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Quick Reactions: Crowdsourcing/Crowdfunding Week 2013

Validation of Crowdfunding!

I attended Day 4 of Crowdsourcing Week: Emerging Crowdcentric Biz Models & Future of Crowdfunding. It was a great event with a congregation of some of the best minds in the burgeoning crowdfunding scene.

The timing couldn’t have been better to provide concrete proof that a local home grown company Pirate3D Inc is creating waves in the crowdfunding scene with a record breaking campaign for Asia at Kickstarter! They started their campaign initially seeking $100,000, surpassed the target within the first 10 minutes and as it stands today, they have now garnered more than $700,000 in pledges!

A roaring success and surely, a validation of crowdfunding!

 Types of Crowdfunding according to CNA (incomplete)

In the article, CNA observed that crowdfunding has been slow to take off in Asia, and defined crowdfunding existing in three forms: (1) donation based, (2) rewards based and (3) equity based. Allow me to briefly describe them.

(1) Donation Based Crowdfunding: Contributions go towards a philanthropic or civic societal cause. GiveAsia.org is one such platform that allows donors to support a cause that they feel emotionally connected to. There is little or no expectation of financial rewards.

(2) Reward Based Crowdfunding: Investors receive something tangible or receive a service in return for their funds. The Pirate3D campaign at Kickstarter is one example. Locally, Crowdonomic organises reward based crowdfunding.

(3) Equity Based Crowdfunding: Investors contribute their funds in return for an equity stake in the company. Two participants of the conference offer such platforms: ASSOB (Australia) and Crowdcube (UK).

FOURTH Type of Crowdfunding: Lending Based

The article is however incomplete to limit crowdfunding to only three forms. There is in fact a fourth type of crowdfunding that has caught on globally and of course, the type that this blog is devoted to – Lending Based Crowdfunding.

(4) Lending Based Crowdfunding: Investors lend money to individuals or business, and in return they receive an interest for their funds and get repaid back their principal in a pre-defined time period, just like any other loans. Many examples of p2p lending sites have been mentioned here in other posts, so I shall not elaborate.

Potential for P2P Lending to Catch On Here?

I personally believe that lending based crowdfunding or p2p lending has the potential to catch on here in Singapore. It offers a middle ground between rewards-based and equity-based crowdfunding, straddling between instant gratification (rewards) and a great leap of faith (equity).

I also believe that it is a viable solution towards a more inclusive financial system that will empower the under-served segments of borrowers and investors.

What do you think?