Taiwan Crowdfunding Cases Decupled in the Last Four Years

Translated and compiled by Yuan-ling Liang

Recent reports show that the number of crowdfunding cases in Taiwan has decupled in the past four years. The rapid evolvement of crowdfunding platforms is worth noticing with Taiwan being the leading country of crowdfunding in Asia. However, several mechanisms are urgently needed to maintain the operation of these platforms.

Taiwan is one of the most prospering countries in Asia when it comes to crowdfunding with the density of crowdfunding platforms highest among the globe. According to Crowd Watch’s annual report, 13 platforms were set up in Taiwan within only six years, including platforms targeting social movements, art designing programs and technology developments.

How did the rapid growth take place?

In 2011, pioneering crowdfunding groups for the cultural and creative industry were developed. “FlyingV,” currently the biggest integrated platform in Taiwan, was established that year and it helped 684 projects succeed. The total amount of the funds raised reached NT$130 million (approximately US$4 million). Afterwards, programs for temporary activities such as a cosplay marathon and a documentary debut also used crowdfunding as their financial resources.

Business Next reports, this trend of temporary crowdfundings, to some degree, promoted citizens’ participation in public events, breaking the barriers of monopoly by financial groups.

In 2014, food safety crisis, dispute over cross-straits agreements and failure in the education system stormed the island. The power of public awareness was gradually awakened by social chaos.
Meanwhile, small crowdfunding programs served as an important role in protests against nuclear energy and the Sunflower Student Movement.

Taipei Mayor Ko Wen-je’s “White Power Movement” is also a well-known case. Ko initiated the funding program on FlyingV to promote medical knowledge and raised more than NT$1.6 million (approximately US$49,000). In his program, Ko invited doctors in different fields to give speeches to the public, hoping to change the Taiwanese value towards social issues.

A year later, Taiwan’s crowdfunding system took a step forward.

Taipei Times reports, in 2015, the National Development Council (NDC) of Taiwan announced that investors are allowed to purchase stakes in startups and small companies on crowdfunding platforms.
Woody Duh, former Minister of the NDC, points out, “Startups are the fruits of innovation. They benefit our economy and generate employment opportunities.”

He also mentions that to compete with China’s low-cost products, crowdfunding for startups in Taiwan is rather crucial. Therefore, modifications in Taiwan’s Company Act have been made to facilitate the operation to attract more funds for startups.

Disputed cases and concerns over crowdfunding

The current crowdfunding system in Taiwan has evolved to a new scale. It has become a choice for startups that need venture capital or self-promotion. Along with domestic platforms, projects in various fields are now funding themselves or even seeking for help on international crowdfunding platforms.

However, failed cases have also aroused concerns over crowdfunding.

According to the US crowdfunding platform Kickstarter, around 9% of the projects fail to reach their funding targets.

One of the most famous cases in Taiwan is “CatFi,” a product that identifies faces of cats and feeds them automatically. Founders of “CatFi" raised more than NT$7 million (approximately US$240,000) on Indiegogo to develop the product. However, they failed to estimate their original cost properly, which added up to NT$3.6 billion (approximately US$109 million). The founders did not inform their supporters of this outcome and angered those who sponsored the project.

Aside from this incident, suspicion over the crowdfunding platforms also appeared with some netizens saying that the platforms should hold partial responsibility when similar situations take place.

Future possibility of crowdfunding in Taiwan

The Crowd Watch analyzes, in 2016, programs targeting specific products will move to an international scale while projects arousing awareness for several issues will dig deeper in the local region.
In addition, with the development of various fundraising tools, such as third-party payment and independent funding, the growth of crowdfunding platforms in Taiwan will start to slow down.
Another obvious trend is the specialization of crowdfunding. Crowdfunding programs in different industries are popping up everywhere in Taiwan.

Regarding disputed cases, corresponding mechanisms should also be set up. Several platforms have been working on developing hedging strategies, including shipping insurance, third-party certifications (certified by the platforms themselves) and stage funding (allowing the platforms to keep the funds until they allocate to initiators).

Youwu Report reports, further methods, such as a review system, is still lacking in current platforms while it already exists on Amazon, App Store, Yahoo or even Uber. To keep the crowdfunding system in Taiwan running, strategies regarding consumers’ needs should also be taken into consideration.

Edited by Olivia Yang

Sources:
Business Next
Business Next
Crowd Watch Annual Report
“NDC announces plans to facilitate crowdfunding" (Taipei Times)
“Taiwan Investment Crowdfunding Platforms to be Operated by Brokers" (CrowdFundInsider)
Youwu Report