An interesting little bit of historical trivia: one of the earliest recorded crowdfunding efforts in this country happened thanks to football fever.
The year was 1982. These were the dark days before ASTRO and other satellite television. The World Cup was taking place in Spain, and local fans were hungry for football action. RTM, however, was only showing the opening, the semi-final and the final matches live.
Enter football fan Patrick Teoh, who suggested that Malaysians donate RM1 each to pay for extra live telecasts. And so the People’s Live Telecast Fund was launched, targeting to raise RM60,000. At the end of that campaign, the Fund collected RM300,000 – resulting in four more matches for delighted fans to watch!
At the time, this method of fundraising was considered revolutionary. There wasn’t even a name for it yet. Today, however, it is commonplace. Crowdfunding, defined as the practice of funding a project or venture by raising many small amounts of money from a large number of people, usually via the Internet, has definitely taken the world by storm.
Modern visionaries are spoilt for choice, with the existence of many prominent crowdfunding programs such as Kickstarter, Indiegogo, Crowdfunder and Rockethub at their bidding. Closer to home, Malaysian crowdfunding platforms such as Pitchin.my, Social Sharity and MyStartr.com all offer various perks and benefits for their users.
But does crowdfunding work in a Malaysian context? Is it possible to convince hundreds or thousands of strangers to part with their money, all to support what could amount to merely a glorious pipe dream?
Fail fast, fail cheap
According to crowdfunding platform Pitchin.my co-founders Sam Shafie and Kashminder Singh, crowdfunding fills a niche that was lacking in the Malaysian business process.
“If you look at sites like Kickstarter and Indiegogo, you see that a lot of people are having difficulty trying to raise funding from banks. And that’s where crowdfunding came in. It was what’s missing in Malaysia: an ecosystem of like-minded people interesting in finding the next big thing,” Sam said.
“We wanted to take this concept, which worked on the ‘pay it forward’ basis, and implement it here.”
Launched in June 2012, Pitchin.my is one of Malaysia’s most prominent crowdfunding sites. The site allows users to pitch ideas in various categories such as Arts & Design, Photography, Games and Music.
“Sometimes, pitchers have naïve ideas of what they really need, they haven’t done their research.”
The platform has hosted about 45 pitches since it was established, with about 29 pitches from high schools recently added under their MaGIC Junior Pitch competition.
Asked their success rate, Sam said it was not very high, with only about four to five creative and commercial projects meeting their targets so far.
“Previously, our most successful pitch was Tee Something Nice. This was three designers, who designed T-shirts with patriotic designs for the upcoming Hari Merdeka. They were aiming for $1,000 (RM3235.50). But because they had such a successful promotion project, they managed to raise $7000 (RM22,648.50)!” Shafie said.
“Now, however, their record has recently been surpassed by Project Tapau Fest which managed to raise RM87,705,” he adds, referring to the recent music festival.
Pitchin.my also hosts community and social projects, which make up about a third of the projects on site. Unlike the commercial projects, all money raised on these charitable efforts are kept by the pitcher, regardless of whether their financial target was achieved.
All submitted pitches are vetted by Kashminder and Shafie, who offer suggestions and consultation if necessary.
“We make sure your project is credible. If we find the project is illegal, we will reject it. We also look at the legality of copyrights and so on. We also make sure that you’re asking for a reasonable amount. For example, if you’re doing a short film, and you say you need 2 million, there’s a bit of a disconnect,” Kashminder said.
“It’s not that they’re trying to cheat. Sometimes, pitchers have naïve ideas of what they really need, they haven’t done their research and just mention a random figure,” Sam said.
If the project succeeds in reaching its target, Pitchin.my takes 5% of the amount raised; all pledged funds return to contributors if the project does not reach its target. According to the duo, this meant crowdfunding was the cheapest and fastest method to gauge product validation.
“If you put your product up on Pitchin.my, and no one is willing to give you even a dollar for it, you may want to question if your idea has legs. Rather than spending money on something nobody wants, why not go to Pitchin.my and pitch it? And if you can convince a stranger to give you money for it, that’s a strong message that your project is a good one.”
“Fail fast, fail cheap,” Sam quips.
“If you can convince a stranger to give you money, that’s a strong message that your project is a good one.”
Asked about the possibility of crowdfunding scams, Kashminder said Pitchin.my had not encountered any such cases so far, and had measures in place to prevent this, including the making of a project video.
“By its very nature, a crowdfunding platform is actually a better and safer way of raising money. If someone were to do a project, and you raise RM10,000 for it, don’t forget that your video with your face in it has been uploaded. It’ll be seen by lots of people. If he fails to complete his project, his credibility is gone! And all these backers will go after him. So the chances of him completing the project are higher,” Kashminder said.
Sam said, however, that Malaysian attitudes meant the crowdfunding scene in the country have not yet reached its optimum potential. “We’re still struggling to get people to pitch projects. People are not too comfortable sharing their ideas, and are scared of others stealing them.”
“They are also scared of failing in public. Telling people that they need a certain amount of money, and then having to say them they only managed to get 1% or 10% of that, is viewed as failure!”
Despite this, Sam says he feels the future of local crowdfunding is very promising. According to him, many exciting developments are in store, including the introduction of equity crowdfunding, where backers become equity stakeholders in the companies they support with funding.
“We’re also going to be introducing another model soon. This is where we want people, professionals and companies, to put up money to support students. I think we can all play a role in mentoring students. We’re going to be building a site where you can back them,” Sam explains.
“We think this is a great way for everybody to play a role in building the next generation,” Kashminder adds.
Crowdfunding around the world
According to Forbes, crowdfunding is predicted to create at least 270,000 jobs and inject $65 billion into the economy by the end of 2014.
