East Versus West Crowdfunding sites: What’s the difference?

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Crowdfunding is a burgeoning field in many parts of Asia. In comparison, crowdfunding in places like the United States has been around for a longer period. While the United States relaxed regulations on returns-based crowdfunding in 2012 (via the JOBS Act), rewards-based sites like Kickstarter and Indiegogo have been around since the late 2000s.

In the recent months, countries in Asia are slowly catching up; especially when it comes to returns-based crowdfunding regulations. For example, India and Malaysia have recently circulated some crowdfunding consultation papers to gather feedback from stakeholders. In May 2014, Hong Kong’s Securities and Futures Commission (SFC) also released a circular on the risks as well as potential regulatory issues that crowdfunding has. In addition, there is speculation that the Singapore government will be soliciting feedback on returns-based crowdfunding in the coming months. Hence, all these seem to suggest that many Asian countries are starting to realise the potential (as well as risks) that crowdfunding have, and some are hoping to get in on the action.

With growing interests in crowdfunding, I thought that it would be timely to do a simple comparison and see how some Asia crowdfunding sites compare against those in the West. While I generally focus on real estate related research, I thought of giving a more holistic view by expanding the scope of this article to include the other types of crowdfunding sites.

Limitations in the analysis

But before you read further, I would like to emphasize that this is not intended to be a comprehensive research article. This is because there is presently not much data available online. Apart from established sites like Kickstarter and Indiegogo, not many other crowdfunding sites share their statistics online. In addition, there is no standard definition on what constitutes a successful or unsuccessful crowdfunding deal, conversion rates, etc.

Nonetheless, with whatever data that is available, I will be attempting to provide readers with a sense of how this new sector is evolving. To provide a sufficiently diverse view, platforms from the different countries, focus sector and crowdfunding types have been selected. To ensure relevance, the latest data that could be found online were also used for the comparison table (showed in Figure 1). A clearer version of the chart is available here.

Chart part 1

Chart part 2

(Click on picture to enlarge)

Key takeaway from the comparison

The companies are listed by region in alphabetical order.  Based on the comparison table, some of the takeaways are as follows:

1. Takeaway 1: Crowdfunding platforms in the West currently have more traction. Based on the table, it can be clearly seen that crowdfunding has more traction in the Western countries. In terms of members, viewership rates as well as Alexa ranking, they are significantly more than their Asian counterparts. Putting things into perspective, this is not surprising as some of the more prominent crowdfunding site there have been around for a longer period of time. For example, Kickstarter and Indiegogo have been around for more than 5 years while Fundedbyme, a Swedish crowdfunding platform, has been around for more than 3 years. In comparison, one of the more prominent and established crowdfunding sites in Singapore, Crowdonomic, has only been around for less than 2 years.

2. Takeaway 2: Amount pledged via Western crowdfunding platforms is significantly more. While it does not come as a surprise that Western crowdfunding platforms are able to secure more funding, what is interesting to note is the quantum. Based on statistics from Kickstarter, more than US$99million was pledged in 2011. The 2011 figure was used, as data for 2012 and 2013 were not available, nonetheless this shows the magnitude of funds that could be raised via an online crowdfunding platform. It also provides a glimpse of the growth potential that crowdfunding sites in Asia have.

3. Takeaway 3: Similar charging model – sites typically charge around 5%. Two of the most “expensive” crowdfunding sites in the analysis are FundedByMe and Crowdonomic, which charge up to 12% and 9.5% respectively. However, the rest of the sites charge about 4% to 5%, which shows that fees between Asian and Western crowdfunding sites are comparable.

4. Takeaway 4: Similar user conversion rate of more than 2%. Based on an article on Compete.com, it is interesting to note that the conversion rate for Kickstarter and Indiegogo is slightly more than 2%. While there is limited information on user conversion for Asian sites, if we use statistics from CoAssets as an indication, the user conversion rates for Asian sites are inline with those of their Western counterparts.
Conclusion

Putting things into perspective, it should not come as a surprise that crowdfunding sites in the West are currently doing better than those in Asia. This is because those sites have been around for a longer time; hence it is only natural that they have more users and traction.

Based on a report by International Organisation of Securities Commissions (IOSCO), it highlighted that the financial rewards for the crowdfunding market was worth more than US$1billion in the US, UK and China. Looking at how things are evolving in places like the United States and Europe, it clearly shows that there is a lot of potential in the field of crowdfunding in Asia. For the savvy entrepreneurs, this could be the next modern day “gold rush”.

Source of data for the table

1: http://crowdfundbeat.com/grow-vc-group-makes-strategic-investment-in-crowdbaron/

2: Based on www.CoAssets.com, more than S$30million worth of deals were pledged.  However, excluding the S$20million from EPIC 2014 (https://sg.news.yahoo.com/20m-deals-done-epic-event-094211376—sector.html) the online funding amounts to S$10million.

3: https://www.crowdonomic.com/searches/searchall (6 successful deals out of 49 as at 15 Sep 2014)

4: http://www.slideshare.net/lopeztruji/fundedbymecom-mult

5: Whole year data for 2012 and 2013 for Kickstarter.com were not available in the blog.  Hence 2011 figures were used. https://www.kickstarter.com/blog/2011-the-stats

6: https://www.realtymogul.com/anniversary-infographic

7: Counted from the website (as at 15 Sep 2015)

8: http://techcrunch.com/2013/08/30/kickstarter-owns-indiegogo-with-around-6x-more-total-dollars-raised-average-success-rate-much-higher/

9: Based on the 6 successful deals listed on the site.  Stop the Killing ($21,346 by 151 funders), From Beta to the Store ($3,000 by 51 funders), S’pore Skyfilm Society (%500 by 9 funders), Take WAM’s office to the next level ($216 by 4 funders), Garden by the Roof ($1,130 by 19 funders) and PixBento ($3,220 by 21 funders)

10: https://www.kickstarter.com/year/2013/?ref=footer#1-people-dollars (it was reported that in 2013, 3million people funded $480million worth of projects).

11: http://go.indiegogo.com/blog/2012/03/indiegogo-insight-average-contribution-amount-through-email-is-higher-than-other-referral-sources.html

12: https://blog.compete.com/2013/10/30/conversion-rates-crowdfunding-kickstarter-vs-indiegogo/

To access the original article, please click here.

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