Surveying Thailand’s Emerging Crowdfunding Scene
by Laura MacKay
It could easily be argued that non-digital crowdfunding has been practised in Thailand for centuries; dana or ‘giving’ is a key component of the Buddhist religion and Thai culture itself. Any early riser in Thailand will have witnessed the daily alms ritual of monks, who collect their meal for the day from Thai shopkeepers and street vendors. Thai‘s also regularly contribute to the upkeep of the numerous temples, whose golden pagodas grace the skyline of every Thai city. The landscape of Thai crowdfunding reflects this spirit of giving in the large number and success of rewards-based crowdfunding platforms such as Taejai, Dreammaker, Asiola and MeeFund. However, despite the desperate need for alternative forms of raising capital in Thailand, and the recent enactment of regulations which permit equity crowdfunding, Thailand is yet to see a registered equity-based crowdfunding platform emerge.
The advent of rewards-based crowdfunding in Thailand has spawned numerous and varied platforms catering to a wide array of different projects, ranging from charity-orientated platforms to sites dedicated to cultural and artistic expression. One of the leading crowdfunding websites specialising in NGO projects and social enterprise is Taejai which was launched as a collaboration between the Khon Thai Foundation and ChangeFusion Institute. Taejai’s founder, Sirinart Torvriyalertchai, realised the potential of such a site because of the enormous amount of ideas for good projects, and the willpower to support them, but the lack of a meeting place for these parties to come together. Demonstrating the enormous potential crowdfunding has in the Thai market, Taejai raised almost 3 million baht (NZ$120,700) in its first year for 42 different projects, including everything from creating wheelchairs for disabled dogs to building rice mills in rural areas.
Thailand also boasts curated platforms such as Asiola, which supports artists, musicians, chefs and many others in their cultural pursuits. It works in a Kickstarter-esque manner; supporters get premium access to unique and exclusive rewards such as first release of the product. Projects on Aisola also have to reach 100% of their goal within a set time limit, or contributions are refunded. Asiola doesn’t solely support cultural pursuits however. Many groups or individuals also launch projects aimed at social change, such as a recent successful campaign titled ‘The Right to Breathe.’ For more than a century farmers in northern Thailand have used a burning off method as part of their farming, which has grown in intensity due to the rise in consumerism. Not only is the smoke a major contributor to greenhouse gases and reduced soil fertility, it also has severe health effects on the local population. ‘Right to Breathe’ aimed to use contributions to fund a series of workshops for children who live in affected villages to teach them more sustainable methods of farming, as well as giving them materials to replant their family’s land.
Some platforms and entrepreneurs are beginning to look beyond donations and rewards based crowdfunding into equity crowdfunding. Meefund, launched in late 2015 currently offers only rewards-based crowdfunding, however Nathawut Paopreecha, the CEO of First Coin Co recently told DEALSTREETASIA that “we believe that crowdfunding will grow rapidly here in line with the world’s mega trend. It is forecast that the value of crowdfunding will be higher that the value of venture capital in the next one to three years. Thailand’s crowdfunding is in the very beginning stage, which remains based on reward. We need to accelerate educating Thai people and changing their attitude towards crowdfunding. Then we can improve it to equity-based level, allowing supporters to hold stakes in that project or company.”
Another platform with a similar attitude is Sinwattana, which currently offers both donations and rewards-based crowdfunding ranging from dance, design and fashion projects, to more socially orientated causes such as building toilets in remote areas of Thailand. However, they are currently under expansion, looking towards extending their services into equity-based crowdfunding and lending.
The advent of crowdfunding as an alternative source of capital is one that is much needed in Thailand. Many Thai banks refuse to lend funds without a source of collateral and it is hoped that crowdfunding could be the remedy for small and medium businesses – which count for 98.5% of total enterprise in Thailand- who are struggling to find finance as banks tighten their belts due to the Thai economy failing to hit government growth targets. On top of this, both Thai banks and the government’s specialist fund tend to be cautious of innovative projects requiring venture capital meaning that venture capitalism has never really taken off in Thailand. This gap, and the potential of equity crowdfunding to fill it has been recognised by the Thai authorities.
As stated by Vorapol Socatiyanurak, a member of the National Legislative Assembly and chairman of finance, banking, financial institutions and capital markets sub-committee in an interview with Reuters, “If crowdfunding can help innovative start-ups, it could make SE Asia’s second largest economy more competitive. Thailand needs a start-up generation to help improve our competiveness… we need to be more innovative and develop our own brands. Global demand is changing.”
Socatiyanurak’s vision came one step closer to fruition when earlier this year, the Capital Market Supervisory Board introduced regulations regarding the offer for sale of securities through electronic system or network. Although there have been no registrations under this new regime as of yet, given the popularity of rewards-based crowdfunding in Thailand and how seamlessly equity-based crowdfunding would plug the gap in terms of access to sources of capital, it is likely start-ups will soon enter the equity-based crowdfunding market.