Crowdfunding — a way of raising money over the internet from multiple individuals — first started gaining serious traction in the wake of the 2008 global financial crisis when lines of credit from the banks dried up for all but the biggest and safest clients.
Since then, the industry has grown from being a $530 million industry in 2009 to almost $2.7 billion in 2012, according to a study by Massolution, a research company that specialises in crowdfunding businesses.
According to the World Bank, that figure is set to balloon to $US96 billion by 2025. One country — China — will account for $US50 billion of that total.
Despite the massive market potential, American crowd funding giants Kickstarter and Indiegogo have so far been reluctant to test the waters in China -- choosing to focus their international expansion efforts on safer options like the UK, Germany, France and Canada.
Their reluctance is not surprising. The history of foreign tech firms who have tried to gain a foot-hold in the Chinese market is littered with many failures.
Companies that dominate the tech lives of most Westerners such as Facebook, Google, Amazon, Twitter and eBay have made valiant attempts at the Chinese market but have only managed to gain small beachheads.
While the big American players dither, one of Australia’s own crowdfunding start-ups is having a crack at China’s elusive market.
Having already expanded operations to Malaysia and Singapore, Pozible made its first foray into the Chinese market late last month with the launch of its first China-based project, the Gyenno One fitness wristband.
The project smashed its funding target in under a minute. At the time of writing, the project has raised RMB 770,000 ($A132,000) from over 14 countries — 77 times the original funding target.
When asked why Pozible is trying what many other foreign tech companies have failed at before, Chinese-born founder of Pozible Rick Chen says it’s because China is home to him.
“I’m well positioned to get into that market because I know it by nature” says Mr Chen.
“But it's not only because it’s where I'm from, it’s also an emerging market that nowhere else in the world can actually compare to.”
Chen feels the time is right for Pozible to make its move in China as other major markets have already become too saturated.
“China on the other hand — because of the language barrier, because of cultural barriers and a few other critical issues — it’s relatively isolated from the rest of the world.”
That isolation has meant that a lot of Chinese innovation that is hidden from view is waiting to be discovered.
According to Chen, China is no longer just about cheap knock-offs and low-end manufacturing goods. He has already lined up a number of innovative products to be launched on his platform including a smart watch for elderly people that monitors the heartbeat and sends out health warnings.
“Shanzhai” or “guerilla” innovation in which local inventors copy and adapt technology from the West has been thriving in China for years. What has been lacking is a legitimate way for that energy to bubble to the surface.
In many ways, conditions in China are perfect for a boom in crowdfunding.
China’s banking system - though steadily reforming - still makes it hard for budding entrepreneurs to access the credit they need to build up their businesses.
Other similar phenomenon like Group-buying behaviour existed in the Chinese market long before it became well known in the West with the emergence of sites like Groupon.
When that site attempted to enter the Chinese market, local companies cookie-cut their model, adapted it and stole away market share before they could even get a proper start.
When asked why the same thing won’t happen to Pozible, Chen says it comes down to the community the site has fostered over its four years of existence.
“A local rip-off can easily get the functions of the site, but they won't get that community of people behind the site” Chen says.
A lack of policy certainty has contributed to the dearth of Chinese companies operating in the sector. Unsurprisingly, when it comes to online financial innovation, it’s fallen to Alibaba to drag China’s policy makers into the future.
In late March Alibaba launched Yu Le Bao, a fund that allows customers to invest in entertainment products. The company claims it’s an insurance product but works in much the same way as a crowdfunding project would.
The Chinese Securities Regulatory Commision announced soon after that it was researching specific regulations for the sector and would announce them soon.
In the meantime, Chen hopes to get create a steady base for Pozible in China and start bringing the competition to the local players.
“That’s what our aim is, if we're not as big as them we shouldn't be too far from what they're doing.”