Is there a crowdfunding market in Asia? How does it differ from the West?
According to a Business Times article late last year, the crowdfunding market potential for South East Asia is projected to grow to some US$8.9 billion come 2025. In Singapore, total venture capital funds in start-ups were only about S$25.2 million in 2012 - a proverbial drop in the vast ocean considering our status as a financial hub. Against such a backdrop, it is evident that there is much potential for crowd-sourced funds to grow.
Thanks to a presentation by Nicola Castelnuovo of Crowdonomic at the recent Crowdsourcing Week Global 2014, I picked up a thing or two about the crowdfunding eco-system in our neck of the woods.
Let me highlight some of the salient points from his talk.
The Asian Model
Unlike traditional linear funding models from donation to rewards to equity, crowdfunding in Asia tends to be more disruptive. Here, the sequence may be more simultaneous and free-flowing, where fund seekers, donors and resource providers interact and engage. Business model wise, the crowdfunding action in Asia takes place via B2C or B2B "crowd companies" as intermediaries rather than a more free-flowing direct marketplace.
Similarly, the growth of crowdfunding in Asia is unlikely to be through discrete vertical portals that offer distinct crowdsourced offerings. Rather, it is one where crowd powered solutions that integrate across the value chain or business eco-system is provided. This more collaborative model may suit communal Asian cultures better than the more individualistic Western system where independent entrepreneurs abound.
Crowdfunding is no longer an individual offering, but part of a large "end-to-end" system which supports an organisation's innovation process covering multiple industries. Through "virtual incubators", the various needs of a company from the stages of ideation, conceptualisation, seed financing, resourcing, prototyping, commercialisation to growth are provided.
These different phases can be crowdsourced through intermediaries that assist in the four stages of incubation: 1) Open Innovation (ideas and solutions); 2) Reward Crowdfunding (early stage funds and feedback); 3) Cloud Needs (crowdsourcing of talents and resources); and 4) Venture Financing (equity and debt).
This can be seen in the slide below.
Integrating The Innovation Ecosystem
Taking the above idea further, the opportunity then arises for crowd-solution providers to help connect an enterprise across the entire innovation ecosystem. These providers link start-ups, SMEs and fast growing companies to crowd resources like universities (ideas and concepts), research labs (business cases), accelerators and incubators (seed funding), venture capital funds (prototyping), corporate partners (commercialisation), and financial institutions (growth funding) as shown below.
How Key Players Benefit
With the ecosystem, processes and solution providers in play, what benefits do participants enjoy? According to Nicola, this can be summarised as follows:
1) Start-ups/SMEs - Access to funds, marketing/PR expertise and resources, product feedback, customer acquisition;
2) Enterprise - Broad stimulus of innovation, earlier prediction of market, community outreach, access to upcoming stars; and
3) Investors/Funders - Radar to sourcing of new deals, reduction of risks as they can "top-up" via the crowd, ability to partner with promising businesses, and internationalise.
Equity Crowdfunding - The Next Wave
Looking ahead, Nicola views crowdfunding to move beyond individual projects or products to include taking a financial stake in companies. For equity crowdfunding to succeed, however, there is a need for the industry to have players with deeper skillsets in appraising businesses while conducting the necessary due-diligence. Companies seeking such funds need not just be start-ups but could include established companies with SBUs or portfolios which could benefit from the capital injection and rigour of venture finance.
The Vision for Singapore
Reiterating his bullish holistic approach to the crowdsourcing ecosystem, Nicola shares his vision of how players like Crowdonomic can link the disparate components and players, and help investors to gain access to this burgeoning market as shareholders. This can cover the entire chain from crowdfunding (equity or debt), venture finance (grants, venture loans), crowdsourcing (ideas, resources, partners, talents), to information services (company profiles, communications, connections, mentors).
While I am excited about the possibilities for crowdfunding in Singapore and the region, much work is needed to convince incumbents of the emerging opportunities. As Nicola has alluded to, the Asian business culture is still rather conservative when it comes to funding relatively untested businesses through an online platform. Hopefully, this will all change as more success stories such as Pirate 3D appear in the landscape.
