Business

Crowd funding takes root in Hong Kong

Crowd funding is gaining momentum in Hong Kong, but locals have yet to be ready to give away money for projects neither charitable nor creative.

While seed money remains a headache for many entrepreneurs, a local miniature artist and his business partner secured theirs, $3.3 million, over months last year through donations online from 1,800 people in Hong Kong and abroad.

They thanked their donors, who heaped up money nearly eight times their target funding amount at US$55,000 ($430,000), with T-shirts and miniatures.

The artist Mr Ray Wong Wai-man and his business partner Mr Ho Hon-wai turned to Kickstarter, a popular American crowd funding website, instead of banks when they were about to launch a board game featuring sculptured characters Mr Wong designed.

The sum their account had been credited with by last December marks a record amount of money amassed in the city through the platform.

Crowd funding is defined by the Canada Media Fund as "the raising of funds through the collection of small contributions from the general public using the Internet and social media." Originated in the United States, crowd funding websites are believed to have become an incubator for cash-starved creative projects.

Local websites are burgeoning as Hong Kong passport holders are not eligible to raise funds on foreign platforms. At least five local crowd funding websites are known to be operating, but official figure is unavailable.

While calling on strangers online for donations to finance one's business is catching on in the city, early movers say projects involving neither well wish nor enthusiasm for creativity can hardly make locals put hands in their pockets.

Ms Maryann Hwee Teng-teng, Executive Director of local crowd funding website FringeBacker, said crowd funding in the city was mainly confined to public welfare and creative projects.

Mr Chan Ka-ying, co-founder of Dreamna, another local crowd funding website, agrees.

"I think certain projects are just not suitable for Hong Kong," he said. "That is why we concentrate on charitable events, which we think Hongkongers readily accept."

Mr Leonard Steinbach, a museum consultant who works closely with local artists and crowd funding websites in Hong Kong, attributes Hongkongers' reluctance to give away money for other kinds of projects to their investment mindset.

"People here are not familiar with the idea that one pays without getting tangible returns," he said.

Initiating a fundraising campaign is as simple as having a proposal pass a website's vetting, but crowd funding is no easy job even when one has had a creative proposal, according to Ms Hwee.

"A lot of people have this misunderstanding that as long as their ideas are creative, all they need to do is post them online and wait for money to be transferred to their accounts, because the website will take care of the rest," she said. "This is completely wrong."

She stressed that a fundraiser's creativity, reasonable budget and proper marketing were what ultimately led to success, although her website would provide consultation services and facilitate the fundraising.

"But at the end of the day, it is still your project. If you don't feel like promoting it yourself, I can't see much future of it," she said.

Echoing Ms Hwee, Mr Ho said their triumph was hard-won with a promotion video clip that took $200,000 and numerous sleepless nights.

He said the choice of crowd funding websites was also a result of deliberation.

"The reason we chose Kickstarter was that our target audience were board game lovers and miniature collectors, neither constituted a large proportion of our potential market in Hong Kong," he said.

Mr Ho also calls attention to the importance of revising one's proposal based on backers' feedback.

"This not only gives you a better project, but also makes the backers feel rewarded because they know that they are making contributions," he said.

Mr Steinbach agrees, saying making backers feel involved and intrinsically rewarded was key to successful crowd funding, especially for cultural projects.

In a case as early as 1885, renowned newspaper publisher Mr Joseph Pulitzer amassed donations from 120,000 people and resumed the construction of the base of the Statue of Liberty, whose funding then ran short, by declaring the statue "the People's Statue" and promising to acknowledge contributors in the press.

Crowd funding is expected to have raised US$10 billion ($78 billion) globally by the end of this year, US research firm Massolution reported. Major players in the US including Kickstarter have seen a consistent growth of the industry both at home and overseas.

Ms Hwee is optimistic about the future of crowd funding in Hong Kong. She believes crowd funding is a sustainable business model, although it needs some "fine tuning" along its way to be more compatible with the city.

 

Reported by James Zhang

Edited by Song Cheng

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