In this sharing-economy era, platforms are being used not only to raise money for causes, but also to support the development of new and innovative products that might not otherwise make it to the marketplace.
For a language like English with its 26-letter alphabet, creating a font is a relatively simple task. Doing so in Chinese, however, is a Herculean task, which has led to a paucity of quality typefaces, to the dismay of designers like Ian Chen.
“Having the right font can be so important, but in Taiwan only a few are available, and the character set is often limited,” he says.
Users frequently have no choice but to resort to combining different fonts in one project, or even borrowing from fonts used in China – hardly an ideal solution given the difference between China’s simplified characters and the traditional ones used in Taiwan. “The results look ugly,” says Chen, who teaches at Tungnan University’s Department of Creative Product Design.
So when Chen saw a notice about a crowdfunding project for Jin Xuan, a modern and elegant font named after the popular Oolong tea varietal cross-bred in Taiwan, he jumped at the opportunity. The font wasn’t cheap. As a backer, Chen put in around NT$5,000, and the wait for the product to be delivered was more than a year.
“It was worth it,” says Chen. Since then, he has backed multiple font-creation crowdfunding projects from Justfont, the makers of Jin Xuan.
Although crowdfunding was originally used mainly for social or altruistic causes, it’s also widely used by startups to raise funds. There are several ways for startups to reward their funders. Reward-based crowdfunding allows backers to contribute to a startup in exchange for a “reward,” usually a product or service offered by the company. Another approach is equity-based crowdfunding, in which backers fund a startup to gain shares.
Debt-based crowdfunding, also known as “peer-to-peer lending,” works more like a loan. The startup is expected to pay back the loan to funders with interest over a specific period. Lastly, backers of donation-based crowdfunding donate to a project because they believe in the cause, and the only return on investment is community benefit.
According to marketing analyst Matthew Ryan of the Substack newsletter Taiwan Consumer Insights, Taiwan is undergoing a crowdfunding boom. “While crowdfunding in the U.S. and elsewhere somewhat plateaued in 2015,” notes Ryan, “the Taiwan market has grown at breakneck speed. Big campaigns regularly make the mainstream media and raise millions in US dollars.”
Chen hasn’t stopped at just fonts. He shows off a sporty cross-body style backpack that he unzips into a more formal, square-looking bag that’s more appropriate for business meetings. He also shows me an ingenious insert organizer that keeps big and small pieces of paper easily accessible. Chen estimates he’s easily backed more than a dozen campaigns.
Even the wait is part of the experience. “If your products arrive too quickly, you can be sure it’s not a genuine creator-led project,” says Chen. He notes that some projects are little more than a collective purchase of existing products not yet available in the Taiwan market.
Data from the Taiwanese crowdfunding analytics site BackTail show that crowdfunding projects in Taiwan raised NT$3.3 billion (US$110 million) in 2021, 1.6 times higher than in 2019. Over the same period, the U.S. market dropped about 8%.
More than merely selling a product, crowdfunding projects provide a sense of participation, says Tahan Lin, co-founder and CEO of the crowdfunding consulting agency Backer-Funder.
During an interview with TOPICS in Backer-Funder’s headquarters, located in a historic warehouse building converted to office space, Lin is surrounded by examples of projects he and his team have shepherded to successful conclusions. They include an AI-assisted bird-shaped baby monitor, a series of children’s books in which a Formosan black bear explores Taiwan, and a plaque of a smiling cartoon cow that represents small farmers who were able to get started in the milk business using crowdfunding.
There are even crowdfunding projects without a product at all. For example, a total of 7,416 backers contributed over NT$25 million to the HTTP-3A project that sought to be Taiwan’s first crowdfunded rocket. Instead of receiving a tangible reward, these backers got to witness the indigenously designed rocket with autonomous attitude and trajectory control take off in Pingtung County last July.
Lin was working at a platform for crowdsourcing projects called Flying V when he became aware that the Taiwanese crowdsourcing ecosystem had become mature enough to support an agency focusing on helping creators succeed with their crowdfunding projects.
“There are many creators with great ideas, but they lack the marketing skills to make their project a success,” he says.
Backer-Funder works with creators from the inception of the project, providing production and marketing services and more. Projects might make their debut on Backer-Funder’s crowdfunding platform Wabay or on an international platform such as Kickstarter.
