims to change the way people trade. It is the world's first exchange-trading platform for startup companies. It allows people to trade stocks in startup companies and realize their value faster than the normal 24 to 28 months after the initial investment.

Crowdbaron is a Hong Kong-based international real estate crowdfunding company. It creates profit-sharing opportunities in international property. Whenever a project is sold, the backers gain a share in the profits.

There are fewer technology or art-focused crowdfunding sites in Hong Kong compared with financial ones.