Crowdfunding catches on in Singapore
The Business Times
CROWDFUNDING in Singapore is growing fast, with millions raised by Singapore-based campaigns in the past eight months alone. But whether this can be sustained and become a powerful fund-raising tool for Singapore-based start-ups remains to be seen.
According to crowdfunding platform Crowdonomic.com, a record amount of money has been raised by Singapore-based campaigns this year, and this amount doubles on a monthly basis. The number of Singapore-based supporters is growing too.
In March, Singaporean film The Body raised US$29,050 (S$36,460) via global platform Indiegogo. In April, senior-friendly smartphone Silverline bagged US$54,001. And the following month, US$107,730 was pledged to the S377A Constitutional Challenge.
But some observers are cautious about continued high-octane growth, citing Singapore's small market and slow adoption rates as limitations to crowdfunding's potential.
But they agree there is a role for crowdfunding in Singapore as it can complement venture capitalists (VC) in supporting start-ups.
Crowdfunding, which has more than 800 global online platforms today, allows anyone to raise funds for anything - profit ventures, creative ideas or personal needs - in exchange for rewards. A campaigner sets a funding goal and deadline. If people like the campaign, they can pledge money to make it happen.
Pirate3D, having raised US$1.44 million for its 3-D printer The Buccaneer, is Singapore's top crowdfunded campaign on a global platform. It is also the only Singapore-based company that earned a spot (No. 20) on Entrepreneur Magazine's 2013 list of Top 100 Crowdfunded Companies.
"Apart from Pirate3D, I don't think there has been any other high-profile product or service that got funded," said Mr Julian Low, entrepreneur-in-residence at Red Dot Ventures.
Said Mr Alok Mishra, co-founder of B2B mobile advertising app Notiphi: "I don't think crowdfunding has really even taken off in Singapore. Even within the start-up community and early adopters, the buzz is somehow missing."
Mr Low said: "I think the problem lies in the fact that (No. 1 platform) Kickstarter is a lot larger than the next biggest platform. And Kickstarter requires you to have a US or Canadian presence, so it's disadvantageous to non-Western tech companies, many of which are innovative and competent in their own right."
To address this gap, more crowdfunding platforms have been staking their presence here to attract local campaigners. Singapore-based platforms ToGather.Asia and Crowdonomic.com launched last year and this year. Australia's Pozible will be setting up office here this month, said its co-founder, Mr Alan Crabbe.
So, is crowdfunding likely to replace venture capital in the near future?
Observers disagree, and say both are complementary tools, especially for early-stage start-ups.
Said Notiphi's Mr Mishra: "VCs come with resources who are knowledgeable about the respective fields in which they invest, and keep up with new developments in a systematic manner. It's just not possible for crowds to be equally well informed."
Mr Crabbe said: "Crowdfunding for equity may impact traditional venture-capital funding, but I don't think venture capital will be replaced. VCs will still provide access to networks, mentorship and experienced entrepreneurs."
Mr Leo Shimada, founder-CEO of Crowdonomic.com, said: "Start-ups could benefit most from a combination of crowdfunding, which brings the wisdom of the crowd, and top-tier venture capitalists, who bring their wealth of business-building experience."