The crowdfunding market in Japan is gradually spreading, despite the fact that it is still low. This article will take a look at the reward-based crowdfunding market in Japan with a view to exploring the different types of crowdfunding.
Reward-based crowdfunding is a process by which entrepreneurs raise funds from members of the public without recourse to financial institutions. Reward-based crowdfunding campaigns can be for several objectives ranging from financing, arts, music, scientific research, software development, among others. For every reward-based crowdfunding campaign, there is usually a financial goal which is always defined by timing as well as funding volume. The creators behind the reward-based crowdfunding will publish content that is engaging via text, photos, and videos, with a view to explaining the purpose of the fundraising.
In March 2012, Moderating Organization (a crowdfunding platform) triggered the spread of crowdfunding in Japan, during its launching. Up until now, over 50 Japanese-language crowdfunding platforms have been created, according to a report released by JSIF.
There are about three types of Reward-based crowdfunding in Japan, which include donation, investment, and purchase. Each of this type of fundraising is based on what supports will receive for contributing to the campaign. However, one common feature that is inherent in the three types of crowdfunding is that those who contribute towards the campaign are sympathetic to the goals or ideas of the project developers.
In Japan, there is the existence of conventional donation scheme before the advent of reward-based crowdfunding. There are about 15 sites currently practicing reward-based crowdfunding in Japan. Across Japan, there is community foundation provide relief funding from the money contributed by citizens. Pundits have suggested that these communities should be incorporated into the donation-type crowdfunding.
The purchase-type crowdfunding is the common type of reward-based crowdfunding available in Japan. Majority of these crowdfunding type concentrate on specific activities such as sports, animation, craft making, social entrepreneurship, and initiatives.
In August 2013, a major online entertainment developer in Japan stormed the crowdfunding market, creating a historic moment in the crowdfunding market of Japan. Such a platform is seeking for ways to receive attention from members of the public by offering projects in filmmaking and journalism. It is projected that sometime in the future; the Japanese crowdfunding market will enter a competitive phase.
This type of reward-based crowdfunding is further sub-divided into three categories, which include association, Equity-based crowdfunding, and loan. A typical example of the association category is the project christened “securite” by Music Securities Inc. Several financial experts have argued that micro-investment funds should be incorporated into the association-based type.
In present, the Japanese reward-based crowdfunding market does not have any company practicing the equity-based type. Although, it is projected that new platforms that will practice this type of crowdfunding will spring up as soon as regulations are relaxed.
The loan-based type is currently being practice by four companies. As at December 2013, a security firm launched its services, making the number of companies practicing loan-based type to be four.
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