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 time. While the United States relaxed regulations on investment-based crowdfunding in 2012 (via the JOBS Act), rewards- based sites like Kickstarter and Indiegogo have been around since the late 2000s.
In recent months, Asian countries have begun to slowly catch up; especially when it comes to investment-based crowdfunding regulations. For example, India and Malaysia have recently circulated crowdfunding consultation papers to gather feedback from industry 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 investment- based crowdfunding in the coming months. Hence, all these events seem to suggest that many Asian countries are starting to realise the potential (as well as risks) of crowdfunding, and several are hoping to get in on the action.
With the growing interest 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 giving a more holistic view, by expanding the scope of this article, to include the other types of crowdfunding sites.
Limitations in the analysis
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. 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).
[scribd id=240231000 key=key-n0sTABPHbcV75Gx4DxOO mode=scroll]
Based on the table above, some of the takeaways are as follows:
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 rankings, they are significantly more prominent than their Asian counterparts. Putting things into perspective, this is not surprising as some of the more visible crowdfunding site 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: 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 amount raised. Based on statistics from Kickstarter, more than US $99 million 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: 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: 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.
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”.
Mr Getty Goh has a Masters in Real Estate from the National University of Singapore (NUS) and is the CEO of CoAssets.com, South East Asia’s first crowdfunding website. Mr Goh is also a director with Ascendant Assets Pte Ltd, a real estate research consultancy and think tank. The views expressed are his own.