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The huge difference between crowdfunding in the Philippines and in the U.S. 

June 5, 2017

Digital Reporter

Cover art Erka Capili Inciong

“Crowdfunding is an old concept, really. Pulling a small amount of money so that you can make someone’s business or dreams into reality is basically bayanihan using online platforms,” Chux Daza, one of the co‑founders of Philippine crowdfunding website The Spark Project, said during the Crowdfunding Meetup on May 17 at Penbrothers, Makati. It was a cozy meet‑up of small‑scale entrepreneurs (some with actual products in tow), curious students, potential backers, one reporter, and Spark Project alumni and co‑founders.

Set up in 2013, The Spark Project is the second online crowdfunding platform to be built in the Philippines, preceded by Artiste Connect. Since then, the company has raised ₱4.5 million for 45 projects, with a community of over 2,036 backers.

But how does online crowdfunding in the Philippines differ from the more popular American‑based platforms such as IndieGoGo and Kickstarter?

“Those are mostly online and they’re able to get money online. That’s not the case here,” said Mr. Daza.

“What we’ve learned is that in the Philippines, face‑to‑face interaction is important,” he added. “We need both online and offline campaigns.” They also learned that Filipinos are more comfortable with offline soliciting than online campaigns.

“In the Philippines the trust rating with what you see online isn’t that high as in the United States, and a lot of people don’t have online bank accounts yet,” said Mr. Daza. On the other hand, Filipinos still trust banks more, and prefer giving cash outright for the project after a pitch.

Art Erka Capili Inciong

This isn’t helped by the fact that the Filipinos have a preference for knowing the story behind the project—the “drama,” if you will.

“You wouldn’t usually back a stranger just because they have a good product. Usually you’ll look at why they’re doing this, who they’re helping,” Mr. Daza said. “It’s a factor that we Filipinos look for drama, that extra wow.”

SparkUp also spoke to The Spark Project CEO Patch Dulay after the meet‑up broke into its networking session. With an undergraduate degree in Management Information Systems from the Ateneo and a masteral degree in Global e‑Business from the University of Lille in France, Mr. Dulay started the project in hopes of using his studies to give back to the community.

For a business to successfully seek funding, Mr. Dulay said it could be “at the idea stage but at a mature idea stage, when you’re ready to launch a project that already has a prototype.”

“Let’s say I want to make a bag. I don’t only need to have the design of the bag. I must already have made a bag, sourced my suppliers, know where to have it made—the only thing I'm missing is funds,” he explained. “If you do the campaign, you have to show the people what the bag looks like. They have to see something real.”

There’s also an advantage to established businesses that just need the extra funding to launch a new service or product, like in the case of Murang Liboro Online’s book subscription service. “That way, you don’t need to convince people that you can operate your business because you’re already doing it,” said Mr. Dulay.

The Spark Project has also been used to fund artistic and charity projects. “For artistic projects, the equivalent of a prototype is, for example, if I’m a film‑maker, I’ll show my films from the past or a reel to show people what I can do,” Mr. Dulay said.