While the 2010s are probably the golden age for crowdfunding, few know that early versions of it were in existence for far earlier than that. Indeed, if it wasn’t for crowdfunding, we wouldn’t have the Statue of Liberty!
One of the earliest recorded instances of modern crowdfunding came in 1997, when the British rock group Marillion collected $60,000 to finance their US tour using an Internet campaign, the “Tour Fund.”
Crowdfunding rose to greater prominence last year, with the cancellation of the hit drama series Veronica Mars. After a film script continuing its storyline got rejected, producer Rob Thomas turned to Kickstarter, asking for $2 million to get the film made. This goal was achieved in 12 hours. When the pitch time ended, 91,585 backers had contributed a total of $5,702,153. Veronica Mars is now the highest-funded movie project and the fastest project to hit both $ million and $2 million on Kickstarter.
Closer to home, Singaporean blogger Roy Ngerng also reportedly turned to crowdfunding to fund his legal costs after being sued by the Singaporean government for defamation.
Swimming with the start-ups
One local company partially funded through crowdfunding is Tanks and Kinis, an online beachwear and swimwear company set up in the summer of 2013 by friends Nadzirah Hashim, Rachel Lai and Diyana Hashim.
“We chose crowdfunding because we always wanted to create a sense of community within our customers. We believe that it is a lot more personal when your customers know that you’re real people who have a dream and would like a lending hand to grow the business,” said Nadzirah, who is the company’s Marketing and PR manager.
The trio pitched their project to Indiegogo, asking backers for $4000 to build their dream online shop. They also shot a video, and promoted the video through Facebook.
“The response was fairly good with most contributions coming from friends and family. Our most popular perk would have to be the Kasih Sayang and La Due Sorelle perks which gave our contributors postcards and CDs from us,” Nadzirah said.
She added, however, that she did not rely solely on crowdfunding to achieve her goal.
“We were somewhat optimistic but were not fully banking on the funds to fund our website. We had backup plans in mind but knew that even if we reached half our goal we’d be able to fund our website,” Nadzirah said.
“We believe that it is a lot more personal when your customers know that you’re real people who have a dream.”
In the end, the online pitch raised them $1351 out of their $4000 goal. This, however, was enough for the girls to get their project started, and their online boutique was launched soon after.
“We covered the rest of our expenses through our small cash reserve that we kept in case we failed our campaign. It managed to help us pay for the website we wanted to build but not with all the features we wanted. Nonetheless it has helped us have a shop front that is more professional than a Facebook page,” Nadzirah said.
Would Tanks and Kinis have succeeded without the aid of crowdfunding?
“Definitely yes. But it would’ve meant borrowing cash from a family member instead of getting people to contribute for our cause. The beauty of this is we have managed to gain a lot of longterm traction and loyal followers of our brand. So we have a brand name to live up to and that’s something we will continue to maintain,” Nadzirah said.
Also trying his hand at crowdfunding was producer Kit Lim, who used Indiegogo to fund a film.
His idea? Letters From Death Row, based on 12 letters written on death row from Yong Vui Kong, a young Malaysian who was sentenced to death for drug trafficking at the age of 19.
“I was inspired by the story of South Korean director Choi Yong-bae, who used crowdfunding to make a film on a controversial subject matter – the Gwangju Massacre. Similarly, I wanted to make a film about the mandatory death penalty,” Lim said.
“I was realistic that crowdfunding would not be able to raise the funding for the whole film, so we just crowdfunded the developmental phase. Crowdfunding is a good way to get your project out there and heard. It was also a good way to raise awareness on an important issue – the inequality of capital punishment.”
Lim uploaded his project pitch on Indiegogo, asking for US$15,000 to cover the film’s initial costs, including the production costs of the trailer and pitch video, the final draft of the screenplay and research.
The producer poured his heart and soul out on his dream, shooting a trailer and creating a Facebook page and website for the project. He even entered Letters from Death Row into Indie Reign’s Project of the Week, eventually coming third in the voting process.
“I have gained confidence in pitching my projects.”
At the end of his crowdfunding phase, Lim only managed to raise $590, or 4% of his target. This setback was balanced, however, by some good news.
“Three months after our campaign, our subject, Yong Vui Kong got off death row. What more could you ask for?” Lim says. He pauses, before adding, “Well maybe the other 96% of the funding goal and also the abolishment of capital punishment.”
“Did I do enough? Well, yes and no. Yes, because I was extremely exhausted at the end of the campaign and no, because I did not reach my goal.”
Lim is determined, however, not to let the dream die.
“We recently pitched to a few individual investors and we’ll be shooting a new trailer to appeal to the Chinese market, in light of the success of The Journey. I feel our story has the weight and punch to match the success of Malaysia’s highest grossing film, which is a family-themed Chinese drama as well,” Lim said.
“I will only be truly satisfied when Letters from Death Row makes it into the big screen.”
Lim said that if he were to repeat his crowdfunding efforts, he would probably have set a more tangible target. Overall, however, he regarded his experience as a positive one.
“With the crowdfunding experience I have, I have gained confidence in pitching my projects. I recently walked into a room full with people to pitch a website project and did not feel nervous at all; maybe it was due to my theatre training as well. I would definitely do it again, if I come across a project I really believe in and can assemble a team I can trust.”
Crowdfunding can provide a way to fund your projects, and may seem like a viable alternative to the usual bank loan or family sponsorship. However, it is not a get-rich quick scheme or surefire way to success. Like all fundraising methods, it comes with its own challenges.
Once truly understood, however, there’s little limit to the heights that crowdfunding can reach. We Malaysians are a creative lot, after all. Given a platform to reach out to all of society, local crowdfunders could quite possibly change the world.