TOKYO (Reuters) – Japanese crowdfunding companies said they have enjoyed a surge in business during the pandemic-induced economic havoc, as they quickly connect cash-strapped firms to people keen to donate, lend or invest.
Makuake Inc said revenue in April-June rose 61% compared with the previous three months and 209% versus a year prior, with the number of projects and unique users soaring.
Funds raised through Campfire in May rose six times from the same month a year earlier to 4 billion yen ($37.44 million), with benefactors rising almost five times to 390,000. Readyfor said total transaction value rose 4,400% in April from March.
The University of Tsukuba, located about 50 kilometres (31 miles) northeast of Tokyo, said it raised 28.4 million yen via Readyfor to support its students who lost part-time jobs.
“The government has prepared support programmes but you have to go through various processes like getting proof to show a fall in income,” said Tetsuya Yamada, head of the university’s development office.
The government has earmarked 230 trillion yen to support an economy disrupted by social distancing measures both at home and abroad. Critics have said it has been slow in delivering cash.
Readyfor Chief Executive Haruka Mera said money through crowdfunding will increasingly become the norm as people continue to struggle through prolonged economic upheaval.
“There is a feeling among people that the damage is so big that other people’s suffering is their own suffering,” Mera said.
Interest in equity crowdfunding has risen sharply too.
Japan Cloud Capital saw a record increase in new accounts in May. Chief Marketing Officer Juntaro Mukai said the market will likely grow 1.6 times to about 1.5 billion yen this year.
“Retail investors flock to venture companies that come up with strong plans even under the coronavirus, while companies also look more to crowdfunding as they have less contact with institutional investors,” Mukai said.
But the boom could slow if supporters’ income dwindles as the pandemic continues to disrupt economic activity, said researcher Tamako Watanabe Japan Research Institute.
Reporting by Hiroko Hamada and Hideyuki Sano; Editing by Christopher Cushing