Meet Startup @TW

Japanese crowdfunding platform reaches out to Taiwan startups

One of the Japan's most visited crowdfunding sites is urging Taiwanese manufacturers to use its service to grow their business in the large and advanced fellow Asian market.

The CEO of that platform, Makuake, a subsidiary of Internet services group CyberAgent, says companies in Taiwan can use crowdfunding because it does not require setting up a branch in Japan first to reach local customers.

Products also can be mass produced in Taiwan before being shipped to Japan through Makuake’s logistics partners, the executive says.

“Companies have to make a lot of preparations before their products can be sold in Japan, but if (a product) flops in the market, then all the earlier efforts put in the product launch would go to waste,” CEO Ryotaro Nakayama said in describing a historic issue.

“Crowdfunding is a great way to create preorder revenues, and successfully funded projects are great promotional materials that companies can use so later negotiations with retailers will be smoother.”

PITCH TO TAIWAN'S HARDWARE MAKERS

At a conference organized last month by Taiwan’s non-profit organization Epoch Foundation, Nakayama reached out to the island’s manufacturers for the first time.

Today about 90 percent of the products that seek crowdfunding via Maukake are made in Japan and the rest come from international startups.

Crowdfunding sites started to trend in Japan in 2011, and within five years the number of sites mushroomed to more than 100.

Some Taiwanese companies have already found a market through Japanese crowdfunding. Those items include ATOM’s 3D printer and the nextDrive Cube smart hub.

ATOM’s 3D printer was the most successfully funded crowdfunding project on Maukake to date. A funding drive from January 2015 raised 29.77 million Japanese Yen (US$288,002), or 2,756 percent above its targeted goal.

ATOM had contacted Japanese trade companies to help launch its crowdfunding project via Makuake, Nakayama said.

"Taiwan has very high standards," Nakayama said. "Management of Taiwanese hardware manufacturers are also much younger than in Japan, and more willing to take risks, or try new things."

Taiwan's economy has relied largely on contract hardware work in the past, but if local companies can start branding and exporting their products, Taiwan could overtake China as the stronger hardware manufacturer, Nakayama forecast.

"Things were very inconvenient for people living in the 20th century,” he said. “If they wanted to sell refrigerators, washing machines, and electronic devices they needed to broadcast a lot of television advertisements.

“This has changed in the 21st century, as people are seeking more interesting lifestyles,” he added. “So it is important for brands to pitch themselves in such a manner that consumers will find that having a product will enliven their lives.”

HOW MAKUAKE GOT GOING

Makuake is one of the top crowdfunding sites in Japan, attracting some 70,508 visitors per day and receiving nearly 194,602 daily pageviews.

Nakayama joined Japanese Internet firm CyberAgent Group in 2006 as assistant to the CEO. In 2010, he became the founder of a Southeast Asian IoT startup and would reach out to innovative companies in Vietnam.

Two years after returning to Japan, in 2013, Nakayama established Makuake.

Crowdfunding has grown more slowly in Japan than in the United States due to curbs imposed by old investment regulations. Those rules were lifted in 2015, allowing startups to raise money on crowdfunding platforms.

In the past, however, large and established Japanese enterprises would use crowdfunding to test market responses to new products.

Unlike other Japanese crowdfunding sites, which focus mostly on charitable or personal causes, Makuake normally helps promote commercial products. About 60 percent of the campaigns feature finished products including IoT hardware, general hardware, fashion products and food.

About 20 percent of crowdfunding projects are linked to catering and a smaller share covers movies, anime, and music.

Most of Maukake’s supporters are 30 to 50 years old. Men also outnumber female supporters six to four.

Makuake says its crowdfunding supporters spend an average of 15,000 Japanese yen (US$144.11), more than double the Japanese national average on e-commerce platforms.

If campaigners choose an “all or nothing” option, funds will be returned to supporters if a campaign does not reach its targeted amount, while an “all in” option will allow campaigners to take whatever they raise even if they fail targets.

Makuake also integrates crowdfunded products with retail shops. In August 2015 it started a partnership with the large Japanese department store franchise Isetan to help distribute crowdfunded products on shelves throughout Japan. An Isetan store in Tokyo has set up a zone where consumers can test crowdfunded products.

“In the past, most department stores have sold nearly identical goods, but we’re hoping Makuake crowdfunded products can infuse a dose of new excitement for shoppers,” Nakayama said.