Crowdfunding in South East Asia is just beginning to pick up in the region with Singapore at the helm of advocating the platform. The overall numbers are proving to be promising for crowdfunding not only in the region but worldwide as well. But a lot of industry experts are starting to take notice of the massive potential the region possesses.
As North America and Europe respectively raises 59% and 35% of the total numbers worldwide, South East Asia is slowly but surely putting up the numbers. There are still a few kinks that has to be worked on like the language barrier and government regulatory measures but the wealth and generosity of the people are almost at par with anywhere in the world.
Of course, there is still a good percentage of crowdfunding projects and pitches that does not get funded and the project does not see fruition. But for most, they succeed with their financial goals whether it is a donation platform and get to touch a lot of people’s heart or a reward platform and they get to tickle the fancy of consumers.
There are also equity crowdfunding platforms that are able to put together a great business pitch and convince a good number of interested investors to start-up and fund the capital needs of the company. There are a few lending platforms that attract a unique set of funders that is willing to loan their money to those in need.
Why crowdfunding helps a lot of people
People succeed with crowdfunding for a number of reasons. It can be one or a combination of certain factors that helps them get the money that they need for their objective whether it is a personal need, disaster, new business idea or the need to consolidate their debts.
- It makes the process easy. There are a lot of people who are in need of money that flock crowdfunding sites such as personal emergency, college tuition or even to introduce a new product to the market. Conventional sources would have the person in need submit requirements to several banks to check if they will be approved. On the other side of the spectrum, there are people who are passionate about certain issues such as developing a safe car for PWDs or even a new book that they want to read. But they do not know how to fund those people doing the things that they like and to be more technical about it, their bank investments are managed by investment managers and they usually do not have a say on where it goes. Crowdfunding paves the way for those in need and ones that want to help to meet and work together to reach their common goal.
- It matches the right types of people. When people decide to use crowdfunding especially if they want to help someone in need of money, they have the ability to choose the projects or pitches that is close to their heart. The same thing goes for the people that are looking for money because they have the ability to connect with the ones that are passionate with their need. If they are promoting an advocacy to make street crossing safer for students and some parents can relate to it, then they have the chance to fund that project. Crowdfunding makes it possible for these people to see and help each other.
- It is easy to apply compared from traditional lenders. If people who are in need of money decide to use conventional sources like banks, they would face multiple documents, background checks, and hard-pulls on their credit scores. It also takes a few days to even confirm if the loan will be approved or not. The sad thing about this is that the lower the credit score of the borrower, the higher the interest rate to cover the risk the lender is taking. Crowdfunding makes the process a lot easier and the interest rates lower compared to other private lending institutions.
- It minimizes risk for the donors. One good thing about crowdfunding is that most platforms return the money to the donors if the target amount is not met. It minimizes the risk for both parties because the one in need does not have to go through the project with too little of what they needed and the one who donated money does not risk a venture where finances are short.
- It helps people to manage their finances. Personal finance is a touchy subject and people are always on the lookout to make budgeting a little better. There are lending-based crowdfunding platforms that allow people to get an amount with a much lower interest rate. They are often looking for ways to consolidate their loans to manage the repayment a lot easier. This allows them to combine multiple debts under one account and has one payment date, payment amount, and even one interest rate.
- It helps businesses with capital. There are startups that are in need of capital infusion to be able to start their business venture or even existing businesses that are introducing a new product. Crowdfunding helps these companies either introduce a new business or product to a tested target market.
- It is free. One of the biggest reasons crowdfunding succeeds is that it is free to participate in. The project initiator and the donor does not have to pay to participate in the platform. One idea for initiators is to ask for a little more than what they need to cover the fee of the crowdfunding platform. But on the onset, both parties do not have to shell out funds to get the campaign rolling.
Challenges faced by project initiators
There are those who are not able to raise the funds that they need due to common mistakes project initiators make. Here are some of them which can hopefully be avoided in the future.
- Not knowing the type of crowdfunding platform needed. There are about four types of crowdfunding platforms and each one differs from the other. Project initiators need to understand how each one work and where their need fits in. If they purely need donation due to natural disasters and if they can offer a small reward in exchange of a donation will be best put in different platforms.
- Half-baking the pitch. For other people to understand and appreciate the project, initiators needs to put together a well-thought of pitch and not something they just cooked up five minutes before posting. The pitch should have a clear need and amount that is intended to be raised. Blurring these details can spell disaster for the project.
- Not having an original idea. There are some projects that fail because they just seem to copy an already existing idea. One might put up a pitch in an equity based platform for a social networking company that will help connect people with other people. That is already Facebook or even Instagram. Some people say that it is impossible to have an original idea with billions of people in Earth but what sets aside those that succeed is they act on it. Just don’t copy what is already existing.
Crowdfunding succeeds and fails for a lot of reasons and all proponents from project initiators to donors and even the platforms themselves need to work together to succeed.