Crowdfunding websites have become a popular go-to source for funds among cash-strapped startups. (JG Photo)

Crowdfunding, a Head Start for Cash-Strapped Start-Ups

BY :TABITA DIELA

AUGUST 06, 2015

Jakarta. Crowdfunding is an alternative method for Indonesian entrepreneurs to find investors with the same interests and goals. However, both parties must work well together to make this alternative means of funding sustainable.

Small business owners, scientists and artists are beginning to tap a wider pool of investors to fund their creations thanks to local crowdfunding sites, which allow them to raise money online.

GlobeAsia spoke to the people behind Indonesia's crowdfunding business who understand the sites’ potential for creators and the obstacles they face.

Funding a project by raising contributions from a large number of people is already a common practice in Indonesia, yet the idea of doing this via the internet is still rare, according to Mandy Marahimin, film producer and co-founder of Wujudkan.com, a site that aims to help Indonesian producers, artists, writers, teachers or researchers to finance their costly creativity-related dreams through crowdfunding.

“Many Indonesians don’t even know what [a crowdfunding site] is,” said Mandy, noting that the practice is more popular in the United States and Europe, particularly in France and the United Kingdom.

She pointed to the US JOBS Act, which regulates crowdfunding activities and eases the requirements that small companies must meet to raise money.

The popularity of crowdfunding is linked to financial inclusion, said Dennis Adishwara, a social media enthusiast and chief executive of Layaria, a YouTube official partner that aims to help Indonesian video creators develop their creativity.

Financial inclusivity in Indonesia reached 59 percent in 2013 and financial literacy stood at 21.8 percent, according to the most recent Financial Services Authority (OJK) data.

Dennis noted that when people are comfortable using e-banking services for transactions, they are more open to the possibility of sending money to fund a project through crowdfunding sites.

Vikra Ijas, co-founder of Kitabisa.com, agreed that market education will take time. Crowdfunding is a term often used by Indonesians in discussions yet barely ever used, he said. Kitabisa.com focuses mainly on social projects and on July 18 the site raised Rp113.4 million in a single day to rebuild the Karubaga Mosque in Tolikara, Papua.

Specific markets

While the Indonesian public may not be aware of crowdfunding, these sites have their own communities and have helped many people and small businesses to survive and create products.

Wujudkan.com, the crowdfunding site founded by Mandy along with three other co-founders, has has managed to garner “hundreds of millions of rupiah" since its establishment in 2012, Mandy said.

She started the site as a way to help her fellow movie-makers fund unique films that are not market-oriented.

Mira Lesmana, world-renowned producer whose films include "Ada Apa Dengan Cinta" ("What's Up With Love") and "Gie," experienced a similar problem when making "Atambua 39° Celsius" in 2012, but ultimately used Wujudkan.com to raise money to make the film.

At Wujudkan.com, Mandy provides a page for anyone to promote their work and ask people to donate within a certain period. For example, a producer can try to raise any amount from only millions of rupiah to billions in a month by showcasing a film’s storyboard, cast and crew names and the projects’ progress.

However, when the period is up and the target has not been reached, the site has to send the money back to donators. If the project reaches its target, Wujudkan.com keeps 5 percent of the amount.

The success rate of Wujudkan.com is “promising,” but still low, Mandy said.

The site has up to 10,000 members and thousands of interesting projects but only 27 projects have reached their target so far.

“We are merely a platform to help [participants] raise the money. We help them campaign, but they also need to be proactive,” she said, noting that project owners often neglect to simultaneously campaign  on other social media platforms.

Indonesia’s crowdfunding sites are often very specific about the projects they endorse. Wujudkan.com, for example, is dedicated to creative projects, while Kitabisa.com and Ayopeduli.com specialize in social projects.

Vikra Ijas, Kitabisa.com’s chief marketing officer, said each site has its own challenges. His site has facilitated over 150 campaigns and raised more than Rp 2.5 billion ($184,666) since it formed at the start of this year, yet still relies on investors.

“We are a mission-driven, for-profit enterprise. Our goal is to make as much social impact as possible while keeping the boat afloat with a profitable business model,” he said.

Kitabisa.com is still at its early stages since it relies on funds from investors to grow and cover its day-to-day operations.

“Our business model charges an administration fee out of the funds collected from every campaign, depending on the fundraising package chosen. We also provide a campaign agency service, an end-to-end online fundraising service for selected partners’ issues,” said Vikra.

Mandy, Vikra and Dennis are optimistic about the future of crowdfunding in Indonesia and agreed that it is a good medium to raise money for projects.

Still, these sites need creators and investors to keep using their platforms in order to survive.

“I am quite convinced the future of crowdfunding is positive. When Indonesia has more creators, crowdfunding can show its teeth," Dennis said.

GlobeAsia

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