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Can Crowdfunding Work for Developing World Projects?

By Wayan Vota on October 19, 2015

crowdfunding

As I experiment with crowdfunding for JadedAid, a card game to save humanitarians that I co-launched on Kickstarter, I wonder how entrepreneurs in the developing world could use similar crowdsourcing platforms to fund their ideas.

Luckily, infoDev at the World Bank has published “Crowdfunding’s Potential for the Developing World” to explore this very question. In the forward, Steve Case points out why he’s an optimist on crowdfunding:

crowdfunding-report

I believe that equity, debt, and rewards-based crowdfunding open new possibilities for funding more entrepreneurs in more places around the world. These changes enable entrepreneurs to utilize social media and the web to offer rewards, ownership of a shared vision, or even equity stakes to potential investors.

Crowdfunding websites are creating transparency and more open communication by enabling investors to engage with these companies over time to monitor their progress and continue to support their success as the company grows. This technology makes it possible for an entrepreneur in Kenya to more easily engage investors and customers anywhere; whether that be locally, the diaspora, or with others anywhere in the world.

Now is the time for leaders in the developing world to engage in a spirited discussion and analysis regarding crowdfunding and how it should be utilized to benefit businesses and communities while providing prudent safeguards and investor protections. It may be possible for developing nations to use this new funding mechanism as a means to spur domestic innovation and create a larger number of high-growth entrepreneurs.

Yet we still need to be pragmatists, and in the document, infoDev has a detailed guide for development organizations that want to launch a crowdfunding initiative in a developing country, and a high-level self-assessment tool for assessing a country’s readiness for crowdfunding.

We also need to have trust, which infoDev rightly recognizes is the single most important element supporting a healthy entrepreneurial ecosystem. Trust – between entrepreneurs, funders, and customers – is based in relationships: the closer the relationship, the higher the degree of trust or distrust.

Want to know more about how crowd funding could work for organizations in the developing world? Read the report – trust me!

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Written by
Wayan Vota co-founded ICTworks and is the Digital Health Director at IntraHealth International. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of IntraHealth International or other ICTWorks sponsors.
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2 Comments to “Can Crowdfunding Work for Developing World Projects?”

  1. Mike Dawson says:

    What the guide misses and what I don’t see here: most crowdfunding campaigns fail. Those that succeed require that the crowdfunder has friends/family etc. with money who will back it right away (at least 30%).

    Just go to the back of the pages in Kickstarter, IndieGoGo, etc and there’s a graveyard of projects. Perhaps the infoDev guide may have some use to high level policy makers, but for those who want to run a crowdfunding campaign themselves they’d do much better to look at the materials Indiegogo and kickstarter etc. themselves have made. After all those wbesites have a stake in having enough successful projects coming through (as they get a percentage of the funds).

    Entrepreneurs in the developing world can take advantage of most of those platforms in the same way that they can anywhere else with the same prerequisites for success: that is have people close to you kick in right at the start and know the campaign will probably become your full time job for the duration of it. As an entrepreneur I haven’t gone for it because we don’t meet the conditions needed to succeed there at the moment: and I’ve seen a lot of entrepreneurs waste a lot of valuable time on crowdfunding because they didn’t meet those conditions.

    • Wayan Vota says:

      Mike, I completely agree. That’s why I mentioned having a following in my first post on crowdfunding and trust in this post. Creators need to have a large network of people who trust in them to deliver to get tha needed initial boost.

      Anecdotal conversations with my backers says that many of them backed my Kickstarter because they knew and trusted me more than an inherent excitement about the game itself. Flattering and also high-stakes for us to deliver on that trust.