A Marketing Tool for Existing Products?
Crowdfunding companies in South Korea are turning themselves from startup supporters into e-commerce companies to do harm to consumers.
Crowdfunding in South Korea started eight years ago. Until recently, most of those companies successfully fulfilled their role, that is, helping startups with innovative products become venture firms by providing financing opportunities for them. The local crowdfunding market grew from 25 billion won to 310 billion won from 2016 to 2019.
These days, however, an increasing number of those companies are focusing on products and services already in the market and suspension of funding is becoming more and more frequent as they are increasingly deviating from their original purpose. According to the Korea Consumer Agency, the number of crowdfunding-related consumer protection requests tripled to 66 in 2019.
Sellers as well as consumers are complaining about crowdfunding platforms that have become marketing tools. “Many crowdfunding platforms are just bringing existing offline products online rather than introducing newly developed ones,” said a young business founder who recently took part in crowdfunding.