The Crowd­fund­ing So­lu­tion

Enterprise - - Contents -

For en­trepreneurs the most dif­fi­cult as­pect of start­ing a busi­ness is gen­er­at­ing cap­i­tal. They usu­ally suf­fer from fund­ing gap, a term used to de­scribe the cap­i­tal need of en­trepreneurs that re­main un­ful­filled by tra­di­tional lend­ing in­sti­tu­tions and an­gel in­vestors. Find­ing an­gel in­vestors and con­vinc­ing banks or con­ven­tional money lend­ing com­pa­nies to grant loans are all equally dif­fi­cult. This is where crowd­fund­ing comes in.

The ba­sic idea of crowd­fund­ing is that peo­ple pool­ing their money to­gether, usu­ally via the In­ter­net, to sup­port an idea or ef­fort ini­ti­ated by a per­son or or­ga­ni­za­tion. Crowd­fun­ders can build up and nur­ture a com­mu­nity of like- minded in­di­vid­u­als who gen­uinely want to see one an­other suc­ceed. An on­line crowd­fund­ing cam­paign is a key way for an or­ga­ni­za­tion to raise money; ef­fec­tively build an au­di­ence for a project, event, or cause; and keep con­trib­u­tors en­gaged in the out­come.

The In­ter­na­tional Crowd­fund­ing Act es­sen­tially en­ables start- up en­trepreneurs to lever­age the power of the In­ter­net to raise fund­ing for their projects. Now, any­body with a cool idea will be able to pool the funds of ‘ mi­cro in­vestors’ into seed cap­i­tal for the ven­ture. If the idea pays off, then the seed in­vestors can rake in their re­wards.

In early 2011, Rachel Sun Xiangyu, a 21 year- old stu­dent from China, trav­elled to Pak­istan to com­plete a trainee­ship at Naya­jee­van. Hav­ing a pas­sion for mak­ing friend­ship bands, she came up with the idea of teach­ing stu­dents to make these bracelets, with their own unique style. The staff at Naya­jee­van and the Net­work of Or­ga­ni­za­tions Work­ing for Peo­ple with Dis­abil­i­ties Pak­istan ( NOWPDP) rec­og­nized an op­por­tu­nity to spread her im­pact on Pak­istan, while reach­ing out to a vul­ner­a­ble pop­u­la­tion.

From this seed of an idea, Naya­jee­van and NOWPDP are launch­ing a cam­paign to pro­vide a means for all peo­ple to pro­vide a safety net for chil­dren with dis­abil­i­ties study­ing at spe­cial ed­u­ca­tion in­sti­tu­tions in Karachi ( around 7000 chil­dren). Just one bracelet ( for around 200 ru­pees), will pro­vide health in­sur­ance for a month, and a small in­come to the child or teacher in the school who made it.

This is not just any health in­sur­ance; this in­sur­ance pro­vides pre­ven­tive health care work­shops and a 24 hour med­i­cal hot- line to clients along with their emer­gency med­i­cal cov­er­age in case of an ac­ci­dent. NOWPDP and Naya­jee­van have joined hands to put to­gether a man­aged care fund for these stu­dents; who would oth­er­wise be re­fused cov­er­age from in­sur­ance com­pa­nies due to a mis­con­cep­tion that their con­di­tion is as­so­ci­ated with a higher risk of ac­ci­dents.

In Asia, how­ever, crowd­fund­ing is a for­eign no­tion. But projects like To­gather. Asia, a Sin­ga­pore- based startup that claims to be the first in Asia, es­sen­tially al­lows any­one to post up ideas for creative projects, so­cial ini­tia­tives, and in­no­va­tions and seek fund­ing from the public to turn them into re­al­ity. The money is only passed to the project cre­ators once the tar­get is met. There is no eq­uity ex­change in­volved, so the fund­ing is the form of do­na­tion pledges.

Sim­i­larly, In­done­sia’s tech­nol­ogy sec­tor is adopt­ing fa­mil­iar mod­els to foster grow­ing busi­nesses. Some of those qual­i­ties are al­ready vis­i­ble on the na­tion’s indige­nous crowd­fund­ing sites. Wu­jud­kan. com and Patun­gan. net have both adopted fa­mil­iar mod­els and are con­tribut­ing to some lo­cal suc­cess.

Crowd­fund­ing does not of­fer a re­place­ment for tra­di­tional money lend­ing op­tions, but an ad­di­tional av­enue that small and medium en­trepreneurs can con­sider to get ac­cess to cap­i­tal to get their busi­ness stand on their feet or to ful­fill ex­pan­sion goals.

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