Thursday, April 02, 2015

Crowdfunding : A Way of Bringing Unusual Ideas to Life

Urvish Kothari  (Gujarat Samachar, Sunday supplement, 29-3-15),

Translated by Mira Desai

At the end of Rajkumar Hirani’s film 3 Idiots, Aamir Khan plays a genius engineer, Phuntshok Wangdu, who runs a school in Ladakh. Nowhere does the film say that the character is based on a real-life person or that the school really exists. Even after the spectacular success of the film there was no acknowledgement of the fact that a mechanical engineer, Sonam Wangchuk, really runs a school that offers students a unique education in the difficult terrain of Ladakh. (

But this unusual school is not the reason why we are remembering Phuntshok Wangdu’s real-life inspiration, Sonam Wangchuk. Wangchuk thought of building “Ice stupas” to address Ladakh’s crippling water shortage. The word “stupa” is used as such for Buddhist structures of a particular shape. But Wangchuk’s stupa was prompted by a different idea. Wangchuk wondered, what if such large ice stupa-structures are built in winter in a dry riverbed when the entire area is snow-clad? When this ice melts in summer, people would be able to use it, wouldn’t they? (

Ice stupa by Sonam Wangchuk and team
Not that Wangchuk merely has fanciful ideas; he is an innovative engineer as well. He found out that if ice sheets are formed, they might melt quickly; however if compact ice structures were formed, they would be able to withstand direct sunlight much longer, and in April- May when farmers need water for their crops, such a structure would begin to melt. He successfully experimented in a low-lying part of Ladakh, and proved that his hypothesis worked. He proved that if a “stupa” structure with a 20 meter diameter and 40 meter height were built, it could hold 1.6 crlitres of water. To get bountiful rivers flowing in 1500 acres of icy desert is an expensive proposition. Wangchuk turned to “crowdfunding” to pay for these expenses.

Crowdfunding, in simple terms,is seeking contributions. People put details of their project on the internet and call out for assistance. Some of these efforts receive a response, several may not, but one does have the satisfaction of trying. Wangchuk totaled all his requirements, and put out a call for US $ 1.19 Lakh  over two months(from October 2014 to December 2014) through crowdfunding. He received US$1.25 lac in response. If we use share market language, his issue was 105% oversubscribed.

This is the wonder of crowdfunding. People contribute rupees (or dollars) for projects that range from such people-oriented, large efforts, to ideas that one may even consider frivolous. Films, documentaries, music albums, books, comics, unique innovations—funds can be raised for all of these through crowdfunding. India held its first national crowdfunding conference this year, but internationally, and especially in America, crowdfunding is at the peak of its popularity. This is an exciting use of internet, and several success stories read like fairytales. But if we think about it, crowdfunding is not a totally new idea. One example of a crowdfunded film is Shyam Benegal’s Manthan which was made from funds contributed by Kheda district-farmers, these farmers each contributed Rs.2. Of course, this film was about the White Revolution and this particular crowdfunding was possible because it was from a farmer’s co-operative.

In the same way, Mahendra Meghani had published several of his volumes by collecting funds from subscribers. In crowdfunding, special discounts (or perks) are used to raise funding for innovative products. One extremely successful example is that of a youngster from Canada. Apple Co. launched its smart watch this month, but this youngster had launched a crowdfunding project for a smart watch two years ago. His target was for US $ 1 lakh, but after his interview on a popular TV channel, he was able to raise over US $ 8 lakh. This also proves the point that even though the internet is the platform for crowdfunding projects, news broadcast on traditional media can be extremely helpful in collecting such funds.

Whether it is crowdfunding or the “juicer machines” sold in commuter trains for ten rupees or so, the same psychology is at work. Most people are hesitant about contributing to such causes, but once someone takes the initiative to buy or contribute on the crowdfunding site, other people too, begin to contribute. Hawkers who understand this psychology ensure that their first purchases are made by people planted by them, and usually such first purchases “spread” rapidly. Crowdfunding experts say that most projects run out of steam at the 40% target stage. Once projects cross this threshold, most of them sail through.Each project on a crowdfunding site has a defined time frame, ranging from a few weeks to a month or two.

Websites that offer a crowdfunding platform for projects charge a processing fee of 2% to 10%. Additionally, each of these websites have their own policies and standards. The best website of this kind,, allows people from select countries only to put their projects online—India does not feature among these. So Sonam Wangchuk, whom we mentioned at the beginning of this article, put his Ice stupa project on instead. Information about the project, graphics and a video—all this information is usually put up the crowdfunding website. Someone who wants more information then visits the project’s website or uses other means. When the project is active, the funds raised and the % of target reached are shared publicly, too. Some crowdfunding sites are “all or none” – you receive the funds only if the target is reached. Else, start from scratch. (Kickstarter has this policy). Other sites are “take what you make.”

Crowdfunding sites once again prove that the internet has shrunk geographical boundaries. Causes range from issues like raising lawyer fees for people fighting against injustice, to projects that one would call random or just fun. Kickstarter abounds with projects that one would call non-serious or playful. To protest against ever-increasing adaptation of smartphones, a creative sort put a “no phone” product on Kickstarter—no camera, no Bluetooth.You can’t even make calls with it. So what would one do with this rectangular solid piece? Well, nothing. This is a “no-phone”--feel-good without any interruptions.

Such a playful idea earned US$ 18,000 via crowdfunding in fifteen days. India has a few crowdfunding sites, but for this idea to work one will have to deal with the Indian mentality in addition to other issues. The share market’s public issues too, are in a more methodical way, a manner of crowdfunding. SEBI has still to decide on norms for crowdfunding. Until then, crowdfunding will remain a lesser-used, unusual connect between an individual and society.

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