Crowdfunding is a new concept for Nepal but it is a billion dollar industry in the west. So, in this article we will talk about Crowdfunding and Crowdfunding in Nepal.
Note: This article was first published in The Himalayan Times.
Crowdfunding is the process of raising many small sums of money from a large number of well wishers and/or supporters of the project. Though the term first came into prominence around August 2006, several public fundraising activities that would today be termed as crowdfunding have been done all over the world for almost three centuries. One such example is the monumental base of the Statue of Liberty in New York, which was actually built with the crowdfunded money when the government failed to provide funding for the same.
Crowdfunding gained mainstream attention in the internet age first within the creative fields like arts and music. But its growth has been so strong in recent years that it is today widely considered as an alternative to mainstream banking.
While most people think that the benefit of crowdfunding is an instrument of raising money, only because the word in itself involves the term ‘fund’, yet this is only partially true. A major benefit of crowdfunding is its ability to function as a free marketing tool. Besides putting an attempt into raising capital for your venture, you can also test whether your service or product fits the market or not. Unlike traditional venture funding systems, crowdfunding also allows the creator(s) or the supporter(s) of individual projects to be closely linked together. If you are a project owner then you can collect user feedbacks, maintain a strong relationship with your supporters and raise your reputation.
The World Bank has estimated that crowdfunding as an industry could reach an accumulated value of up to $90 billion by 2020. It’s already proven to be a lucrative tool for small business owners, entrepreneurs and social workers for raising funds.
Crowdfunding in Nepal
Nepal lacks a proper policy to guide crowdfunding ventures or campaigns despite a growing interest in the field for over five years. After meeting and talking with lawyers I personally discovered that there are certain workarounds for crowdfunding to function in a rather discreet manner. The only legal types of crowdfunding allowed so far are reward based initiatives and donation based crowdfunding.
The biggest hurdle of starting a crowdfunding platform in Nepal is the lack of any mature payment gateway in the country. Though Nepal does have several local payment gateways and though new ones are being added every year, the number of people using them is very low. In the recent months, Nabil and Himalayan Bank released their new international payment gateway, but because of NRB’s unclear policies, emerging crowdfunding startups from the country haven’t been allowed to make use of the same.
However, despite the above mentioned underlying problems within Nepal, a handful of Nepali citizens have successfully launched their own crowdfunding campaign in international crowdfunding platforms like Kickstarter , Indiegogo or GoFundMe. Several projects originating from Nepal have succeeded in raising money in international crowdfunding platforms. From organisations trying to set up their office in Nepal to non-profits raising money after the earthquake, a lot of international crowdfunding websites have hosted projects meant for Nepal. However, such fundings are often exclusively done internationally with citizens of Nepal not being able to contribute or partner locally due to the absence of feasible crowdfunding platforms.
Hence, although a lot of fund raising activities already happen in Nepal, to regulate and maintain the transparency as well as hold the project promoters more accountable, Nepal absolutely needs local crowdfunding platforms. Due to this lack of accountability and transparency, the end results of international crowdfunding campaigns destined for Nepal are rarely, if ever known. Thus, due to the absence of a proper law, not just are the honest people are at loss, but the dishonest people are at gain. This situation seriously needs to change for the benefit of common Nepali citizens.
While, crowdfunding is definitely a new concept for Nepal and the government authorities may not be too familiar about its workings, broader lobbying through the media and the general people in the society is the need of the hour to make such a noble and feasible idea a reality in Nepal.
The intent to roll out creative ventures to the public, lend a helping hand during tough times or many more personal and social causes have shown that the community is bounded by something positive to hold onto. The potential is huge to strengthen this community and build a better place for ideas to turn into reality.