Crowdfunding 101: What It is, Platforms in the Philippines, and More

Got a potentially game-changing business idea? If so, you're probably buzzing with excitement and dreaming of gracing the cover of Forbes magazine. But to stay on the realistic side, you know you need one important thing for your business to materialize: funding.

Whether it’s an ambitious start-up or a humble small business, money is the fuel that will make your ship move. Of course, there are many ways to raise funds. You can go to the bank, bootstrap by using your retirement money or life savings, or find an angel investor.^[1]

But with the advancements in financial technology and communications, an aspiring business owner can also easily access funds through crowdfunding. 

We’ve come up with a comprehensive guide that will help you understand the meaning of crowdfunding. We've also listed some of the best crowdfunding platforms in the Philippines.

What is Crowdfunding?

Crowdfunding is a financing method where you take small amounts of money from a large number of people, a lot of whom may be interested in your project or business idea.

In layman’s terms, it’s what you can loosely call “solicitation.” Remember those small basketball teams in your barangay asking you to chip in or sponsor their uniforms? Crowdfunding basically works the same way, but of course, everything is done professionally.

In the Philippines, crowdfunding takes place online through different platforms or applications. If a company or a group of people is financing your business, expect them to ask for income share or equity.

Generally, crowdfunding follows this process:

1. Look for a suitable crowdfunding platform in the Philippines.
2. Once you’ve chosen one, post your pitch, set a minimum contribution/investment that your donors are supposed to give, and watch your milestone grow.

What are the Benefits of Crowdfunding?

Crowdfunding comes with many benefits, some of which cannot be found in other business financing methods.

👍 Efficiently Acquire Funds

Bootstrapping can be quite risky, especially when your cash reserve is small. Applying at a bank or a lending company can take time, as processes are multi-layered. The same may go for finding an angel investor.

But with crowdfunding, all you need to do is share your business idea on your chosen crowdfunding site in the Philippines—and with an effective and well-crafted pitch, people will flock to your page to donate and give their support.

👍 Build New Relationships

Crowdfunding is very social in nature. You’re not only receiving funds from different people, but also building a relationship with them. You get to create a community. Plus, your donors will most likely be your first customers.

What’s more meaningful about this is that these investors believe in your idea and capabilities—and that’s definitely a good feeling!

👍 Promote Your Business

Posting your pitch means putting your business out there. The people who’ve donated or invested in your business will also be likely to share your pitch with their family and friends, thus expanding your audience reach.

👍 Convince Investors Easily

Convincing the bank, a venture capitalist, or an angel investor that your business is viable can be challenging. With crowdfunding, however, it's easy.

Other than sharing your pitch on the crowdfunding site, you can also post pictures of your prototypes, works in progress, and other forms of proof of concept. Prospective investors and donors can read through everything.

👍 Get Valuable Feedback

Your crowdfunding page is a community that you’ve built for your business. You can receive constructive comments from your donors or investors, which in turn will help you improve your product design and process flow. They can point out the things that you haven’t considered before and help you close some loopholes.

What are the Drawbacks of Crowdfunding? 

For all its benefits, however, know that crowdfunding comes with risks, too:

• There might be hefty fees to pay, depending on your chosen crowdfunding platform
• Drumming up interest for your project requires time and energy
• Other entrepreneurs might see your idea and steal it
• Potential donors might leave non-constructive feedback 
• Crowdfunding is a saturated market
• Donors are wary of scammers who raise enough funds but don't follow through
• You might end up not meeting your target amount even after exerting significant effort

Is Crowdfunding Legal in the Philippines?

Yes, it is. In fact, the Securities and Exchange Commission has rules on crowdfunding.^[2] This crowdfunding regulation in the Philippines ensures that all the parties involved—from the entrepreneur to the investor and crowdfunding platform—are duly protected.^[3]

The Commission recognizes four types of crowdfunding:

• Donation-based - Supporters pool their money and resources to support charitable causes.
• Reward-based - People give money to a start-up or small or medium enterprise (SME) in return for a “reward,” which may be a product made by the company itself.
• Lending-based - The participating individuals lend the company some money. The company will repay the loan on the agreed date and with the agreed interest rate.
• Equity-based - Individuals invest in a company’s shares and receive profit shares, possibly in the form of distribution or dividends.

8 Best Crowdfunding Platforms in the Philippines

If you want to start funding your business, here are some of the top fundraising websites in the Philippines to consider for your business.

📌 Investree

Website: investree.ph

Established in 2015 in Indonesia, Investree is a fintech company that connects SMEs with investors.^[4] It claims to be the country's first SEC-approved crowdfunding platform for Filipino entrepreneurs aiming to grow and scale their businesses. Currently, it has two major services: invoice financing and purchase order financing.

To start, create an account on the website. After a relationship manager verifies the details, your application will be evaluated and endorsed for an auction among investors. 

📌 The Spark Project

Website: www.thesparkproject.com/crowdfunding

Started in 2013, the Spark Project is a community that showcases Filipino talent, passion, and innovation. In this platform, you’ll see various kinds of projects, from fundraisers for healthcare heroes to artisanal brands that sell hand-woven bags and scarves. If you have an idea in the areas of education, health, design, and arts and culture with Filipinos as the main target audience, this platform is for you.

Start by creating an account on the website. The team will then get back to you with feedback and recommendations. Once your campaign gets approved and you've paid all the fees, you're ready to publish! 

📌 Cropital

Website: www.cropital.com

If your business idea is agricultural in nature, you can use a farm crowdfunding platform in the Philippines called Cropital.

Supported by different institutions in the U.S., Malaysia, Netherlands, and the Philippines, Cropital empowers the often marginalized sector of local farmers and agricultural businesses, helps reduce poverty, and improves productivity. Aside from raising funds through its platform, Cropital matches farmers with buyers and provides training and access to other support organizations.

