Crowdfunding for Chinese Social and Environmental Small and Growing Businesses: An Investigation of the Feasibility of using U.S.-Based Crowdfunding Platforms
Abstract
Background
China’s “open door” policy transformed the country’s economy, but at a social and
environmental cost. Chinese Social and Environmental (SE) Small and Growing Businesses
(SGBs) can help China face these challenges through economic development, poverty
alleviation, and environmental benefits. Yet Chinese SE SGBs are limited by their
lack of finance. Crowdfunding, soliciting small amounts of funding from many people,
provides an alternative to traditional finance. Currently, the Asian crowdfunding
industry is small relative to that of the U.S. Chinese SE SGBs may find that using
U.S.-based crowdfunding platforms can generate more funding especially if they target
Chinese diaspora and the SE community. The China Impact Fund (CIF) is investigating
whether crowdfunding is a viable financing option.
Research Question
Is it feasible for Chinese SE SGBs to use U.S.-based crowdfunding platforms to gain
access to financing?
Research Strategy
My research project assists CIF in assessing the feasibility of Chinese SE SGBs to
use U.S.-based crowdfunding platforms. I break feasibility into three key research
components:
1. Accessibility to U.S.-based crowdfunding platforms.
2. Burden (Time) of crowdfunding.
3. Funding received.
The Accessibility benchmark and either the Burden or Funding must pass for the research
question to be “feasible”. Chinese SE SGBs must be able to access U.S-based crowdfunding
platforms. However, Chinese SE SGBs may find it worth the extra time burden to obtain
financing, or find the time burden reasonable even if they obtain less than the desired
amount of funding. I establish benchmarks for the components and create within each
several indicators. I determine indicator value by gathering data from primary and
secondary sources including interviews, websites, industry reports and journal articles.
Results and Crowdfunding Lessons
Results suggest that it is feasible for Chinese SE SGBs to use U.S.-based crowdfunding
platforms. Many platforms allow international campaigns. Based on information from
interviews and other sources, participation by internationals did not impose an overly
burdensome fee or time commitment in comparison to U.S. campaigner experiences. However,
the percentage of Chinese SE SGB campaigners that reached their funding goal was smaller
compared to U.S. campaigners. My research and interviews provides Chinese SE SGBs
with several applicable lessons to their crowdfunding campaigns.
1. Personal and professional networks play a powerful role in crowdfunding. Many interviewees
expressed heavy reliance on their networks to get immediate funding, word-of-mouth
marketing, and presence in the crowdfunding market. Chinese SE SGBs can ask their
U.S. contacts to help navigate the U.S. marketplace and identify cultural expectations.
2. Campaigns should have a consistent, clear and strategic marketing plan. Concurrent
with having a strong professional and personal network, marketing contributes to campaign
success by publicizing the crowdfunding campaigns and the organization behind it.
3. Chinese SE SGBs should carefully decide how to position their campaign. Funders
can be viewed either as customers that “pre-order” campaign rewards, or as supporters
of a communal and charitable purpose. Chinese SE SGBs will need to think cautiously
since their decision may affect future campaigns and business transactions.
4. Crowdfunding is generally a high time commitment with no guarantee of success.
Chinese SE SGBs that crowdfund should be prepared for a possible time commitment of
a year or longer devoting between 1-17 hours a day to sustain the campaign.
Type
Master's projectDepartment
The Sanford School of Public PolicyPermalink
https://hdl.handle.net/10161/8418Citation
Yip, Christine (2014). Crowdfunding for Chinese Social and Environmental Small and Growing Businesses: An
Investigation of the Feasibility of using U.S.-Based Crowdfunding Platforms. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/8418.More Info
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