Crowdfunding is an incredible way to get a project off the ground, and if you’re reading this, you likely have experience with platforms like Kickstarter or Indiegogo already.
What you might not know is that crowdfunding is a growing trend in Hong Kong.
When you’re looking to make use of them, however, it’s important to understand the differences, advantages and idiosyncrasies of crowdfunding in Hong Kong.
Here’s what you need to know about Hong Kong crowdfunding platforms.
What Is Crowdfunding?
First, a brief overview of what crowdfunding is.
Crowdfunding sites give you – the entrepreneur or small business – a means to raise funds for your project.
Traditionally, individuals with startup and project ideas had to court investors or venture capitalists to get the large lump sum funds they needed to kick start their business.
This usually meant giving many professional presentations, and facing a lot of rejection along the way. Not to mention, they lost some equity and, therefore, complete control of the company or product.
But crowdfunding allows for many contributors – including public donators – to give small amounts of money (often for smaller incentives or rewards) if they feel the cause is worthy of their attention.
In other words, the larger sum of money you need is being contributed by a larger group of people.
The project initiator must develop an effective landing page that leads to interested parties supporting the idea. Videos are among the most effective tools in communicating a message.
Since crowdfunding campaigns do not involve using credit card debt or loan money, entrepreneurs can test out their ideas without risking everything. A de-risked method to test a startups minimum viable product or MVP. Local Hong Kong incubator Brinc requires participants in their hardware program to launch an Indiegogo campaign to test their MPS
Even if you fail, you’ll learn from the experience and can improve your offer and try again.
For example, one of the recent Kickstarter legends Coolest Cooler, raised over $13 Million USD–but, this was not the creators first try: the Coolest Cooler was on it’s 3rd Kickstarter campaign and the creator launched and set records on the platform because he was able to apply the lessons learned from his previous attempts.
Crowdfunding is also a great way to gather comments and feedback from backers while you are in the process of developing your product. Some companies are even using as a better, more accurate, method than focus groups or otherwise to test (validate) a market.
Crowdfunding platforms allow for a truly innovative way to practice one step, validating your idea, in the Lean Startup methodology. Some sites even let you crowd fund medical expenses or charity donations–but, for the Floship blog here, since we ship products–we’ll keep the focus on hardware and other material goods.
The Legalities Of Crowdfunding In Hong Kong
One of the main differences between crowdfunding in Hong Kong and other regions is the fact that there are no laws regulating these activities in The Pearl of the Orient.
This, however, does not mean that there aren’t any liability issues.
Equity crowdfunding as well as P2P lending may be subject to local ordinances.
These restrictions mostly have to do with inviting the public to acquire securities, shares and debentures, equity or collective investment schemes.
It is advisable to look into these issues and seek the council of a good legal attorney before using Hong Kong crowdfunding platforms.
The Future Of Crowdfunding In Hong Kong
Despite the slow adoption, there are many exciting things ahead for crowdfunding in China and Hong Kong.
Consider the following:
- Massive growth. When you consider the sheer size of China, with nearly 1.4 billion people, it’s not hard to see where things could go.
- Better legal infrastructure around equity crowdfunding. As we’ve already discussed, equity crowdfunding is still problematic in Hong Kong. The proper regulations need to be – and will be – put into place in the near future.
- Big companies venturing into crowdfunding. Alibaba – the largest eCommerce business in the world – started a new crowdfunding platform not long ago called Yu Le Bao.
Is crowdfunding in Hong Kong right for you?
That depends on the nature of your project. But if other forms of funding haven’t worked for you in the past, it’s worth experimenting with.
The future of crowdfunding is exciting, and when you consider how quickly it has the potential to blow up in Asia, it’s hard to overlook.
Whether in Hong Kong or anywhere else in the world, Floship is a recommended fulfillment provider for many successful crowdfunding campaigns.