Crowdfunding: the moderating role of the funding goal on factors influencing project success

Purpose: The factors determining the success of crowdfunding projects is one of the central aspects for crowdfunding researchers. Most quantitative approaches recognize the amount of funds targeted as an important control. However, little is known about the impact of the funding goal on other factors that impact crowdfunding success. We hypothesize that the effect of crowdfunding success factors might vary dependent on funding goal level. Design/methodology/approach: A dataset of 338 crowdfunding projects on the German crowdfunding platform StartNext, with a vast majority of projects founded in Germany and a few projects from international European founders, in the years 2015 to 2016 is analysed by conducting regression analyses controlling for varying funding goal sizes. We use the dependent variables success, the degree of success, number of project supporters and the average contribution per supporter and control whether the effect of independent variables such as comments, updates and social media depend on different funding goals. Findings: Our study indicates that the impact of the investigated success factors in fact strongly depends on the goal sizes of crowdfunding projects. By grouping projects into clusters of varying funding goal sizes, we find that the impact of individual success factors changes and that the funding goal plays a moderating role for factors impacting project success. Research/practical implications: These results help both researchers and future entrepreneurs to better understand supporter behaviour. First, we suggest researchers to include the projects’ funding goals as moderators in most cases especially when assessing success factors for crowdfunding projects. Second, future entrepreneurs should be aware that factors influencing the success of a crowdfunding project strongly depend on the set funding goal. Depending on funding goal, some factors become less relevant whilst other factors’ importance is increasing. Originality/value: The funding goal of a crowdfunding project determines whether instruments used by project founders have an impact on their project’s success. Although the funding goal is a central issue in crowdfunding research, it is often used as independent variable, in contrast we suggest incorporating it as a moderator for other success factors

Crowdfunding Project Success for Game Developers: Evidence from Kickstarter and Steam

Crowdfunding has revolutionized business investor connection in many industries, one of which is game development. Traditionally, triple-A game developers and publishers were able to monopolize the industry, but with the emergence of crowdfunding platforms, smaller game development teams and companies have a way of competing with large corporations by attracting funds. However, Kickstarter reports show that two-third of game funding projects fail to meet their goals. This study develops and empirically examines a theoretical model to predict video game’s crowdfunding success to address this gap. We collect data on video game projects that were initiated on Kickstarter and were later released on the Steam platform. Our analysis of more than 7000 reward tiers for 1967 projects reveals that reward type (free game copy, in-game perks, accessories, artworks, and involvement), and reward description length positively influence funding success, while the number of reward tiers and funding period negatively impact funding success

Dynamics of reward-based crowdfunding’s degree of success : impact of project dimension

Mestrado em Gestão e Estratégia IndustrialIn this dissertation we develop a better understanding of a relatively new phenomenon known as crowdfunding. We start by shedding some light on its roadmap, namely how it became a mix of the traditional financing methods and crowdsourcing. Having many specialized variations, sometimes crowdfunding leans toward more financially focused projects, rivaling banking, business angels, capital ventures, etc., while sometimes it focusses on the development and pre-selling of new products. The latter is known as reward-based crowdfunding, in which this study is focused. A creator presents a product or idea in development to the general public (the crowd). Then, any individual maysupport the project by giving money to the creator in exchange for a future reward, typically the product itself. What we try to accomplish with this study is to better understand the dynamics of this complex environment, by examining which variables contribute to the degree of success of campaigns in general, but also if the dimension of the project changes its dynamics and the variables contributing to their success. Based on the existent literature, we build four linear regression models to test our hypotheses,using data gathered from Kickstart.com campaigns, where our dependent variable is the degree of success of a crowdfunding project. Our results suggest that indeed project dimensions affects the dynamics of what contributes to the degree of success of a campaign. Backer related variables are almost always significant, but in the case of the number of backers supporting the campaign at day 1, depending on the project dimension, the contribution changes from negative to positive. Structure, communication, creator, and popularity related variables are also sensitive to project dimensions, especially their significance. With this study we contribute to a better understanding of the crowdfunding phenomenon, with theoretical and managerial implications and leave suggestions for future research on the topic.Com esta dissertação desenvolvemos uma melhor compreensão acerca de um fenómeno relativamente novo, conhecido como crowdfunding. Começamos por examinar o seu desenvolvimento, nomeadamente como se tornou uma mistura entre os métodos de financiamento tradicionais e o crowdsourcing. Por vezes o crowdfunding assemelha-se mais a projetos de foco financeiro, rivalizando o papel de bancos, business angels, capital de risco, etc., outras vezes foca-se mais no desenvolvimento e na pré-venda de novos produtos. Esta última tipologia é conhecida como crowdfunding baseado em recompensas, no qual este estudo se concentra. Um criador apresenta um produto ou ideia em desenvolvimento ao público em geral (a crowd ou multidão). Posteriormente,qualquer indivíduo pode apoiar o projeto doando dinheiro ao criador em troca de uma recompensa futura, normalmente o próprio produto. O que pretendemos com este estudo é compreender melhor a dinâmica deste ambiente complexo, examinando quais as variáveis que contribuem para o grau de sucesso das campanhas em geral, mas também se a dimensão do projeto muda a sua dinâmica e as variáveis que contribuem para seu sucesso. Com base na literatura existente, construímos quatro modelos de regressão linear para testar as nossas hipóteses, utilizando dados retirados de campanhas no Kickstarter.com, sendo a nossa variável dependente o grau de sucesso de um projeto de crowdfunding. Os nossos resultados sugerem que a dimensão dos projetos afeta a suadinâmica e os fatores contributivos para o seu grau de sucesso. Variáveis relacionadas com os apoiantes das campanhas são quase sempre significativas, mas a contribuição donúmero de apoiantes que apoiam o projeto no primeiro dia da campanha muda de negativa para positiva, dependendo da dimensão do projeto. Variáveis relacionadas com a estrutura, comunicação, criador e popularidade são também sensíveis às dimensões do projeto, especialmente quanto à sua significância estatística. Com este estudo contribuímos assim para uma melhor compreensão do crowdfunding, com implicações teóricas e de gestão, deixando sugestões para investigação futura sobre o tema.info:eu-repo/semantics/publishedVersio

