By Sirish Shrestha

After the devastating earthquake that hit Nepal, one of major economic problem was generating future investment that provoked economic growth. According to the government of Nepal, overall damage from the earthquake and its aftershocks is estimated to be at about $10 billion which is nearly half of the gross domestic product (GDP) of $19.2 billion. The estimated cost for rebuilding homes, roads and bridges alone could run up to $5 billion. So, I want to take the edge off this problem. I found out that Crowdfunding was very popular for local businesses abroad.  I wanted to help small businesses and individuals in micro level. As paying back loans and mortgages is nearly impossible after the earthquake, I wanted to set up a social Crowdfunding platform. By pledging a certain donation, people from all over the world can help small scale businesses and individuals help fend off future financial problems and look towards growing their respective businesses.

Currently, huge sums of money is being poured in Nepal for its reconstruction, but most if it is soft loan that needs to be paid back. I want to change that by initiating a Crowdfunding website. How can funds reach only to those in need? How to provide individual assistance from anywhere in world? How to minimize foreign loans but maximize foreign donations? These questions were doodling in my head and crowd funding was the answer. By pledging small about for the greater good was the main thing that I want to see. I am currently trying to startup a Crowdfunding platform in Nepal.

Crowdfunding is an innovative and growing platform to get financial help. Fundable has estimated that Crowdfunding will generate $3.2 trillion of economic activity a year. It is a unique idea in Nepal that has not been tested yet. It is based on a simple concept “all for one and one for all.” My business model is based on project owners having an easy fundraising by holding events that solicit contributions from large numbers of stakeholders. Due to the recent surge in social media broadcasting, I am fairly confident that Crowdfunding in Nepal will be successful as a popular way for fundraising.

Popular Crowdfunding sites such as Indiegogo and GoFundMe have already helped millions of its users. Crowdfunding nearly tripled last year, businesses & individuals raised $16.2 billion. I was at an entrepreneurship workshop a month ago where I met Stephanie Arrowsmith, Manager of Global Partnerships of StartSomethingGood. I learned that she travelled to 35 countries, including Cambodia, Denmark, Indonesia, Guatemala and the USA and that Crowdfunding was a total hit there. I told Stephanie that I was thinking about setting up Crowdfunding in Nepal. I did some counseling and I leaned that StartSomethingGood attracted users through its unique features like Pre-Crowdfunding, use of Bitcoins, help in marketing the event, etc. They also don’t charge any commissions or fees if the event failed to reach its targeted fund. On top of that, the users will receive what they managed to collect. She shared stories about how Crowdfunding helped the economically troubled families and young entrepreneurs. The main thing I took away from this workshop was that I understood the value of donation to those in need. Crowdfunding really does change lives. This workshop boosted my motivation to bring Crowdfunding to Nepal.

Crowdfunding is not all treasure and gold, here are things to consider:

  • Crowdfunding must be done through a registered broker-dealer or registered “funding portal.” In Nepal, certain policies restrain the shift of money. So, ESewa partnered with Nabil Bank. I have made an approach to Yeti Development Bank to avoid this problem.
  • Traditional investment banks have not yet registered for Crowdfunding, leading to speculation that Crowdfunding will be facilitated by lesser-known financial institutions and individuals with little or no retail investment track record. This is a huge problem for a startup business. Although, we have partnered with an NGO and considering posting ads to show we are a legit business.
  • Also Crowdfunding transactions are subject to a one-year restricted period or even less, this creates urgency but also contribute negatively towards inadequate funds being raised. However we will notify users of this before starting the fundraising event and set less that 12 months as the deadline for fund collection.
  • Transparency and trust issues are also a major problem with Crowdfunding websites. Users might feel wary about hidden charges and receiving fund after the campaign ends. My intention is to put forth a legal contract before the event guaranteeing they will receive their donations.

Crowdfunding hasn’t been fully initiated here in Nepal but there are signs that it is starting. Concept of pooling of funds locally is there for insurance purpose but not for investments. The main thing that has halted me is a policy of central bank of Nepal. It states that an institution cannot hold a certain sum of fund for itself. Recently, I met with Mr. Daniel D. Shrestha, Head of Marketing and Business Development of IME Ltd to discuss about tackling this problem. One solution is to register my business as a NGO. The other is to follow a business model of ESewa an online portal for money transfer among banks in Nepal. The later one seems to be more favorable. Right now, I have completed forming a five person team consisting of undergraduates of background IT, Engineering, Arts, and Management. My goal is to initiate Crowdfunding by early next year.