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[February 23, 2014]
Pick of the crowd About pitchIN [New Straits Time (Malaysia)]
(New Straits Time (Malaysia) Via Acquire Media NewsEdge) CROWD-FUNDING can help entrepreneurs turn their dreams into reality. Izwan Ismail finds out more.
Graphic and comic artist Faros Amzas wanted to make and sell cool limited edition T-shirts. But he needed money. So he and his friends - e-learning content maker Arif Rafhan and multimedia designer Tintoy Chuo - submitted their project, TeeSomethingNice, to local online crowd-funding pitchIN (www.pitchin.my).
Early promotions of their T-shirt designs among friends and families, as well as a good video presentation on the pitchIN portal enabled them to raise US$7,382 (RM25,873) from the targeted US$1,000.
COOL CROWD Crowd-funding, a cool concept where the public helps fund small start-ups, is catching on fast across the globe. It's quite huge in America and Europe with platforms such as Kickstarter, Indiegogo, RocketHub and Crowdtilt.
According to Shamsul Jafni Shafie, who started pitchIN with business partner Kashminder Singh, one of his main objectives was to create a community of entrepreneurs who will help each other, as well as to develop a support community to honour entrepreneurship and support cool ideas to full development.
"We also love the fact that on a crowd-funding platform, there are no losers, only winners, even if their project fails to be funded," he says.
Why is this so? Because by going to the crowd-funding mode, the entrepreneur can fail fast and fail cheap.
"If you get hundreds of strangers giving you money because they'd like to see or enjoy your product, that speaks volumes where validation is concerned. On the other hand, if you fail (to get funds), then people may be telling you to drop your idea because there is little interest. In fact, if you think about it, they are helping you," says Shamsul Jafni, who has pledged funds for 58 ideas in Kickstarter, possibly the biggest crowd-funding site in the world currently. It has funded more than 50,000 creative projects, involving five million pledgers and more than US$700 million collected.
Shamsul was a pledger in the Pebble Watch project in Kickstarter, which asked for US$100,000 but got a whopping US$10 million from the public.
He also did his part for Supr Slim Wallet, a simple project by two guys to make a holder for credit cards.
HOW IT WORKS Crowd-funding works by having projects placed on the crowd- funding platform for a certain period of time like 30 days, pledging certain amount of funds to kickstart the project.
The public can view all the projects (with all the presentations like videos by the participants) and pledge money for the ones they like. This can be from as low as US$10 to a hundred or thousands.
Pledgers will only be charged on their credit cards after the project has successfully accumulated the target amount. In the event that the project is not successful, the pledgers will not be billed.
A successful project hinges upon several points. First, a good video and project description. Second, the project owners need to do all pre-promotion and publicity before the project goes live on pitchIN. "By the time the project goes live, people would have known about it and this makes the decision to support the project easier and faster," he says.
Third, the project owner makes it a point to update the status of their project during the funding period.
"People want to know if project owners are serious about their project, if they are continuing to update and develop their project or whether they are simply waiting until they receive the full funding," he adds.
A successful crowd-funding campaign normally takes 30-90 days, depending on the project, but it takes months of preparations.
LOCAL SCENARIO Although crowd-funding is still relatively new here, the potential is huge.
Cradle Fund Sdn Bhd vice president (marketing and strategic partnership) Hazel Hassan Hisham says this is more so, as the government funds for start-ups will be lesser in the future.
"Sooner or later, the private sector has to stand up and support the industry," she says.
Kashminder from pitchIN says that while the word crowd-funding may sound new to many, the concept of getting funds from the public has been in existence for many years.
"Remember the 1982 Fifa World Cup Soccer when the TV stations said they had no money to telecast the games live? Eventually, the generous public donated the much needed funds. This is a form of crowd-funding," he says.
Chuo of TeeSomethingNice believes the concept will soon have a snowball effect.
"It needs people to get familiar with it, just like the ATM card usage in the early days," he says.
For Arif, crowd-funding is a good platform, but the awareness is still not there yet. "Hopefully, more people will know about it in the future, and once it's a trend, they will start to pledge," he says.
LESSONS LEARNT Successful or not, crowd-funding has proved to be a vital learning platform for many technoprenuers. For entrepreneur Joann Soon Mei Chuen, whose team created the Owe$ome app which makes splitting bills and debt collection easy, the experience was invaluable although they did not meet the targeted amount for the project.
"We only met one-fifth of our crowd-funding target on PitchIN," she says. "We were pressed for time, and needed all the help we could get. At that point in time, crowd-funding seemed like a good option and it did help in a big way." Eric Tan, another pitchIN recipient, agrees. He initiated the Smarthus project to develop a smarthome solution that allows people to control all electrical devices in their home wirelessly. Although he also didn't manage to meet the target, he learned that being proactive is key to a successful crowd-funding campaign.
"Design also matters as potential customers are particular about the look of the product, as much as the functionality," he says.
GOING FORWARD Shamsul Jafni says pitchIN will be introducing new project categories as part of its expansion plans.
"We're planning to get corporate bodies, brands and government agencies to be involved directly, championing some of the projects that they like in pitchIN, lending credibility to the project owners and opening doors to thousands more potential supporters," he says. "We're also excited by the prospect of introducing equity crowd- funding in the country." Last year, the Securities Commission issued a request for a proposal to allow companies which are not publicly listed to raise funds, and crowd-funding was one of the modules that the authorities were considering.
"What this mean is that startups and entrepreneurs can now raise funds publicly in a platform that has been given prior approval by the authorities, in exchange for equity. We hope that this will spur more angel investment activities in the country," says Shamsul Jafni.
ABOUT PITCHIN pitchIN is a crowd-funding site that was launched in June 2012. Its objectives is to offer a platform for anyone to raise funds from the public in order to develop his or her idea.
In pitchIN, there are two types of project allowed - commercial or creative and community projects. Within pitchIN itself, there are several categories of project - arts and design, community, technology, publishing, music, film and video, games and photography.
pitchIN is currently a reward based crowd-funding platform. As such, funders will receive whatever reward that is tied to the amount that they are willing to pledge. For example, if the projects is in relation to publishing a book, a US$10 pledge will get the person the PDF copy of the book, while a pledge of US$25 may get both PDF and hardcopy.
To date, 25 projects have gone live on pitchIN. Out of that, nine are community-based projects, while 16 are commercial/creative- based.
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