Warm-Glow Giving, Hedonism, and Their Influence on Muslim User Engagement on Loan-Based Crowdfunding Platforms

This paper investigates how platform design features affect the funding motivation of Muslim users on loan-based crowdfunding platforms. Theoretically grounded in Andreoni’s warm-glow giving theory and Sober and Wilson’s model of evolutionary and psychological giving, this work has high practical relevance, given the increasing demand for Islamic financial products. Loan-based crowdfunding platforms are important to the unique context of this research since Islamic religious constraints regulate monetary transactions involving lending. We used a scenario-based survey developed on the basis of a pilot study and confirmed by our manipulation check. The results show that “hedonism” represented by monetary interest negatively affected Muslim users’ willingness to engage in a loan-based crowdfunding project. This finding challenges the commonly agreed-upon egoistic motivator for loan-based crowdfunding platforms (i.e., monetary interest), which is based on Western Christian and Chinese Confucian capitalist economic and financial paradigms. Remarkably, we also found that Muslim funders’ level of willingness to engage on the hedonistic platform had an exponentially positive effect on the amount of money that funders were willing to lend. By contrast, “warm-glow giving,” manifested as belonging to a community, had no effect on users’ engagement. Implications of these findings for theory and practice are discussed

참신성에 따른 스타트업 크라우드펀딩 창업 자금 조달 전략

학위논문(박사) -- 서울대학교대학원 : 공과대학 협동과정 기술경영·경제·정책전공, 2023. 2. 황준석.This thesis explores startups' fundraising and development strategies that started from novel ideas to sustainable companies through crowdfunding. From the stage of persuasion by presenting novel ideas to subsequent business development, the study analyzes the factors that enable startups to grow successfully through crowdfunding and accordingly reveals what an effective action strategy from the entrepreneur's point of view is. The purpose of the thesis is to understand the cycle of the campaign, value delivery, and subsequent development while focusing on the strategic perspective of entrepreneurs using crowdfunding as an entrepreneurial fundraising tool. First, at the fundraising point, which is the beginning of crowdfunding startups, the study focuses on indicators that can measure an idea's novelty and explore the behavioral strategies of founders during crowdfunding campaigns according to the degree of novelty. This study proposes a machine learning-based methodological measurement to understand the novelty and presents a behavioral strategy using the method. The study demonstrates that the novelty of an idea is a crucial element in changing the direction project founders must act for successful fundraising in reward-based crowdfunding. The second study proposes a framework for a satisfactory crowdfunding experience for reward-based crowdfunding participants. Through the framework of utilitarian-hedonic value delivery borrowed from consumer research, the study finds the determinants of how founders deliver value to crowdfunding participants after realizing business ideas. This study explores the post-campaign idea implementation and satisfaction delivery process, taking preliminary steps to broadly understand the subsequent business processes after fundraising. The third study examines the differences in characteristics of crowdfunding startups that have attracted follow-up venture funds. In particular, the study analyzes how the timing and valuation of follow-up venture financing are affected by the characteristics of the crowdfunding campaign process. This study in-depth finds the relationship between the process of crowdfunding and long-term sustainable startups.Chapter 1. Introduction 1 1.1. Research Background 1 1.2 Research Objectives 4 1.3 Research Outline 5 Chapter 2. Literature Review 8 2.1 Entrepreneurial Financing 8 2.1.1 Venture Capital 8 2.1.2 Crowdfunding 11 2.1.2.1 Crowdfunding in entrepreneur perspectives 12 2.1.2.2 Crowdfunding in investor perspectives 14 2.2 Idea Realization 16 2.2.1 Signaling theory 18 2.3 Contribution of the study 19 Chapter 3. Effective Strategies to Attract Crowdfunding Investment Based on the Novelty of Business Ideas 23 3.1 Introduction 24 3.2 Literature Review 27 3.2.1 Crowdfunding as entrepreneurial financing and signaling theory 27 3.2.2 Novelty of an idea and crowdfunding success 29 3.2.3 Measuring novelty and innovation performance 31 3.3 Theoretical framework and hypotheses development 33 3.3.1 Ideas novelty 34 3.3.2 Target diversification and an ideas novelty 36 3.3.3 Information updates and two-sided communication 39 3.3.4 Method 45 3.3.4.1 Data sources 45 3.3.4.2 Descriptive statistics 46 3.3.4.3 Dependent and explanatory variables 47 3.3.4.4 Control variables 49 3.3.4.5 Empirical model 51 3.3.5 Results 54 3.3.6 Discussion 66 Chapter 4. Delivering Satisfaction after Crowdfunding through Utilitarian and Hedonic Value Structure 74 4.1 Introduction 75 4.2 Theoretical Background 77 4.2.1 Idea realization in crowdfunding 77 4.2.2 Market feedback from funder satisfaction after fundraising 78 4.2.3 Idea implementing capacity: delivering the utilitarian value 81 4.2.4 Emotional satisfaction of participating innovation: improving the hedonic value 84 4.3 Research objective, Methodology, and Data 88 4.3.1 Research objective and data source 88 4.3.2 Dependent variable 89 4.3.3 Explanatory variables 90 4.3.4 Control variables 91 4.3.5 Descriptive statistics 92 4.3.6 Empirical model 93 4.4 Results and Discussion 96 4.4.1 Empirical results 96 4.4.2 Discussion 99 4.5 Conclusion 102 4.5.1 Limitations and further studies 103 Chapter 5. Subsequent funding of crowdfunded startups: Focusing on factors affecting follow-up funding amount and timing 105 5.1 Introduction 106 5.2 Theoretical framework and hypotheses 109 5.2.1 Crowdfunding as entrepreneurial financing 109 5.2.2 Venture financing performance: amount and timing 112 5.2.3 Research framework 113 5.2.4 Feedback aspect and follow-up financing 114 5.2.4.1 Securing market expectation 114 5.2.4.2 Securing market satisfaction/dissatisfaction 117 5.2.5 Relationships with investors and follow-up funding 119 5.3 Data and method 122 5.3.1 Data sources 122 5.3.2 Descriptive statistics 123 5.3.3 Dependent and explanatory variables 124 5.3.4 Control variables 127 5.3.5 Empirical model 128 5.4 Results 130 5.5 Discussion with case studies 135 5.6. Limitations and further research 141 Chapter 6. Conclusion 144 6.1 Overall Summary 144 6.2 Implications and Contributions 148박

