Seeds of suc­cess

China Daily (Canada) - - FRONT PAGE - By LUO WEIT­ENG sophia@chi­nadai­

While seed money may re­main a headache for many en­trepreneurs in Hong Kong, there is no dearth of run­away suc­cesses among the city’s crowd­fund­ing com­mu­nity.

Ambi Labs is a Hong Kong-based startup whose flag­ship prod­uct is Ambi Cli­mate, a con­nected de­vice that au­to­mat­i­cally con­trols one’s home air con­di­tioner. It se­cured $115,000 over one-and-a-half months last year through on­line fund­ing from 749 back­ers, in Hong Kong and from abroad.

Ju­lian Lee Shang-hsin, co- founder and CEO of Ambi Labs, thanked fun­ders on the popular USbased crowd­fund­ing web­site Kick­starter for help­ing them reach al­most five times their tar­get fund­ing goal of $25,000.

But it had not been smooth sail­ing at first. Lee’s fundrais­ing cam­paign had a bumpy start as it barely made 34 per­cent of its tar­geted $40,000 at close on Sin­ga­pore-based crowd­fund­ing web­site Crowd­ti­vate. But it bounced back on its sec­ond at­tempt, this time on Kick­starter.

Hard­ware star­tups like Ambi Labs re­quire a lot of up­front in­vest­ment. Crowd­fund­ing there­fore is a great way to pre-sell prod­ucts while con­tin­u­ing devel­op­ment and pro­duc­tion.

The con­cept for crowd­fund­ing is sim­ple — sup­port­ers chip in to help get a cash-starved project off the ground, with the prom­ise of in­cen­tives.

But crowd­fund­ing is not a cake­walk and young firms can­not ex­pect that as long as their projects are promis­ing, all they need do is post the de­tails on­line and wait for the money to pour into their ac­counts, cau­tioned Lee.

Lee said their tri­umph was hard-won, as they shelled out $5,000 on the first pro­mo­tional video clip for Crowd­ti­vate, and as much as $10,000 for the one on Kick­starter.

Lee be­lieves crowd­fund­ing is more than a fundrais­ing chan­nel. It also mar­ries in­no­va­tion and public en­gage­ment.

Hence the ob­vi­ous im­por­tance of re­vis­ing the projects or prod­ucts based on feed­back from back­ers to make them feel in­volved and in­trin­si­cally re­warded, Lee said.

But Lee’s is not the only suc­cess story scripted by crowd­fund­ing sites like Kick­starter.

Ac­cord­ing to US re­search firm Mas­so­lu­tion, the global crowd­fund­ing in­dus­try ex­panded by 167 per­cent last year to raise $16.2 bil­lion. In 2015, the in­dus­try is set to more than dou­ble once again, as it ap­pears poised to raise $34.4 bil­lion.

The ex­po­nen­tial growth in 2014 was due in part to the rise of Asia as the sec­ond-big­gest crowd­fund­ing re­gion, where vol­umes grew by 320 per­cent to $3.4 bil­lion raised.

Yet, it may be too soon to re­joice at the as­tound­ing growth, as in com­par­i­son to Europe and North Amer­ica, crowd­fund­ing in Asia still ap­pears to have a long way to go and even in­dus­try in­sid­ers do not know when it is re­ally go­ing to take off.

Af­ter look­ing at a set of Asia-based crowd­fund­ing sites, Lee placed Ambi’s bet the sec­ond time around on Kick­starter, a glob­ally po­si­tioned plat­form. The gen­eral con­cept of crowd­fund­ing, he feels, has yet to take shape in Asia, where a sup­port­ive com­mu­nity of like­minded in­di­vid­u­als keen on the idea of crowd­fund­ing and will­ing to reach into their pock­ets has yet to be set up.

That was also the rea­son why Ambi Labs did not take lo­cal crowd­fund­ing plat­forms into se­ri­ous con­sid­er­a­tion.

Global plat­forms in­clud­ing Kick­starter and Indiegogo cer­tainly can­not have the field all to them­selves. Projects with­out strong global ap­peal will very likely be shut out on the popular global crowd­fund­ing sites. And some global plat­forms like Kick­starter have not opened the door to for­eign star­tups, noted Ti­mothy Yu Yau-him, founder of on­line tu­tor­ing startup Appedu.

“Only US pass­port hold­ers are el­i­gi­ble to raise funds on Kick­starter, which means we have to bring in a US part­ner if we want to launch a crowd­fund­ing cam­paign on it,” said Yu.

His startup fi­nally de­cided to kick off its eq­uity cam­paign at the lo­cal eq­uity crowd­fund­ing site Fund2.Me, which was some­how in tune with the na­ture of Appedu as a lo­cal-ori­ented startup.

How­ever, the prob­lem is that when it comes to crowd­fund­ing, what spring to peo­ple’s minds are very of­ten some global big names, mak­ing it quite hard for Asia-based sites to make a dif­fer­ence, said Jackie Lam, direc­tor of lo­cal eq­uity crowd­fund­ing web­site Big­col­ors.

Lee noted a pos­si­ble way for­ward for Asia-based crowd fund­ing sites could be es­tab­lish­ing a re­gional pres­ence with a fo­cus on mul­ti­ple mar­kets.

Most global crowd­fund­ing gi­ants usu­ally zero in on English-speak­ing mar­kets in the West­ern hemi­sphere de­spite the fact that the Asian mar­ket as a whole has long stood as a lu­cra­tive and tempt­ing op­tion, said Lee, who be­lieves this is where Asi­abased crowd­fund­ing plat­forms could come in.

For­eign crowd­fund­ing sites may need time to fight their way into the cul­tur­ally and lin­guis­ti­cally di­verse Asian mar­ket, which gives Asia-based crowd­fund­ing sites some first-mover ad­van­tages, he added.

For Hong Kong, the crowd­fund­ing story so far is all about in­vest­ment ed­u­ca­tion be­fore delv­ing into how to pol­ish one’s brand as a re­gional crowd­fund­ing hub, said Lam.

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