Seeds of success
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.