Business Strategy on the Success of Sharia Securities Crowdfunding: Indonesian Sharia Crowdfunding Pioneer

Purpose: Internet-based fundraising or commonly known as crowdfunding (CF) is currently a popular means for entrepreneurs to raise funds. The huge potential of the sharia economy encourages startup companies to establish sharia-based securities crowdfunding (SCF) companies. The purpose of this study is to provide an understanding of business strategies in order to achieve success in Islamic SCF companies in Indonesia. Design/methodology/approach: This research employed a qualitative research design with a case study approach on the first sharia SCF company in Indonesia named Shafiq. The data were collected by conducting in-depth interviews with the board of directors at Shafiq. Results: The research found that the success of Islamic SCF companies is triggered by the presence of teams, content, videos, platforms, use of social media, project quality, legality, business selection, and selection of sharia systems. In other words, this indicates that the factors of trust and security for both business actors and investors are the main factors that drive the success of sharia SCF companies. The novelty of this research is obtained by using a qualitative case study method to analyze the business strategy of Islamic securities crowdfunding, and there are no researchers who have investigated the strategy of Shafiq's company as the first sharia SCF company in Indonesia. Paper type: Research paper &nbsp

Advances in Crowdfunding: Research and Practice

publishedVersio

Advances in Crowdfunding

This open access book presents a comprehensive and up-to-date collection of knowledge on the state of crowdfunding research and practice. It considers crowdfunding models and their different manifestations across a variety of geographies and sectors, and explores the perspectives of fundraisers, backers, platforms, and regulators. Gathering insights from a wide range of influential researchers in the field, the book balances concepts, theory, and case studies. Going beyond previous research on crowdfunding, the contributors also investigate issues of community, sustainability, education, and ethics. A vital resource for anyone researching crowdfunding, this book offers readers a deep understanding of the characteristics, business models, user-relations, and behavioural patterns of crowdfunding

Equity Crowdfunders’ Human Capital and Signal Set Formation: Evidence from Eye Tracking

This is the author accepted manuscript. The final version is available from SAGE via the DOI in this record.Signaling theory typically assumes that attention is always given to observable signals. We study signal receivers’ formation of signal sets—the signals to which receivers attend and that they can use for subsequent interpretations. Drawing on a cognitive perspective, we argue that signal receivers’ human capital influences the volume and type of signals they attend to and the time they take to form signal sets. Using eye tracking, we show that equity crowdfunders do not attend to many signals that are easily observable on a campaign page, and that differences in crowdfunders’ human capital uniquely affect their signal set formation.Research Foundation – Flander