The crowdfunding industry has been growing fast during the last couple of years. In 2012, Massolution estimated a total value of €2.7 billion for the global crowdfunding market, with around $1.6 billion coming from the USA and $945 million from Europe. Asia, instead, was responsible for slightly more than 1% of the total value.
This is immediately striking: how do areas like Southeast Asia and China, which are hosting an increasing interesting startup scene and whose GDP summed together is approximately $15 trillion, contribute so little to the overall crowdfunding industry?
According to some regional sector’s experts, the reasons can be manifold. In particular, some say that one of the main obstacles to the diffusion of crowdfunding in the region might be a cultural factor, that is that in Southeast Asia and in China people are afraid of failure, since it would imply losing face in public. Crowdfunding would expose them and their successes and failure even more publicly. Another important barrier to crowdfunding in those regions is the widespread lack of confidence with online payments. In fact, despite e-commerce is growing fast, the number of frauds is still relatively high. Finally, experts also mention that the lack of regulatory support from the local governments is holding back the growth of crowdfunding, since public solicitation is still prohibited in most of the countries.
Regardless of the abovementioned obstacles slowing down the diffusion of crowdfunding, a number of crowdfunding platforms have recently launched in the area. Most of them run a donation/reward based model, focussing predominantly on creative projects, but some equity based platforms and real estate portals are online too, including Grow VC Group portfolio company, CrowdBaron, which allows investors to become international landlords by participating in a variety of land and property projects.
Despite the fact that these pioneers have a challenging task ahead, that is to help people familiarize with online payments and investment and to foster an important cultural change, they have the advantage of being first in what is predicted to be a huge market. Estimations depicts the chinese crowdfunding market potentially reaching $40-60 billion in China by 2025. Who does not want to be there in time?
Elmer, V. Crowdfunding in China could be $50 billion business by 2025. CrowdfundBeat.com. (2013)
Wagner, K. Why crowdfunding hasn’t caught on in Asia. CNN Money. (2013)
Wallace, M. Crowdfunding in Southeast Asia. Zerohedge.com. (2013)
Wikipedia.org. List of Asian and Pacific countries by GDP (PPP).
Image credit to: Harry Lawford: https://flic.kr/p/9eQ3N6
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.