Japan’s crowdfunding site Campfire breaking away into cryptocurrency, P2P payments


See the original story in Japanese.

Campfire, one of leading crowdfunding sites in Japan, announced earlier this month that it has fundraised 600 million yen (about $5.5 million US) from JAFCO (TSE:8595) and SBI Investment. Details such as the payment date and investment ratio were not announced. The company also revealed that their total funding so far has reached 1 billion yen (around $9.1M US).

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Since the company’s beginning in 2011, they have seen over 6,500 projects, had 240,000 backers participate in crowdfunding while the total amount of deals transacted on the platform has reached 2.4 billion yen (about $22M US). In particular, they have experienced remarkable growth in the past year, and in 2017 the total value of transactions has increased to 12 times that of the period from January to March of 2016.  With this funding, the company expands into cryptocurrency, P2P payments, and investment businesses.

One year since founder’s return as CEO

Kazuma Ieiri, Founder and CEO of Campfire
Image credit: Takeshi Hirano

It has been awhile since the idea of crowdfunding appeared.

Around eight years ago Kickstarter took the lead in 2009. If we look at the annual review published by them we can get a general feel for their numbers. About 580 million dollars is invested in nearly 58,000 annual projects, and since the numbers published by Campfire are cumulative it is difficult to compare the two.

In February of last year Kazuma Ieiri returned as CEO of Campfire. At that time he expressed a feeling of crisis.

It’s been five years since we began Campfire out of love for crowdfunding, but honestly if Campfire itself and crowdfunding as a whole is left as it is, I’m worried about shrinking.

At the time, Ieiri was grappling with a 5% cut to commission fees.

I want to launch 1000 individual projects for 50,000 yen (about $460 US) from one large project totaling 50 million.

This train of his thought lead to the concept of the “democratization of funding.”

His next move was swift.

They made a rapid fire succession of announcements about use cases leveraged by the crowdfunding platform: Local businesses that promote local initiatives, fan clubs that are allowed to charge on a subscription basis, in addition to music performance supporting projects currently showing great growth.

In addition to cutting fees, the company also gradually removed hurdles so that more people could participate in crowdfunding, for example, adding the “All-In” function that allows projects to receive funds even if they do not reach their target. As a result, the total transaction amount will increase greatly, and after seeing an increase in capital, etc. via external funding, they will once again be on the path to growth.

Breaking away from crowdfunding

So, what are Ieiri’s views on crowdfunding and the future?

First, it is easier to understand by organizing the new business expansions announced this time around. The business will be comprised of the FireX cryptocurrency exchange (recently launched), a P2P (peer-to-peer) payments service called Polca (scheduled to launch in June), investments, and their  major existing business area dealing with crowdfunding projects.

The overall picture presented by Campfire

What they all have in common is the matching of people who intend to start something and those who wish to support them. Of course, their cryptocurrency business is not solely for trading; an even bigger incentive is likely that they are more easily able to decide rules based on comparisons with legal currency.

Polca is an extremely personal support/financing project, and Campfire a slightly larger project, with the businesses that could stem from them bringing investments and loans. Through the use of crothe ghosts of transaction fees that haunt them at every turn can be exorcised.

To tie it all together, the hazy picture the company paints of their platform, with people connecting at the center and the goal of support through distribution of their own money effectively creates an economy.

The next stage of the “Democratization of Funding”

Speaking with Ieiri at Infinity Ventures Summit in Kobe.
Image credit: Takeshi Hirano

In an interview conducted in November of last year, Ieiri confided his thoughts on expanding the scope of the project from crowdfunding to a social and money lending business. He reiterated those sentiments this time around.

He said:

Japan is full of challenges–so much so, that they even say we’re a developed country with problems. […] A redistribution of wealth, I think is what it’s called–I believe it’s necessary to create a system to circulate money from private citizens who have it to those who do not. However, it remains, how to do it through a steady business scheme rather than charitable activities.

Crowdfunding was supposed to be the ideal democratization method for Ieiri. However, as the beginning numbers show, the wall remains high to make it even bigger and turn it into a financial method anyone can access. The announced funding appears to be a way to break through the wall.

At the time of this news was revealed, I was able to get in contact with Ieiri in Kobe during the invitation only conference, Infinity Ventures Summit. He had this to say on the funding:

It’s been about one year, February of 2016, since returning full-scale to Campfire, which had 3 employees at the time. Now that number has increased to nearly 70, and we moved offices just the other day. In regards to finance, as we announced, we have earned nearly 1 billion yen cumulatively.

In terms of the total transaction voume, this year it’s expected to be around 3.5 billion yen, bringing the total to 5 billion. We’ve seen some growth, but we still have a ways to go. Until now we were ‘Campfire for Crowdfunding’, but from here on out we will evolve into Campfire–aiming for a world where anyone can raise their voice for any funding needs, including crowdfunding. I intend to use the funding to advance our new image, one that goes beyond the framework of crowdfunding in order to advance the democratization of funding.

I plan to continue checking the trend of how the crowdfunding model evolves in Japan.

Translated by Amanda Imasaka
Edited by Masaru Ikeda