In recent years, the Vietnamese market has come up with a unique form of capital mobilization called Crowdfunding, roughly translated as capital mobilized from the community or sponsored by the crowd. This is a form of capital mobilization that had developed in other countries for many years before being introduced into Vietnam. In addition to the main purpose of getting funding, crowdfunding helps us introduce our ideas to the vast majority of the public.
THERE ARE 4 COMMON TYPES OF CROWDFUNDING:
– Donation-based crowdfunding: A type of crowdfunding in which social organizations and non-governmental organizations join hands to support victims of natural disasters and people with special circumstances, etc.
– Reward-based crowdfunding: The amount of sponsorship is divided into packages, each being a gift. Sponsors will receive gifts when the project is successful, regardless of profit or equity ownership.
– Equity-based crowdfunding: This type of crowdfunding is similar to buying shares from a potential new company. Investors get back shares and profits if the company makes a profit.
– Lending-based crowdfunding: A loan is made from capital contributions of a community or from entrepreneurs who are successful thanks to this type of crowdfunding to create a large flow of capital. Crowdfunding is not common in Vietnam. Due to cultural differences between the West and the East and different perceptions of failures, crowdfunding is not the platform where people are willing to share their ideas and call on capital because they are afraid of being denigrated instead of being supported. With a business environment that focuses on relationships like in Vietnam, investing in a stranger on the internet is not easy at all.
Moreover, the limiting of online transactions and the legal system that doesn’t specifically regulate crowdfunding are major obstacles. However, these problems cannot prevent crowdfunding from developing in Vietnam. In contrast, in the last three years, many crowdfunding web platforms have emerged and gained a great deal of trust from the Vietnamese community, for example, FirstStep, Comicola, Fundstart, Charity Map, FundingVN, etc. Each of the crowdfunding web platforms in Vietnam has its own unique strengths:
- Comicola is known as a fundraiser dedicated to comic books and is a trusted organization with many successful funding projects. Furthermore, Comicola develops online selling of products related to comic books. This crowdfunding web platform operates quite actively and allows terms of payment like phone card, online bank transfer, thereby helping users to exploit all its strengths.
- Charity Map is dedicated to charitable donations with a variety of programs and ideas to support and assist those who are struggling to launch a successful funding campaign and gain attention from the community.
- FirstStep stands out because of the variety of startups: agriculture, software, entertainment, games, charities, etc. The payment system through digital wallet, transparency and manageability of the list of contributors, together with the relatively high success rate of Firststep.vn web-funded projects have greatly contributed to increasing the community’ trust in crowdfunding. Recently, that FirstStep was recognized by Fintech as a crowdfunding platform in Vietnam is a promising step. In the future, FirstStep is expected to promote startup communities as well as making crowdfunding more vibrant.
It can be seen that crowdfunding has been familiar to the Vietnamese community since ancient times mainly in the form of charity activities, contributing rice to support freedom fighters, building houses of gratitude (for war invalids or martyrs’ families), supporting victims of natural disasters, etc. Successful crowdfunding projects have the common characteristics: creativity, feasibility, and the expectations of the contributors about the reward value they receive when funding projects.
Therefore, start-up projects that create innovative products that fit the needs of the community will have many opportunities to succeed. Furthermore, crowdfunding is an opportunity for project owners to survey market demand, collect ideas, and do marketing for their products.
Phan Law Vietnam