For a growing cohort of Chinese tech startups, overseas crowdfunding platforms serve as springboards to expansion into key markets abroad. These companies are using online fundraising sites to enhance their name recognition and lift sales in markets outside China.
EcoFlow, a manufacturer of portable batteries, has staged successful fundraising campaigns on US crowdfunding platforms including Kickstarter, which mostly raises money for creative projects like art, music, film and technology. The Chinese company has also raised more than JPY 1.1 billion (USD 9.7 million) on Japan’s Makuake.
Even big Chinese companies like Midea Group, a home electric appliance maker, are turning to crowdfunding, which allows people and organizations to raise funds from supporters who do not have a direct economic interest in the ventures themselves. Since crowdfunding tends to attract support from early adopters, it offers a good fundraising option for tech startups.
“It is no exaggeration to say we are a star in crowdfunding,” says EcoFlow co-founder and chief executive Wang Lei. “We are keen to adopt this approach. When we launched a project on Makuake, I personally read all the posts from potential backers using translation software, and worked all night to reply to them.”
Of the some 20,000 fundraising drives carried out on Makuake, EcoFlow had the second-, third- and fifth-largest campaigns in terms of funds raised, as of November. The company has also used major US crowdfunding platforms, including Kickstarter and Indiegogo.
After graduate school, Wang began his career at DJI, one of the world’s biggest drone makers. He helped improve the range of the company’s drones by setting up a unit devoted to battery research and development. In 2017, he left DJI and founded EcoFlow to develop eco-friendly energy technologies for consumers.
The company’s mainstay products include the River series of lightweight portable batteries designed to provide power for campers or in emergencies. Its Delta line of large-capacity, high-output portable batteries can supply power during disasters. EcoFlow says its fast charging technology enables its batteries to go from zero to an 80% charge in less than an hour, about 10 times faster than most rival products.
The company now operates in more than 100 countries and has a large presence in North America, Europe, and Japan. It employs about 900 people around the world and forecasts more than USD 200 million in sales this year.
EcoFlow is eager to tap into crowdfunding platforms because they offer “constructive proposals that can be of immediate help for product development,” Wang says. “Crowdfunding sites are highly suitable venues for introducing consumers to new technologies and products. They attract many early adopters. These people have great word-of-mouth influence and can spread the word about products.”
The company is one of a growing number of Chinese tech players that take advantage of overseas crowdfunding platforms. Mad Gaze, which makes augmented reality devices, and AgileX Robotics, which develops educational robots, are just two of the young companies capitalizing on this fundraising option. Elegoo raised some JPY 600 million in October for its 3D printer project on Kickstarter. Besides startups, big Chinese manufacturers like Midea, a leading maker of air conditioners, and TCL, a major TV manufacturer, also raise capital on overseas crowdfunding sites.
Most crowdfunding projects are intended to raise several hundred million yen at most. The platforms are not generally viewed as key sales channels. “The benefits of crowdfunding include modest sales, but more importantly, this approach offers great opportunities to interact with users,” EcoFlow’s Wang says. Many tech companies use crowdfunding projects as a way to get feedback from users to improve new products, mainly those aimed at niche markets.
Consumers often have doubts about the legitimacy of crowdfunding projects, wondering if they will really receive the promised product, even if the project is fully funded. Companies that want to build trusted brands and customer loyalty through crowdfunding must forge lasting ties with users, rather than focusing on raising fast cash.