Reach out to the Cropital team through their website to get started.

📌 GoGetFunding

Website: gogetfunding.com

Recognized by Forbes^[5] as one of the top global crowdfunding sites in the world, GoGetFunding allows people to raise money for anything that matters to them, which includes business ventures and start-up ideas.

Some people also use the platform to pool money for community efforts or for more personal campaigns such as funding a family member's or pet’s medical expenses.

Just click Start Fundraising, create your page, share it with your community, and get donations through credit or debit cards or PayPal.

📌 SeedIn

Website: www.seedinph.tech

Looking for funds to purchase inventory and equipment, hire more employees, launch marketing campaigns, remodel and renovate your store, or perhaps open a new location?

Seedin calls itself Southeast Asia’s leading business financing platform. Here, local businesses looking for alternative sources of financing can borrow money from entities seeking to diversify their investment portfolios. To register, businesses must be registered as a Sole Proprietorship, Partnership, or a Corporation Entity. Note that all applicants would have to undergo a strict credit risk assessment and provide collateral. 

Start by clicking I want to borrow. From there, see if you qualify, receive approval, and get the funds. 

📌 RoundOne

Website: roundone.ph

Round One is the first-ever SEC-licensed equity crowdfunding platform in the Philippines. Through this website, you can launch your fundraising campaign.

Interested parties can then make an investment commitment. If they end up purchasing your securities, which can come in the form of equity, debt, or both, they are entitled to the corresponding rights and benefits. 

Click Sign Up to register first. Next, prepare and publish your campaign. Wait for investors until you hit your target before the deadline. Lastly, receive your funds. Investors will also receive their records of ownership.

📌 Airfunding

Website: www.airfunding.net

Airfunding promises to help its users' dreams come true. While plenty of popular posts on the platform are medical, disaster, or education-related, you can post business fundraising campaigns on the website. Your campaign can also reach different countries around the globe—it will be translated into 17 different languages. 

The best thing is you can use this crowdfunding platform for free. Plus, even if you don't meet the target by the deadline, you still get to receive the amount you've raised. 

To create your fundraising project, click Start a project. Fill out the details, then promote the campaign to your friends, family, and community.

📌 Gava

Website: gavagives.tech

Gava focuses on social and charitable projects, so if your business is grounded in advocacy, this is the perfect crowdfunding platform in the Philippines for you. This platform is unique in that it is integrated with Blockchain technology for transparency.

Aside from receiving donations from anyone, anywhere, you can also use this website to access tools critical to making better fundraising strategies in the future. However, note that Gava will deduct 5% of the total amount raised for overhead costs.

Simply click Sign up to launch your campaign, promote your efforts to family and friends, and wait to receive your funds. 

5 Tips to Remember Before You Start Crowdfunding in the Philippines

Ready to start? Not too fast! Here are some of the important things to remember, so that your first crowdfunding project will go smoothly.

✔️ Research Different Platforms and List Down the Pros and Cons

Not all crowdfunding platforms in the Philippines are the same. Some crowdfunding platforms specialize in creative projects or tech-based endeavors only while others accommodate a much wider range of interests.

List down each platform’s pros, cons, and similarities. That way, you can decide which of them is perfect for your type of business.

✔️ Write a Convincing Pitch

You need to be a blatant promoter of your own brand. In other words, to gain funding and support from investors, you need to have “kapal ng mukha.” With that, your pitch should be comprehensive and detailed.

The title of your pitch should be clear and creative (not clickbaity, though!). For the body, you can follow a story approach—a narrative wherein you share how you started your idea with a couple of friends in your garage, or something similar. But be careful not to sound too sappy or pitiful.

Next, show that your project is practical and actionable. Share a timeline, from ideation to product launch. Show some proof of concept, such as sketches or pictures of the prototype, so that investors will have something to refer to while they’re reading through your pitch. Lastly, keep your words simple and avoid using lots of jargon and buzzwords.

✔️ Consider Integrating a Video

Since you’re being an aggressive self-promoter, take things a step further by including a video. Not only is it a good demonstration of effort, but it can also better explain what your business is about—a lot of people prefer consuming video content, anyway.

However, keep in mind that everything will still depend on the platform you’ve chosen, as some crowdfunding platforms may not support video materials.

✔️ Check Your Analytics

Your crowdfunding platform may give you access to your page’s analytics. Take advantage of this function, as it will show you where most donations or pledges are coming from. With this kind of information, you can adjust your campaign and pitch accordingly to boost donations and support.

For instance, if you’ve found that most of your patrons and investors are women, you can come up with a feature in your product or service that can attract more female investors.

✔️ Be Transparent with Your Backers

Always keep your backers, investors, and supporters updated on your project’s progress. This will assure them that your project is alive and has a shot at success. After all, these are the people who believe in you. It’s just right to show respect by being transparent.

Read more: How to Deal with the Toughest Challenges Facing a Startup Business

Final Thoughts

The process of starting a business has changed a lot over the years. Now, banks and lenders are not the only sources of funding—the general public is, too!

Before you choose a crowdfunding platform in the Philippines, remember that going for this method doesn’t automatically guarantee funding success. There’s still a lot of work involved, such as writing your pitch, constantly updating your business’ social media pages, and engaging your donors and supporters. But with the right plan and hard work, you can increase the likelihood of your business’ success.

Looking for other funding options? Consider getting a loan for your business instead:

Sources:

• ^[1] Angel Investor Definition (Investopedia, 2023)
• ^[2] SEC Approves Rules on Crowdfunding
• ^[3] SEC Memorandum Circular No. 14 Series of 2019
• ^[4] Investree FAQs
• ^[5] About GoGetFunding