A few days ago, PulsoSocial’s Aleyda Rodriguez spoke with Jennifer Pineda, Colombian expert on all things crowdsourcing and crowdfunding. Pineda explained the prospects of the two concepts in Latin America – the opportunities as well as the obstacles surrounding them on a regional level.
We decided to get another perspective on the lay of the land to get a closer look at the real stance of the crowd in Latin America. Rebecca Plofker, Head of Business Development and Communications at crowdfunding platform Idea.me, reached out to share her experiences with the market in Latin America. The Idea.me team, which celebrated its one-year launch anniversary on the 12th, has experienced the ups and downs of crowdfunding in Latin America and remains optimistic about its prospects.
The Lay of the Land
First, Plofker gave us an idea of the crowdfunding industry on a global level, pointing to a recent study by crowdsourcing.org that indicates that more than US$1.5 billion was raised via crowdfunding platforms around the world in 2011. Contributions from Latin America made up just .001% of that number. Internationally, crowdfunding earnings are expected to double this year, and rewards-based crowdfunding should grow a whopping 300%. What’s not clear, however, is what role Latin America will play in all of this – as mentioned in the Pineda article, Latin America currently makes up just 2% of e-commerce in the world.
While crowdfunding has by no means exploded in Latin America, the Idea.me team believes that the concept is, regionally, well on its way. Plofker asserted, “The question that we then need to ask is; are we ready? After one year, our experience at Idea.me says absolutely.”
Idea.me has experienced quite a bit of success in its first year, having helped 50 ideas to reach their goals and raised US$180,000. Its strongest hold is in Argentina, Chile and Mexico, where ideas from the categories of technology, education, editorial and music have worked best.
Plofker pointed to Latin America’s evolution in terms of trust and confidence in requesting financing and support as a main factor behind Idea.me’s progress. In her experience at Endeavor (where she worked for six years prior to joining the Idea.me team), Plofker noted a big fear of failure throughout Latin America as well as a stigma of corruption surrounding starting a business. Today, individuals in the ecosystem are becoming more and more open with cooperation and the launch of new ideas. Plofker further explained:
Crowdfunding is a marketplace, so it’s equally important to note that a culture driven by individuals willing and excited to support new ideas exists is growing as well. For us, they represent the demand. We’ve built a community of more than 24,000 people, of which more than 4,800 have become collaborators, supporting individuals by providing outreach and capital. We disagree with Jennifer that this open cooperation is a hurdle, and see it as validation of a market opportunity. What is crucial to build a sustainable and scalable platform is transparent and trustworthy.
One of the main keys to success, Plofker points out, is transparency between the platform, creators and supporters. As skepticism about online payment remains, Idea.me is faced with the task of ensuring users that the risk of fraud is minimal. She said:
To us, transparency means we give an explanation of each payment method offered and provide options to both sides of the community. It means that we clearly articulate our own services. This means showcasing those who succeed as well as publishing those who don’t (unlike Kickstarter). We exist to be the trusted broker between innovators and their supporters.
Beyond transparency, Idea.me is also focused on education, building awareness about the concept of crowdfunding and demonstrating real cases of success. The Idea.me team believes that education is a joint effort and that creators themselves must get involved, understanding how to leverage the crowd and creating realistic budgets and proposals. Creators must engage the audience, not alienate it. On the topic of education, Plofker stated:
If this education is done correctly (and is where much of our own resources are spent now), then additional vetting is not necessary. While as Jennifer argues, past successes of creators offer validation, the point of crowdfunding is to be democratic – the best ideas succeed. Our goal at Idea.me is to democratize the ability to launch new ideas.
In closing, Plofker touched on what is the most difficult hurdle for crowdsourcing in Latin America: payment. Idea.me is still identifying payment methods for use in Latin America, going country-by-country to identify the best action plans possible. Plofker pointed to Colombia as the most challenging market, mainly because of tough-to-maneuver legal restrictions. Still, Idea.me forges on, most recently working with Paypal and other partners in Latin America to overcome the barriers at hand.
Crowdfunding represents a huge opportunity for business in Latin America, where the startup bug is becoming increasingly widespread. Not only does the concept democratize business and creativity, but it also opens the door for an improved economy and, importantly, job creation in companies that, with funding from the crowd, find success. Regionally, there are still adjustments to be made, and a ton of room for growth remains. However, with Plofker, Pineda and others behind it, the crowdfunding concept is likely to push forward and continue to expand.