Hong Kong yet to catch up on crowdfunding boom

May 26, 2015 17:48
Maryann Hwee, executive director of FringeBacker, said Hong Kong is lagging behind Taiwan and Western countries when it comes to crowdfunding.  Photo: HKEJ

Many young entrepreneurs around the world are tapping into crowdfunding to launch their innovative projects. However, Hong Kong people are still not quite familiar with the concept.

In 2013, funds raised through crowdfunding nearly doubled from the previous year to US$5.1 billion, and the World Bank estimates this number could reach US$96 billion in a decade.

Hong Kong is a global financial center, but crowdfunding platforms are still underdeveloped here. FringeBacker is one of the few active players.

Over 200 projects have raised funds through FringeBacker so far, with the biggest deal raising as much as HK$480,000 (US$62,000).

FringeBacker says its success rate is now 80 percent.

Its executive director, Maryann Hwee, told the Hong Kong Economic Journal that the city is lagging behind Taiwan and Western countries when it comes to crowdfunding.

Hwee has over 20 years of experience in direct investment, marketing and business development in IT businesses in Hong Kong, mainland China and Southeast Asia.

It is not an easy task to raise funds through the internet. According to data available in the United States, only one-third of applicants have successfully raised funds through crowdfunding platforms.

To boost the success rate, Hwee said FringeBacker uses survey and statistics to analyze the workability of fundraisers’ proposals.

“Many US youngsters are making use of crowdfunding to test initial market responses towards their ideas and products," Hwee explained.

“That way, the risk is limited even if the ideas aren’t well received,” she said.

Most of FringeBacker’s projects do not involve equity stakes and are not profit-oriented. They include charity projects and those related to arts and culture.

The platform has helped to raise capital for the independent English-language news provider Hong Kong Free Press, which is going to be launched in a little more than a month. It has also helped a candle artist to launch an exhibition in Milan.

FringeBacker requires project fundraisers to sign legally binding terms and conditions as a way to protect the donors.

Fundraisers have the responsibility to carry out their projects within 60 days, according to their contracts with FringeBacker. They have to refund the money if they fail to do so.

As a middleman, FringeBacker takes 5 percent of the money raised as administrative fee, Hwee said.

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