The Impending Wave: Crowdfunding Asia's Revolution

Author: DBS BusinessClass, Administrator of DBS

A crown of glass bottles' ends adorns each glistening dome of the historic 19th century Sultan Mosque in Singapore's Kampong Glam heritage district. These bottles were collected en masse as donations from the less well-to-do religious devotees to aid in the mosque's reconstruction. It stands as a stalwart reminder of not only pious devotion but also as an early example of the potential of crowdfunding in Singapore - and by extension, Asia.

Fast forward to the 21st century. Two-thirds of the global middle class will lie in Asia by 2020 with $3.5 Billion coming from emerging economies. The Asian revolution is real and there are three trends driving it. First, consider online marketplace popularity, fueled by the explosion of retail e-commerce. The Asia-Pacific region will soon outspend North America by $40 Billion and make up 40% of all buyers world-wide. Second, social media penetration and savvy are at an all-time high. 52% of social media users and 47.6% of mobile users reside in Asia. Let's not forget the success and popularity of crowdfunding in Asia, with countries like Singapore being among the top ten worldwide for crowdfunding.

Given this scenario, when do we need to look for when choosing the right crowdfunding platform? A platform that understands Asia and a platform with a wealth of experience in various forms of crowdfunding. First, let's examine how this revolution is sweeping across the world by taking a closer look at crowdfunding legislations in a few other countries.

• In the United States, the Jumpstart Our Business Startups (JOBS) act was signed into law by President Obama in 2012. It aims to encourage small business and startup funding by allowing small contributions from individual contributors, without having to make in IPO.
• In Japan, the House of Councilors passed a bill into law for promoting ‘crowdfunding', to allow startup companies to more easily sell their unlisted shares via the internet.
• The Australian Small Scale Offerings Board (ASSOB) is a crowdfunding facility for small businesses in Australia to raise equity finance. It allows for small fund raising without the need for a prospectus. Funds raised are currently capped at $2 million.

In many parts of Asia, crowdfunding is still relatively new and in its early stages of development. But the crowdfunding scene appears to have taken root and is growing fast in popularity. Crowdfunding is also increasingly popular for businesses - that is, it doesn't exist in isolation and increasingly seen to complement other fund-raising efforts. A good example would be the Heartware Network, a Singapore-based organisation which seeks to instill positive values and good character traits in youths between 18-35 and raised close to $40,000 on FundedByMe.

The governments of Singapore and Malaysia have both announced that they are looking to establish suitable regulatory frameworks for equity crowdfunding - with Malaysia targeting towards a December 2014 timeframe. If it succeeds, this would make Malaysia the first country within the ASEAN region to approve equity crowdfunding.

Jonathan Leow is Head of Marketing of Duet and the PROTAG app, a smart bluetooth tag that prevents you from losing your phone by sounding an alert if you've accidentally left it behind. It raised $106,000 on Indiegogo in two months and garnered rave reviews from all around the world. Leow says it's all about the ‘right place, right time and the right product,' when it comes to crowdfunding a new product. ‘Learn to read the global trends and move in swiftly.' He also highlights the benefits of kicking off a PR launch in the U.S, due to what he terms the PR ‘flow-back effect' - where news that is first covered on big platforms like Techcrunch will have a much higher chance of being pick-up back home in Asia - adding that ‘a sale in the U.S is worth ten times more than a sale in Asia.'

Leow also challenges us with a sobering fact: Now that startups in developing ASEAN countries like (E.g Vietnam, Myanmar) have access to crowd capital - are we prepared for the wave that's about to hit?

Because crowdfunding is a low risk investment with a potentially high ROI, Venture Capitalists are sensing this opportunity and are moving in to join forces with crowdfunding platforms. All in all, when it comes to crowdfunding, the three key consensus among everyone seems to be - Asia is a growth market, Asia is a growing market and Asia is ready.

‘Crowdfunding is a natural choice when it comes to marketing your brand,' says Camilla Hall, co-founder of Åre Natural Mineral Water AB, which raised more than $200,000 on FundedByMe. ‘Singapore is small so you have to think big from day one, because if you make it in Singapore, there's a ripple effect around the region' she continues, adding that, ‘More people need to be educated about crowdfunding and what it can achieve.'