Last January, Iqbal analyzed Indonesia’s crowdfunding landscape noting that the concept was slow to gain traction. 8 months later, despite some massive crowdfunding wins from Asia-based start-ups on international platforms, the number of entrepreneurs turning to crowdfunding is still low compared to the level of innovation that actually exists in the region. Why is this?
At Crowdonomic, we usually sit down and meet with start-ups before they launch their projects. Although interest in crowdfunding is growing, through my conversations, I’ve found that people have many misconceptions about crowdfunding and how it really works. Often, these prevent them from launching their campaign or from reaching their target amount.
Here are 5 common misconceptions that I’ve encountered and why they are not true:
1. I will lose face
An issue that often comes up is that entrepreneurs are too shy to ask for money from strangers, and even more so from their own family and friends. Why? They’re afraid of losing face—a cultural trait that’s ingrained into the Asian identity. However, crowdfunding is not about “begging” for money, but about sharing your entrepreneurial journey and asking people to help empower your dream. For instance, Yohan, who raised SGD 3,000 for his video game, was surprised to find out how readily his immediate network was willing to give support in this way.
2. It’s just for start-ups that can’t get traditional funding
Aside from a way to raise funds, crowdfunding can be seen as a marketing tool to spread awareness, engage with new customers, or to test for market demand. Furthermore, it’s not just for fledgling startups, but also for more established businesses.
For example, although Canonical, the company behind the Ubuntu Edge campaign, failed to reach their target of $32 million, their crowdfunding effort was not a failure in the sense that they received a lot of international media attention.
The steps that you’ll be taking to promote your campaign, whether it’s setting up various social media accounts or reaching out to the press, are steps you will have to take to market your business anyway, so a campaign can just give you a more structured timeframe and a more defined cause to focus your marketing efforts on.
3. I need a fancy video
Many entrepreneurs are quite camera-shy, and when I suggest that they get in front of the camera, some would rather not complete the campaign at all! You don’t need a fancy explainer video, or even a professional camera. All you need is a simple and honest message that connects with your intended audience. For example, one campaign used an iPhone but still reached her goal.
4. Once my campaign is live, I can sit back and watch the money roll in
Unless you win the lottery, you’re always going to have to work for your money. It’s up to you to reach out to your network, follow up, and to expand your reach by finding good referral sources. The work starts well before your campaign and keeps on going throughout the campaign.
5. If I have more time, I can get more funds
Many successful crowdfunding campaigns reach their target well within the first 10 days of their campaign. This is because most of the work in promoting a crowdfunding campaign happens before the campaign goes live. Having a longer campaign duration can take away the sense of urgency for people to support your campaign rather than playing to your advantage.
In reality, crowdfunding isn’t rocket science and has a lot to do with the level of effort you are willing to put in. Start-ups in Asia need to overcome their misconceptions and realize the potential that crowdfunding has in filling the funding gaps in the region.
About the Author: Leo Shimada is the CEO and Founder of Crowdonomic a crowdfunding platform for projects based in Asia. You can follow him on @Leo_Shimada, or on @crowdonomic.
[Header image from Shutterstock]
