Crowdfunding Market in Brazil
The crowdfunding market effectively started in Brazil in 2011, with the creation of the website Catarse, which was the first Brazilian company of this type.
The crowdfunding market effectively started in Brazil in 2011, with the creation of the website Catarse, which was the first Brazilian company of this type. After its creation, several companies followed the trend such as Sibite, Benfeitora and Vakinha.com.br. At its peak there were 80 different crowdfunding websites operating. Currently there are only 24 of them, which is considered a result of the harsh scenario for the market in the country.
Since the crowdfunding market is fairly recent in Brazil, it is still evolving and adapting to the country’s donation profile. There is no specific data about the market share among donation platforms, although it is known to be considerably small, estimated at around 0,03% and 0,3%. One of the main reasons for the low adoption is the unprofissionalization of the sector, which is still not regulated, raising lots of questions related to taxation. The pioneer of crowdfunding, Catarse, had BRL 32 million in transitions in its four and half years of operation.
Crowdfunding in Brazil is increasing as an opportunity for independent financing, but following a slightly different model to the rest of the world. The Brazilian websites usually display projects from activists, digital culture figures and even athletes, who can raise money without the intervention of the government or being sponsored by companies. Other types of successful projects published on this type of platform are related to startups, music, cinema, games and even comic books. Research from the Universidade Federal Fluminense states that Brazilian crowdfunding is more focused on micro-financing and playing an important role in the national culture market. It is an easier channel for funding than regular governmental incentive policies, such as the Lei de Rouanet.
Funding Campaigns
The most common crowdfunding models available in Brazil are donations and rewards. The donation projects are usually focused on social causes such as surgeries, animal shelters or uniforms for kindergartens. Reward projects are those which offer any kind of reward according to the amount financed by the user. The supporting options are defined as “all or nothing” or flexible. In the former case the project owner only receives the funds if the target is reached and the supporter is refunded in cases where this does not happen, and in the second the money is transferred to the project owner independently of the amount raised.
The websites usually use a MoIP payment system or PayPal to collect monies paid by supporters that donated using a credit card, bank transfer or boleto bancário. The project owner must have a MoIP account or PayPal to receive donations. In cases of refunds, the supporter will receive the money according to the payment method used. For credit card refunds the amount will be compensated on the next invoice, and for wire transfers or boleto the money is transferred to the bank account. The amount financed is under total responsibility of the donor, who must accept the risks involved in the project whether it succeeds or not. The Brazilian Consumer Protection Agency, or Procon, considers crowdfunding as a consumption relation, and the consumer has the right to complain in cases of disservice, such as in the case of not getting the expected reward.
Types of Crowdfunding
The main websites in Brazil are usually open to any kind of projects, but there are also thematic ones directed to determined causes, such as Bicharia, for animal protection, Bookstart, focused on financing independent publishers, and Socialbeers, for artisanal beer producers.
A model that is being largely employed in the world is debt crowdfunding. This allows collective financing, allowing the proposer to attend its needs and supporters to receive the applied money with interest rates. However, this model is not allowed in Brazil according to the Brazilian Central Bank’s regulations, that forbids allowances between two individuals. In 2010, a website called Fairplace was created using this model, but was shut down due to legal reasons.
The owners of the main websites highlight the importance of spreading crowdfunding models in Brazil, since there is a lack of trust amongst people regarding the real destination of their money. In order to avoid non-serious projects, most of the websites pre-select the projects according to their content, providing more confidence for the donor to participate.
Main Crowdfunding Websites in Brazil
The main crowdfunding websites currently available in Brazil are listed below:
Catarse
Catarse was the first Brazilian crowdfunding website, created in 2011. It has several categories of projects and a total of 3.7 thousand published projects with more than 221 thousand supporters. The only supporting campaign available is “all or nothing” which is free of charge, but the website retain 13% of the target money raised which already includes additional fees. The campaigns can last from 1 to 60 days, which is defined by the project owner. The supporter is refunded if the project does not reach its target. All the transactions by Catarse are in Brazilian Reais. The money is transferred to the project owner in up to 10 working days through a bank wire transfer.
Kickante
Kickante is among the most popular crowdfunding websites in Brazil, and is the only one that follows a North-American format. The website offers “all or nothing” and flexible campaigns, charging 12% and 17.5% to each one respectively. One of the main distinctive features available is the possibility to pay in installments, and the project owner can reopen the campaign for new funds whenever it is necessary. Kickante accepts all types of campaigns and there is no pre-approval process, being published automatically. The project owner can keep a campaign open from 1 to 60 days, and the money is transferred to the owner’s account between 2 to 4 weeks.
Benfeitoria
Benfeitoria was created in 2011, publishing any pre-approved projects related to social, creative and collective cultures. The website has a traditional structure with campaigns from 1 to 90 days, with rewards and the “all or nothing” model. Benfeitoria does not charge any mandatory fees, and the announcers can give any amount to support the website if they choose to do so. However they charge from 1.3% to 4.9% and a fee of BRL 0.39 for each contribution. The company has a parallel website called Recorrente, created in 2014, in order to house recurring campaigns, where the project owners get continuous funding, charging 5% of the amount raised.
Juntos.com.vc
Created in 2012, Juntos.com.vc is a non-profit crowdfunding website focused exclusively on social projects, specializing in non-governmental organizations. Juntos.com.vc adopts an “all or nothing” with rewards system, charging a fee from 2.49%, for MoIP, wire transfer and boleto, to 4.29%, for credit card transactions, plus BRL 0.39 for each contribution. The projects must be approved by Juntos.com.vc before launching.
Sibite
Sibite was launched in 2011 and initially focused on culture projects, but now accepts anyone who can not get financed by traditional means, such as governmental public policies. Sibite offer distinct models from other websites that goes beyond crowdfunding, such as crossfunding, in which the project gets marketing, communication and deployment support to obtain tax incentives and sponsoring, and personal campaigns for philanthropy projects. The projects using the “all or nothing” model , are charged a handling rate of 13%. On the other hand, the flexible one, allows the project owner to collect the money when 51% of the target is reached, charging 20% of the amount and the credit card transaction fee.