CREATING A ROBUST CROWDFUNDING ECOSYSTEM IN VIETNAM (THE FACTORS INFLUENCING THE CROWDFUNDING ECOSYSTEM IN VIETNAM) (MANAGEMENT PROJECT TOPICS AND MATERIALS)
ABSTRACT
For the last decade, crowdfunding has been a new concept that has been receiving attention in academic research and gaining ever wider use in practice. Even though crowdfunding is in its infancy, it is not only popular in developed countries but also becoming a global phenomenon. Crowdfunding has just reached Vietnam within the last few years, thus is still a relatively new concept for the country. However, crowdfunding is showing growth and is emerging as a new trend.
This research was set out to understand this phenomenon deeper, analyze factors that affect crowdfunding in Vietnam, and develop strategic recommendations for the government, NGOs, and the private sector to deal with the challenges.
A literature review was conducted to deepen knowledge of crowdfunding, specifically to find the elements of a crowdfunding ecosystem. In the empirical research, qualitative method was employed. Primary data came from semi-structured interviews with crowdfunding platforms representatives in Vietnam.
The findings of the research reveal that there are several factors that affect crowdfunding ecosystem in Vietnam, which can be broadly grouped into four categories: cultural, social, technology, and regulatory. The most important factors required for crowdfunding to exist are broadly present in Vietnam. However, to make crowdfunding succeed, a culture of trust should be fostered not only in crowdfunding activities but also in entrepreneurial activities and online payment activities. Therefore, a list of recommendations was developed to create a robust crowdfunding ecosystem in Vietnam.
KEYWORDS:
Crowdfunding, entrepreneurship, entrepreneurship ecosystem, crowdfunding ecosystem, financing, fundraising
1 INTRODUCTION
1.1 Research background
Today more than three billion people are using the Internet thus gaining access to information and communication technologies, according to a report from the International Telecommunication Union – a United Nation’s Agency (ITU, 2016a). Thanks to this widespread adoption of information and communication technologies and the rapid rise of online social interaction, people now have more chances to interact, build trust and collect funds from the crowd, which is called “crowdfunding”. For the last decade, crowdfunding has been a new concept that has been receiving attention in academic research and gaining ever wider use in practice. Even though crowdfunding is in its infancy, it is not only popular in developed countries but also becoming a global phenomenon.
Many researchers such as infoDev (2013), Antonenko, Lee & Kleinheksel (2014) and Pekmezovic & Walker (2016) agree that crowdfunding was a societal response to the 2008 financial crisis and stricter business loan regulations. Since then, crowdfunding has attracted individuals and organizations (especially NGOs, SMEs and start-ups) to create public campaigns to fund their projects, whether for charity causes or for-profit ideas (infoDev, 2013).
Crowdfunding has been receiving great attention from the developed Western world and now spreading to emerging markets too. According to a World Bank report on crowdfunding, entitled “Crowdfunding’s Potential for the Developing World” ( (infoDev, 2013, p. 10), approximately 344 million households in developing countries can pool their money and have the ability to contribute up to US$ 96 billion a year by 2025 to invest in community businesses. Considering the amount, the developing world has a significant potential to facilitate crowdfunding.
Crowdfunding has just reached Vietnam within the last few years, thus is still a relatively new concept for the country. Even though yet crowdfunding is not as common as in many Western countries, it is showing growth and is emerging as a new trend in Vietnam. (DealStreetAsia, 2015; Fintechnews Singapore, 2016b). As yet, there has not been any study regarding crowdfunding in Vietnam.