Apart from a production fee for the promotional video, Backer-Funder does not charge project creators upfront. Instead, it takes a 10-20% cut of the funds raised. Consequently, the process of client acceptance is a highly selective process. “Out of about a thousand pitches, we only choose to work with about 50 to 100 projects because if projects don’t get funded, we don’t get paid,” Lin explains.
Lin says that the most successful projects seem to share qualities that he calls the “Three T’s” – Takumi, Target, and Tomodachi. “Takumi is the Japanese word for craftsmanship,” he says. “Projects stand out when they go the extra mile to make the little details perfect.”
“Target stands for whether there is a clear demographic the project is obviously going to appeal to.” And finally, there’s Tomodachi, the Japanese word for friendship.
The backers are involved “not just for the end results but the journey,” says Lin. Successful projects cultivate a relationship between the creator and the backer that goes deeper than the exchange of money for products.
It’s not all about the warm-fuzzies, though. Crowdfunding is a big business in Taiwan. In 2015, Backer Funder’s first year, about NT$100 million worth of projects got funded. Last year, the number had grown to NT$1.1 billion.
Not all of them are plucky first-time creators looking to gain enough support to bring their designs into reality. “Crowdfunding might have begun as a way to give resources to creators who don’t have them, but increasingly, it takes resources to generate a successful campaign,” says Lin.
For instance, Backer-Funder requires that at least a “golden sample” be in hand before it will consider whether to take the project on. Before the crowdsource money comes in, the creators must have invested, at minimum, enough to produce one perfect example of the item they intend to sell.
This requirement is necessary to prove that creators have the chops to see the project through and to minimize the risk of disappointment for backers, says Lin.
In addition, the successful completion of the campaign represents a beginning rather than an ending. “Most creators don’t make enough money from the crowdfunding campaign itself to make the process worth it,” says Lin. “Instead, the campaign is a way to market and validate their product.”
Some successful campaigns are the launchpad for a brand looking to break into the market at large. Lin helped launch Cubo AI, the AI-assisted baby monitor, first on the Taiwanese platform ZheZhe and then on the American platform Indiegogo. It is now a popular product on sale through Amazon internationally.
On the other end of the spectrum are projects that are little more than marketing ploys for importers in “bulk buying” products not yet available in the Taiwanese market. “A lot of those projects do indeed do very well,” says Lin, “But they can also be sugar-coated poison for the crowdfunding market.”
Projects that simply involve the importation of products can undermine trust and dilute the authenticity that attracts backers to crowdfunding in the first place. Lin allows them on his platform, but only if they disclose that they are importers. They are also not given any allowances for late delivery.
Lin says he expects that the crowdfunding phenomenon in Taiwan will continue to grow, but that it will move away from the classic one-time campaign model into building a continuing relationship between the creator and the backer.
“Some of our most highly funded projects are causes rather than products,” he notes.
One example is the “Rising Star” project by Ukrainian-Taiwanese rhythm gymnast Larisa Bakurova. Instead of a “one-and-done” campaign, “Rising Star” collects donations for Barukova’s Gymnastic Association. Those who wish to support her association, which trains Taiwanese youth in rhythmic gymnastics and prepares them for international competitions, can choose to give either one-time or recurring donations.
So far the campaign has raised over NT$48 million on Wabay from more than 11,500 donors. This year, Bakurova led her young athletes to compete in Turkey and Spain, winning 19 gold, 7 silver, and 2 bronze medals.
In addition to good causes, the longer-term model is better for supporting the work of artists and researchers whose work is ongoing, Lin says. “We’re going from the pre-sale model to the continual support model,” he notes. “In the future we might even see the rise of crowd-investment.”
Design professor Chen says that after participating in crowdfunding so often as a backer, he’s keen to do an actual crowdfunding project with his students. “It’s exciting,” he says, “and since the design market is saturated in Taiwan, it’s a great way for young designers to stand out.”
Chen notes that when he trained as a designer back in 2000, there were few students in his class. But Taiwanese today are more aesthetically sophisticated and wish to express their individuality through their purchases.
“It used to be that people would plow their income for the month by buying an international luxury brand handbag,” says Chen. “Now that’s seen as uninteresting, even a little tacky.”
With crowdfunding, there’s an opportunity for people in Taiwan to indulge in their love of shopping, express their individuality, and find community all at the same time.
“For me, backing crowdfunding campaigns is a small luxury that brings a lot of satisfaction,” says Chen. “A lot of people are looking for that now in Taiwan.”