Crowdfunding has become an important alternative source of capital and is growing rapidly in Asia. It allows entrepreneurs and businesses to raise small amounts of money from many individuals to fund projects and ventures. While there are concerns about investor protection, crowdfunding demonstrates the viability of ideas and engages potential customers. Most Asian countries now recognize the benefits and are establishing regulations to provide clarity for crowdfunding platforms.

1. FUTURE OF CROWDFUNDING IN
ASIA
18 JULY, 2014
Jeffrey C Chi, Ph.D., CFA
Vice Chairman (Asia Investments) Vickers Venture Partners
Chairman, Singapore Venture Capital & Private Equity Association

3. • Successfully raised
money for 2 campaigns
in 2013 for new
businesses
• Tested market for 3rd
business, decided to pull
project
CROWDFUNDING – TESTING
THE MARKET

4. • Launched in 2012 via a Kickstarter campaign Raised
$300,000
• Pre-sold 2500 watches via kickstarter, since sold
130,000 units
• Launched 2nd brand in March 2014.
CROWDFUNDING
– SEED FUNDING

5. CROWDFUNDING –
PRE-SALES

6. TOP CROWDFUNDED BUSINESES
June 22, 2014
Star Citizen has surpassed $47m in
amount raised

7. • Raised $2.4m via Kickstarter (Sep 2012)
• Raised the needed $250k within 4 hours
• Raised a total of $91million in crowdfunding / venture
money
• Sold to Facebook for $2 billion (March 2014)

8. WHAT IS CROWDFUNDING?
Using small amounts of money from a lot of people to fund
something
Source: PWC
Crowdfunding – an alternative source of capital

9. BENEFITS OF CROWDFUNDING
• Securing funding needed
• Demonstrates the viability of a business idea or venture (Proof of
concept)
• More intimate audience engagement creates a deeper sense of
participation with potential customers (pre-marketing)
• Crowdsourced ideas for improvements / new features
Crowdfunding – the new angel investor?

10. IN 2012, OVER 530 CROWDFUNDING
PLATFORMS & US$3B RAISED
Source: www.crowdsource.org

11. SOCIAL MEDIA A KEY DRIVER OF
CROWDFUNDING
• Rate of dissemination
• Ability to reach out to a lot more people more quickly than ever before.
• Richness of communication
• Provides the ability demonstrate a product before it is actually produced
Fundamentally changing the way consumers make
purchase and investment decisions

12. NUMBER OF VENTURE CAPITAL DEALS BY
REGION

13. TYPES OF CROWDFUNDING
Source: www.streetwise.co
• Lending based crowd funding proliferated
through the launch of P2P lending sites
(e.g. Prosper in 2006)
• Equity based crowd funding held back by
regulatory constraints
• E.g. General solicitation

14. REAL ESTATE BASED
CROWDFUNDING
• Direct real estate investments is lumpy
• High level of control and transparency but large capital amounts required
• Transaction costs may be high
• REITs (Real Estate Investment Trust) or Real Estate Funds
• More accessible and lower risks as investments are spread across multiple properties
• Lack of control over what properties are bought and sold and management costs can be
high
• Crowdfunding
• Can take advantage of low entry levels and ease of investment process
• Yet maintain high level of control on which assets to put into portfolio as opposed to relying
on a REIT manager
• “Best of both worlds”

15. PAVING THE WAY FOR EQUITY BASED
CROWDFUNDING
• April 2012, President Obama and Congress
passed the Jumpstart our Business
Startups (JOBS) Act
• IMPACT:
Source: Fundable

16. JOBS ACT - THE CONTROVERSY
• FOR
• Facilitates capital formation by emerging growth companies thereby stimulating economic growth and
job creation
• AGAINST
• Removing important investor protections in the federal security laws and thereby enabling fraud
• Creates a problem for startups. Later stage venture capital investors may be deterred to participate in
companies that have accumulated a “crowd” of smal shareholders
Source: Fundable
“Naivete is the issue, not fraud. Most angel investors do not make”
“No matter how much information you give investors, they will sometimes still make poor decisions”
“There are a lot of sophisticated investors who are not accredited investors and this law is good for giving those
people the opportunity to participate”

17. REGULATORY ENVIRONMENT IN ASIA
• Momentum of crowdfunding too strong to be ignored.
• Should be embraced, not ignored
• Several countries including Singapore & Malaysia have stated intention
to promote crowdfunding to kickstart businesses (already recognize the
benefits that crowdfunding brings)
• Currently no clear regulations across Asia This provides no clarity for
operators and restricted in the way they do business
• Regulators cannot afford to “wait and see”, urgently requires rules to be
established.
Players in the industry need to pro-actively drive the
agenda.
SVCA willing to participate

18. DR. JEFFREY CHI, CFA
季淳钧博士, CFA
JEFF.CHI@VICKERSVENTURE.COM

19. Source: Zero2IPO H1 2013 report July 2013
AFTER 2012, IPO ACTIVITY HAD COLLAPSED
• Offshore IPOs stalled after a flurry of activities
reducing the confidence of investors in Chinese
tech stocks
• Jack Ma severing the VIE Structure in relation to Alipay
• Corporate governance issues in Chinese companies
• Onshore IPOs stalled again due to reform of IPOs.
No onshore IPOs from Nov 2012.

20. A BRIEF HISTORY
• 2008 Indiegogo launched (enables
people to donate funds easily by
removing middlemen)
• 2008 peerbackers launched (gives
contributions in exchange for
rewards or perks)
• 2009 Kickstarter launched (funding
platform for creative projects in
return for rewards)
• 2011 President Obama unveils the
Startup America Initiative
• 2012 Fundable (first equity
crowdfunding platform to launch in
conjunction with the JOBS Act
• 2012 President Obama signs JOBS
Act into law.
• 1884, Joseph Pulitzer through his
newspaper New York World raised
over US$100,000 from 125,000
people in 6 months to build the
pedestal for the Statue of Liberty
• 1997, fans of the British rock group
Marillion raised US$60,000 to
underwrite their US tour
• 2003 ArtistShare – first documented
crowdfunding site for music
• 2005 Kiva – provides individuals the
chance to provide small loans to
entrepreneurs in poor areas around
the world
• 2006 Propser – First peer-to-peer
lending marketplace in the US
• 2006 – The term crowdfunding is
coined by Michael Sullivan (Founder
of FundaVlog)