Crowdfunding In South East Asia

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Crowdfunding is simply defined as the practice of getting the needed funds for a project through small contributions from a big group of people. From that alone, you can already point out how it differs from traditional funding sources usually the big lenders such as the banking institutions. They assess your loan applications by looking at your repayment capability and if you fall short of that standard, you don’t get the loan you need.

Of course, these situations are not for those who just want to buy the latest gadget or go on a vacation. People who are looking for some serious cash infusion are usually those who want to start their own business. There are some artists who are looking for funds to jumpstart their careers and some groups that try to raise funds for natural calamities but overall, people are looking for capital money to be able to start earning their own.

With this, crowdfunding has been a big source of funds for a lot of people with various needs around the world. In the US and in most of Europe, this is already a strong contributor to growth as they have been practicing and innovating many of these crowdfunding sites over the past years. Some of the biggest names in the industry come from these parts of the world.

But in South East Asia, crowdfunding is starting to gain some much needed traction with a few countries starting to put up sites of their own. But with the crowdfunding scene in the region, Singapore is taking the lead as a shining beacon in the region with its efforts to push crowdfunding even more in South East Asia by hosting a crowdfunding summit this year.

Massolution released in a recent report for 2015 some promising numbers and how Asia plays a pivotal role in the growth of crowdfunding. It states that the industry broke through to an astounding 167% growth from $6.1 billion in 2013 to $16.2 billion in 2014. The projections are rosier for 2015 which are forecasted to double again.

But the biggest revelation in these numbers is that the 2014 growth in crowdfunding global was due to the rise of funding sites in Asia. There were estimates of about $3.4 billion raised which is more than what Europe raised in the same year. The US still paves the way with about $9.46 billion raised just through crowdfunding.

Benefits of crowdfunding 

The numbers for Asia’s growth are astounding and when you take into consideration what the South East Asian countries are doing with Singapore taking the lead, there are a lot of rooms for growth and improvement. But there are unique challenges that the region is facing that needs to be addressed to help pave the way for forecasted growth.

● Language barrier. Crowdfunding within a country is an easier task but the real growth is cross-country funding. Although the English language is one common denominator with Southeast Asian countries, there are still a large number of people who might find it prohibitive considering it is not their native tongue. This limits their prospective donor base to within the confines of their country.

● Government support. With the different types of crowdfunding available, the equity based model is easily the more complicated among the three. This allows the donors to own a part of the company being put up which in essence is very similar to buying and trading stocks. Bringing that model to a crowdfunding site would need government support to simplify the process and make every step a legal decision to cover the interests of both the donor and the recipient.

● Aversion to online currency. There are still a good number of countries in Southeast Asia who are not that comfortable with combining technology and their funds. Many people still prefer to hold cash and deposit it themselves in their banks or use that cash when buying items that they need. These actions, even with the availability of online banking and online stores show proof that a lot of people in the region are still averse with technological advances that directly concerns their money. Advantages of crowdfunding Knowing the benefits of crowdfunding might make it more enticing to a lot of people in the region. Here are some of them that you can look into.

● Reach multiplier. If you look at the donors or contributors to some of the most successful projects, a little less than 40% of the ones that gave money are coming from people who has first, second and third degree of connections with the one who posted the project. As it gets traction, more people outside that circle get to notice and connect with the need and thus shell out cash for it. These people still make up more than 50% of the donor base which shows the reach of crowdfunding.

● PR & Marketing efforts. People, especially those that are new to crowdfunding might not pay much attention to this but these are important aspects of any business venture. When they start to put their projects on a funding site, they are essentially marketing that idea to many people. Most of the projects that succeed in asking other people for funding are those that are marketed aggressively. One common mistake is making a project and letting it sit there hoping people find and sponsor it. Most crowdfunding sites have easy share links that allows you to let your friends know via social media that you are in need of funding for a project.

● Efficiency of asking. This is one of crowdfunding’s main selling point because it is not everyday that you can ask all your friends on Facebook to fund your project with just one click or your email database with just one send. The efficiency behind the technology allow people in need of funds to reach out to a big market with ease. This allows them touch base with people that they know and reach out to others who might share their vision for the project.

● Real time updates. Making informed decisions are made easier if you have real time date and that is one of the benefits of crowdfunding. You can easily see how many people have responded and how far off you are from your goal. These types of information allow you to make tweaks and necessary changes in your project proposal to reach out to more people for funding.

Crowdfunding is in its infancy stage in Southeast Asia which means that there is a very big room for growth and expansion. It has even surpassed the amounts raised by Europe, considering that they have less barriers to face. This goes to show that the region, with Singapore’s lead and direction, will be a force to reckon with in the coming years.

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This article is written by the Crowdfunders Editorial Team. Crowdfunders.Asia is Asia’s leading portal on crowdfunding, property, start-up and business related news operate CoAssets.com. CoAssets.com is South East Asia’s first real estate crowdfunding site. If you wish to contribute your story, you may write to [email protected].

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