‘Crowdfunding’ only gets the dream started
Print Edition
KICKSTARTER.COM, the world’s largest funding platform for creative projects, was founded in the US in 2009. The concept of raising money from the public to realize people’s dreams in art, creation, music, drama and other business models soon became popular around the world, including in China.
In fact, there are now many Chinese versions of Kickstarter, as more people become familiar with the concept known as “crowdfunding.” Many companies and individuals are enjoying sucess with their funding, but some have also failed despite the cash infusion.
In the latter category is WeeCoffee, a two-story space that sold coffee and snacks on Xinzha Road on the ground floor of a commercial building. It was started at the end of 2011 by 50 partners. The concept was for the shop to hold talks on particular subjects, in which people could participate for free while enjoying coffee or cake, as in other coffee shops.
But after two years, the shop was closed last year. Fifty partners invested a total of 1.5 million yuan, and they ended up losing it all.
“A lack of management experience and inappropriate operation was the key reason for failure,” says Lin Yue, a veteran in the digital marketing and social media industry and one of the founders of WeeCoffee.
As one of the first groups to start crowdfunding in China, many WeeCoffee partners had already been involved in media and digital marketing and saw the possibilities after observing what was going on in Western countries.
“But being good at social media doesn’t mean that you are good at running a coffee shop — each business needs a professional team to execute,” Lin said in analyzing the failure of WeeCoffee.
Wang Xiaosai, another main founder, posted a notice on weibo.com in April 2011 about funding a coffee shop like this. It would be a place where people would chat and network, a place where community would be extended. Hundreds of people expressed interest in a short time and 50 of them became shareholders.
“The criteria for selecting partners is not merely the funds they can afford, but also the expert knowledge and experience they can share — and their mature social network,” Wang said at the opening of WeeCoffee.
But having so many outstanding partners who were successful in different fields became a problem in running WeeCoffee because it was hard to manage and balance all the different opinions, Lin said.
With local crowdfunding websites and projects blooming today, Lin pointed out the problems and risks, saying: “Many people raise money to run a project based on a mood of ‘playing,’ as he/she does not have to invest money in advance. It’s like doing EMBA homework, aiming to get more experience and explore his/her social network. But running a successful business is far more than that — it needs determination, professionalism and insistence.”
As more and more individuals started to realize their dreams on crowdfunding websites, some Chinese art institutes decided to have a try at this still fledgling idea.
Last summer, the Shanghai Drama Arts Center, one of the most important theater institutes and venues in Shanghai, cooperated with Dreamore.com, a local crowdfunding site founded in 2009. Two international dramas were posted on the website to lure sponsors.
The goals were clearly stated on the website: If 60,000 yuan could be raised online within 45 days, “Consumed,” a UK-Chinese multimedia collaborative, could be imported from the UK to Shanghai, and staged last September. For another theater work, the Lithuanian show “Have a Good Day!,” an 80,000-yuan total was needed.
“The initial idea of cooperating with a crowdfunding website started from marketing feedback — exploring some new way of marketing,” says Afra Cai, public relations and development manager of the arts center, who was in charge of this project at the time. “Free promotion and knowing about the audience’s focus in advance seemed to be a good idea.”
But it came to be a failure in the end. While the show “Have a Good Day!” was performed in Shanghai last November, it was only because of sponsorship from the Lithuanian government. The 80,000-yuan goal stated on the website brought in a mere 1,250 yuan.
Drawing a similarly paltry sum on the crowdfunding site, “Consumed” had no chance to stage in the city.
“We analyzed the reasons for failure,” Cai states. “Crowdfunding features an individual’s dream coming true. Projects about people’s dream, invention or some interesting business idea catch more eyes of supporters.”
The two shows themselves, Cai said, werre not outstanding or eye-catching enough.
“If there had been any celebrities involved in the project, the feedback would have been much better, I guess,” Cai adds.
But the shows have no rock stars and are unfamiliar to local audiences, so there is no core fan group and no rallying point to gather financial support.
Wendy Cheong, a local digital agency founder who has focused on social media for more than seven years, calls herself a “crowdfunder hater.”
“I don’t think raising money on the Internet and asking strangers, those ordinary people, to support your so-called dream is a reliable thing,” she says. “A good, creative project can attract professional sponsors to invest money, like banks, financial funds and venture capital firms.”
The truth is that there are a lot crowdfunding projects but few with the potential to earn the money back, according to Cheong.
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