Taiwan’s FlyingV is one of the most successful crowdfunding platforms in the Asian region.
In 2015 roughly US$34 billion was raised globally through crowdfunding, a type of alternative finance that relies on small amounts of capital from a large number of individuals to support new business ventures. Thanks to the internet, fundraisers can easily connect with hundreds of millions of potential contributors. Crowdfunding platforms typically charge a fee to fundraisers if a campaign is successful.
Taiwan’s FlyingV is one of the largest crowdfunding platforms in Asia. Founded in April 2012, it has raised NT$400 billion on 1,900 projects, with a success rate of 48%. The platform’s 270,000 registered users are relatively young – mostly between the ages of 24 and 38 – with more women than men funding projects. A typical contribution is NT$1,700.
Like the United States’ Kickstarter, the world’s No. 2 crowdfunding site, FlyingV is an all-or-nothing platform. For a campaign that reaches its fundraising goal, FlyingV takes an 8% fee, including banking fees. Entrepreneurs who fail to reach their target on FlyingV are not charged. (Kickstarter charges 5% exclusive of banking fees.)
“Crowdfunding isn’t a new concept – it’s a new tool adapted for the internet and social media,” says Tim Cheng, Flying V’s chief executive officer. “It doesn’t replace anything; it just fills a gap.”
In Taiwan, first-time entrepreneurs historically have founded their businesses with capital pooled from their personal savings and contributions from family and friends. If their credit is good enough, they may be able to get a modest bank loan as well.
That model worked well in Taiwan’s high-growth years of the late twentieth century. Today, the economy is barely expanding at 1% a year, per-capita GDP growth is falling, wages are stagnant, and income inequality is rising. At the same time, many Taiwanese investors retain a preference for late-stage investments – ideally when a young company is already profitable. It can be next to impossible to sell those investors on an idea for an early-stage startup.
With its reliance on small individual monetary contributions from a large number of individuals, crowdfunding is well suited to Taiwan’s economic predicament.
As Cheng points out, certain elements of the island’s culture also are favorable to crowdfunding. “Things catch on fast here,” he says. “Once something is proven to be successful, it can become enormously popular almost overnight.” Citing the coffee-shop craze that has swept Taipei, he says “you can see some similarities with the rise of crowdfunding here.”
In Cheng’s view, the open nature of the FlyingV platform has been one of its strongest selling points. “This platform is about content – there are no restrictions on what can be funded as long it isn’t illegal. Even political projects are fine.”
Indeed, FlyingV played an important role in the spring 2014 Sunflower Movement, when protesters occupied Taiwan’s legislative chamber to oppose the then-ruling Kuomintang Party’s attempt to push a controversial trade pact with China through the parliament. To raise money for the Sunflower Movement, student protesters created a project on FlyingV. Within 12 hours – a record for a crowdfunding project in Taiwan – they reached their goal of NT$6.3 million. That money paid for full-page advertisements in support of the movement in The New York Times and Taiwanese newspapers.
Meanwhile, the GreTai Securities Market (now known as the Taipei Stock Exchange) moved to fine FlyingV NT$50,000, alleging that the company had violated its contract with the over-the-counter exchange by using crowdfunding to support a social movement. In response, in April 2014 FlyingV launched an alternate crowdfunding site, VDemocracy.tw, which is under no contractual obligations to the GreTai Securities Market. In May 2014, student protesters took to Vdemocracy in a bid to recall Kuomintang lawmakers. More than 11,000 people contributed roughly NT$12 million over three days to the fundraising campaign dubbed “appendectomy.”
With the success of the two protest campaigns, FlyingV’s profile rose, and with it a public perception that the company was focusing mainly on social movements rather than creative projects. As a result, FlyingV decided to terminate its contract with GreTai.
Meanwhile, activists have continued to use FlyingV to raise funding for their causes. During the 2014 Taipei mayoral race, supporters of independent candidate Ko Wen-je raised money on FlyingV for his successful campaign. Earlier this year, a lesbian couple raised funds for their wedding on the platform as they sought to rally support for gay marriage in Taiwan.
While FlyingV’s social and political campaigns have attracted the most media attention, Cheng is quick to note that the platform’s projects are diverse. In 2012, for instance, the top-performing campaign was a wristwatch (not a smartwatch). Last year, a traditional Chinese artwork project ranked first, raising more than NT$20 million. And in 2016, the top performer thus far has been an air purifier, which raised NT$10 million in just a few weeks.