Monday, April 21, 2014
Friday, April 18, 2014
Courtesy of libcom.org
What does success look like? How do you know that you have arrived?
For some, success is quantified by wealth, status and luxury. They relish the idea of being comfortably ensconced in the top rungs of the social and corporate ladder. Here, success is measured by distinctions, degrees, bank accounts, job titles, and material possessions.
While there isn't anything wrong in ambition, one must be careful not to be enveloped by the mindless pursuit of "mammon". According to the Merriam-Webster Dictionary, the word represents "material wealth or possessions, especially (those) having a debasing influence".
The ill effects of loving mammon is best described by the following Bible verse:
"No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon." - Matthew 6: 24
Surrounded by the trappings of luxury, a person who worships mammon may be lulled into a comfortable slumber. Cushioned from the rigours of this world, he may lose touch with his humanity and spirituality.
Does this mean that it is wrong to be rich? Certainly not. Rather, the danger lies in loving material success so much so that you sacrifice your greater calling.
Which brings us to the second view of success epitomised by the mammoth - a huge furry prehistoric ice-aged beast. A mammoth task is one that requires herculean feats to accomplish, and is not for the faint-hearted. It is a worthy pursuit that makes a significant difference in one's lives and the lives of others (think about what one dead mammoth can yield to a tribe of cold and hungry prehistoric cavemen!).
A mammoth is a project that yields much good for the community. It is something that can be shared amongst members of the tribe and which goes beyond selfish individual gain. However, a mammoth can be an outsized challenge that can only be surmounted with considerable planning, skill and perseverance.
Subduing a mammoth often requires sacrifice. While one may be stimulated by the hormonal rush of adventure, success often comes at a price.
The question we should ask ourselves is this. Are we prepare to forgo the comforts and luxuries of our lives to pursue that Big Hairy Audacious Goal (BHAG)?
For sure, risk is a big part of riding the mammoth. You need to have the guts to stare down your adversary straight in the eye, grab it by the tusks, and tie it down. You also need to leave the comforts of your cave and your tribe, weather unbearable cold, and traverse untold miles before meeting your quarry.
While embracing uncertainty, leveraging fear and plunging into uncharted icy plains doesn't necessarily make you a pauper, it does require you to put something on the table. You need to put up with weeks, months or even years of not knowing where your next pay check may come from.
If you do plan sufficiently with enough reserves to tide you over, however, such fears can be mitigated. Keep your lifestyle minimalistic and slow down your burn rate. Forecast what you need for your adventure, ensure that your basic needs can be met, and then go ahead to pursue your heart's desire.
In being too concerned about preserving our comfortable status quo, we may pierce ourselves with a million arrows. A little piece of ourselves die each time as our hearts grow colder and more unfeeling.
If we feel that way, the time may perhaps be ripe for us to consider leaving the warmth of our present lifestyles, and to pursue that noteworthy undertaking of epic proportions.
"The love of comfort is frequently the enemy of greatness." - Todd Henry
Tuesday, April 15, 2014
Poster child of the burgeoning crowdsourcing movement, crowdfunding is estimated by Massolution to have raised some US$5.1 billion globally in 2013. Internationally, US-based players like Kickstarter, Indiegogo, and RocketHub have kicked butt, while the Asian scene has been relatively quiet.
Launched at Crowdsourcing Week Global in Singapore, StarHub's Crowdtivate is an "online social launchpad" targeted at helping local and Asia-based entrepreneurs and artists to obtain financial support for cutting edge projects. It is one of the first such crowdfunding platform in the region. Providing specific rewards to supporters, the open platform allows funders to discover and back innovative new products and services.
Co-managed by StarHub i3 (Innovation, Investment, Incubation) and crowd solutions specialist Crowdonomic, the telco-backed crowdfunding platform is supported by the Home-Fix Experience Centre, National Book Development Council of Singapore, NUS Design Incubation Centre and Singapore Infocomm Technology Federation.
To find out more about Crowdtivate, join me as I interview Mr Stephen Lee, StarHub’s Head of i3 (Innovation, Investment, Incubation).
Stephen Lee, StarHub’s Head of i3(courtesy of StarHub)
1) What prompted StarHub to venture into the crowdfunding space? Is there a vision or goal for Crowdtivate?
