Making the future a reality: Page 2 of 2

Better than traditional crowdfunding

One may wonder why an entrepreneur would prefer to raise funds via crypto crowdfunding versus traditional crowdfunding platforms such as Kickstarter and Indiegogo. 

According to Ser, among the shortcomings of traditional crowdfunding platforms are:

a)            Lack of control once crowdfunded money is disbursed

In traditional crowdfunding, project backers have very little control over the project as the money is disbursed to the project creators at the end of the crowdfunding effort. When a project fails, most of the backers do not get anything back.

It would be beneficial to have a milestone based funding system, powered by bitcoin and ETH smart contracts that come with a system where users can vote to delay, or stop further milestone payments in the event that project promises are not met, so that backers are protected partially. On the project creator side, they will need to deliver on their agreed milestone deliverables to get further funding.

b)            Lack of support/mentors

Many good crowdfunding projects also get put on hold or fail to get the required funding due to a lack of marketing support. Let’s face it, most project creators are not full-time marketers with expert design knowledge. Key marketing items such as creation of a product logo, website, marketing video and business plans all involve significant time and money.

A supportive crowdfunding platform should help to remove as many hurdles as possible by allowing project creators to seek project help from the community for their existing ideas/projects. Project helpers can be rewarded with Bounty credits, which can be exchanged for project tokens, created during the project crowdfunding place.

Project Tokens can be made tradable through an internal crypto currency exchange, so helpers can eventually convert their tokens to virtual currency and eventually actual cash if they wish to. This is similar to the Bounty programs that the recent initial coin offering (ICO) projects have run, where the ICO tokens were given to reward helpers for their effort.

c)            High transaction costs

Traditional crowdfunding platforms suffer from high payment transaction fees. Typical online donations costs between anywhere between 3% to 5% of the total donated amount, plus a fixed flat fee e.g. 0.30 for PayPal. A project creator on Kickstarter would typically have to pay up to 9% to Kickstarter after including the transfer fees (3-5%) and listing fees (5%).

However, transfer fees for virtual currencies are typically a flat fee which is around 10 cents or less. This means that FYN project creators will receive more funding when they crowdfund through virtual currencies. This also makes milestone-based payment smart contracts more practical, since the cost of processing the refunds, especially for small donations, is greatly reduced.

Ser shares that their goal for FYN to create an entire ecosystem that will revolutionise how crowdfunding is done today, by bringing together the project creatives, people with specialised skillsets and backers excited about being involved in new ideas/concepts/projects.

“The platform is designed to make it simple for all our stakeholders – to be involved in bringing a brilliant project idea from concept to reality. In addition, we have also incorporated a milestone funding model that gives backers more accountability and a peace of mind.”

Ser explains the model further. “We have milestone payments coded into a smart contract. So idea creators are only reimbursed when they hit specific milestones. We encourage at least four, so at every milestone, investors have a right to actually to delay or stop payments because they feel the idea creators are not achieving the milestones as intended.

“I think this accountability factor will make the investors and project creators more inclined and more aligned to the same goal.”

Cryptocurrency demand on the rise

Despite Ser and Tan’s obvious enthusiasm for FYN, the fact remains that cryptocurrencies remain unregulated. Tan, however, is unconcerned.

“We see a huge uptake in cryptocurrency crowdfunding, even though it is unregulated. The reason is that it is very attractive for entrepreneurs to raise money this way. Crypto crowdfunding not only allows them to test out global supporters who can actually fund them, they also get to build a community at the same time. Most of them can do this without having to give up an equity stake in their company,” he points out.

According to Ser, future global demand from cryptocurrencies will come from Russia, followed by the US and China. He also sees Japan coming up in this area, as Bitcoin is legal tender in Japan now and also South Korea.

“And depending on how Singapore and the rest of the region start looking at it from a regulatory point of view, it could change,” he says.

 Commenting on the interest of companies keen on raising funds, Ser believes that there’s going to be equal interest from outside and within Asia. To date, apart from those outside of Asia, FYN has received interest from companies in Malaysia, Japan, South Korea, Singapore, Vietnam and the Philippines.

Future plans for FYN

According to Ser, they are targeting a soft launch for the FYN platform in Q4 2017, with the first batch of projects being listed on the platform by October 2017. The four projects from the first batch are from Russia, Taiwan and Singapore.

“Development work will run in parallel with the soft launch. We target to officially launch the platform in Q1 2018.”

He shares that the FYN team has invested around US$200,000 into the project and that they have also received US$100,000 from angel investors.

“We have also raised US$1.5 million so far from our crowd sale which involved funding raising through selling our own FYN token to global investors.”

“We are planning for the next round of funding in the next one to two years. As we will be looking at expanding the platform to reach more users globally, we are targeting to raise funds in the range of US$10 to US$50 million. Most of the funding raised will be used on user acquisition campaigns and getting creators, backers and helpers on board,” Ser explains.

According to Tan, the market capitalisation of the global crypto environment is only slightly less than US$120 billion. “So this is really not much. It’s still at the early stage. So what we plan to do is that being a first mover in this space, we hope to bring more mainstream people into this and at the same time educate them.

“I look at us as playing a very important role, as a gatekeeper, via our milestone payment mechanism. So in future when people see our name, it lends a lot of credibility as a platform that has done its KYC [know your customer].”

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