We believe that the crowdfunding space can provide us with a continuous source of innovative and creative ideas from start-up companies, entrepreneurs and even the regular man in the street. Innovation can come from any source. We wanted to create a platform that will curate the best ideas in Asia and alow the general public to express their support for the ones that really stand out.
From StarHub's perspective, we hope to curate great ideas that go beyond the traditional info-communications services. It's a wiser long-term strategy for the company. Who knows? We could incorporate successful ideas into our service platforms or help them grow as future businesses.
2) What would you see as the unique differentiating factor for Crowdtivate relative to other crowdfunding platforms?
We are focused on three categories: Creative/arts/books/films, technology and assistive technology. This focus allows us to concentrate on specific projects rather than a broad-based approach such as Kickstarter or Indiegogo.
Crowdtivate further provides mentorship that allows project owners to create good campaigns, with options for support in business incubation and regional outreach. Campaigns could potentially receive additional assistance, including access to test users, marketing support, start-up funding, free software development, invention development and infrastructure support.
This approach offers project owners a more comprehensive roadmap to shape their ideas into viable businesses beyond pure funding. That said, hats off to the pioneers in the crowdfunding field for making it such a success.
3) How many projects does StarHub hope to attract through this platform? Any targeted numbers per year?
We have our own internal projections and we are realistic in our expectations. Crowdfunding is still a relatively new concept in Asia and we expect it to grow in popularity over the next decade. Without giving numbers, what we can say is that we are looking at the quality rather than quantity of projects.
4) Who do you see as your target entrepreneur/ideator? What are the kinds of projects that you hope to back?
We hope Crowdtivate will appeal to entrepreneurs, start-ups, artists and even to the average man in the street who has an idea at the back of his head that he wants to make real. As mentioned, we are looking at three main categories - creative/arts/books/films, technology and assistive technology
5) I like the idea of focused assistance being provided to entrepreneurs through mentorship, business incubation and product development/testing. However, such efforts are likely to be quite resource or capital intensive. Is there a set of criteria on how projects are earmarked for further grooming?
While crowdfunding is popular, there are also stories of how project owners achieved success on the platform but fail to get their projects off the ground due to a number of reasons. Underestimating the business and financial requirements of rolling out a viable business is perhaps the number one reason for this. That is why we have put in place a process which can give an idea significant legs to succeed in the wider market.
As an operator, we won't be afraid to incubate and help that project owner achieve his/her goals upon success on Crowdtivate. We will evaluate each project on a case-by-case basis and make that call when needed.
6) Who are the mentors and partners whom StarHub will be working with to provide guidance to the start-ups? Will they also have a stake in the projects?
Crowdtivate is co-managed by StarHub i3 and Crowdonomic. We are also working with SiTF, National Book Development Council of Singapore, Home-Fix Experience Centre and other partners who will provide mentorship and counselling in the areas where they have expertise in.
We will work together with these partners to review project submissions before they are accepted for crowdfunding on Crowdtivate. Once project owners have achieved success on Crowdtivate, they could leverage on their mentors' networks and experience to market and promote their idea. Whether they will take a stake in the company will be at their discretion - it's not a must.
8) Will StarHub also be taking a direct stake in the projects that are being crowdfunded? Is there a possibility of them being acquired too?
As mentioned earlier, we may either incorporate the projects into our service platforms or help the project owners grow as a future business. We may even back them by investing in, forming a partnership with or bringing the start-ups to overseas markets through our telco partners in Asia Pacific. It will be taken on a case-by-case basis.
9) As a telco, StarHub already has an existing network of users and subscribers. Would you be marketing this idea to them?
We will be marketing Crowdtivate campaigns through social media, direct to our customer base, as well as through our partners.
10) Finally, what would you say to a potential investor/pledger of funds to Crowdtivate? What would your pitch be like to him or her?
Every success starts with a dream and every single support counts. Take a look around. Look for projects that interest you. If it's something you really want to make happen, please back the project owner generously. Communicate with the creators and be open with your feedback. Ultimately, we hope they can be part of the success of their own home-grown entrepreneur.
Crowdtivate will be open in May 2014. For more information and to register, do visit their website at this link.