How does crowdfunding work? Understanding the process through its activity

Crowdfunding is a process featuring incremental financial donations from a ‘crowd’ of backers to help fund a project initiated by a creator. In recent years, crowdfunding has generated significant revenue as well as great interest from industry, government, and creative entrepreneurs. However, rate of successful funding for crowdfunding projects remains around 35% for global crowdfunding leader Kickstarter1, and lower yet for other platforms. The identified gap between crowdfunding growth and crowdfunding success rates prompts the overarching question driving this thesis: how does crowdfunding work? This question is explored and answered through the lens of activity, as activity is largely observable, is featured in every project, and has some degree of control for creators. Activity was uncovered using semi-structured interviews, online observation, and daily monitoring of four crowdfunding projects from pre- to post-funding. By cataloguing the specifics of crowdfunding activity, this thesis reveals the breadth of activity common to crowdfunding projects: financial, non-financial, online, and offline. Further, in mapping activity along a timeline, five distinct periods of crowdfunding activity are identified, each with specific aims. Additionally, the relationships guiding activity are assessed through discussion of community within crowdfunding, accentuating both emotional and behavioural investment in a project. The resulting insights are summarised into two categories of contributions. The first is the consolidation of elements of importance to crowdfunding. By making implicit features of crowdfunding explicit, this adds precision to an understanding of the crowdfunding process. The second is the identification of underlying principles and essential steps to crowdfunding, which can be used by project creators to maximise success. This thesis provides a broader understanding of crowdfunding, emphasising the extent to which successful projects engage stakeholder communities with financial and non-financial activity and outcomes over time, as well as across various sites

Decision Making in Crowdfunding Under Risk Analysis

Crowdfunding is an emerging international financial activity often performed via internet mediated platform. With the rapid growth of this financial system, rising risks would influence participant’s decision making. In this study, we examine the process of a typical crowdfunding activity, pre-ordering pledging as well as its coming risks. Based on the analysis, we combine Evolutionary Stable Strategy (ESS) and General Bass Model (GBM) to build decision-making models for pre-ordering pledging theoretically where risk factors are taken into account. Finally, evolutionary game simulation system is built to simulate the dynamic decision-making behavior in a risk changing environments. The simulation results demonstrate that the currency exchange rate give great impact on international participant’s decision-making behavior in crowdfunding. Low exchange rate brings less investment decision from the investor and high exchange rate leads to overheated investment which challenges funder’s diligence. Project system risk may infest the participant’s decisions-making process and cause ambiguity at the end. Limitation and managerial suggestions are discussed

Theatre makers’ experience with crowdfunding : an exploratory study

This thesis is an exploration into theatre makers’ experience with crowdfunding amidst receding funding provision to the arts in the UK, post-2008 austerity. It focusses on the relationship between theatre makers and their backers, and looks at the consequences of collective financial support on their practice and theatrical productions. Three largest groups of users on the platform crowdfunder.co.uk have been interviewed to investigate aspects of their practice that encourage giving from their backers. Framed by the principles of giving/gifting, their relationships are mapped against the structural dimensions of social capital, in particular, their levels of social capital to reveal an underlying reciprocity of mutual benefit and the public good status of theatre. It also draws on the convertibility of capitals from the financial, social and symbolic capital of theatre makers in their bid to draw in institutional funding for a more sustainable existence. While donations from social relations through crowdfunding may have filled the gap in arts funding provision, it has also simultaneously given rise to a more diverse range of theatre productions, not necessarily framed by the policy-driven agenda of institutional funders. Hence, by participating in online giving, backers ‘democratically’ vary the theatre funding ecology by lending visibility to wider cohorts of theatre makers and their theatrical offering

Understanding UK Rewards-based Crowdfunding as an Alternative Source of Entrepreneurial Finance

Entrepreneurial financing plays a vital role in the survival and viability of businesses (Crosetto & Regner, 2018; Mason & Harrison, 1991; Signori & Vismara, 2017; Zhao et al., 2019). Research studies and financial commentators have suggested that reward-based crowdfunding (RBC) plays an increasingly important role in the process of business start-ups (Baeck et al., 2014; Bilau & Pires, 2018; Lelo de Larrea et al., 2019; Mollick, 2014). However, a review of literature indicates that little is known about the field of RBC from a theoretical perspective. Therefore, the main aim of the thesis is to address the knowledge gap by developing a conceptual framework to advance understanding of the RBC funding process through using a signalling theory lens. The author adopted a pragmatist epistemological stance. This study collected publicly available data of 636 UK start-up projects on a RBC platform, Kickstarter, from September to December in 2017 and repeated this for the same period in 2018. It was found that signal observability (the size and quality of the fundraiser’s network) play a significant role in crowdfunding success across all projects. Whereas, prosocial intention (charitable purpose) plays a stronger role in predicting the likelihood of the success of projects with a medium goal. This study identifies and evaluates how the key factors (project quality, project intention and signal observability) impact on crowdfunding’s success, as well as investigates the interplay between different actors (signallers, receivers and signals) in the RBC market. A further important contribution of this work arises from the use of rich qualitative data in addition to the quantitative research approaches previously utilised by others (Bi, Liu and Usman, 2017; Kunz et al., 2017). The thesis makes contributions to both theory and practice. The findings have major implications for different parties including: policy makers, practitioners, researchers and educators. It provides an insight for practitioners considering the adoption of a crowdfunding approach and the knowledge and recommendations in running a successful RBC campaign. It also helps nascent entrepreneurs to reconstruct their financing strategy through the better understanding of the position of RBC in entrepreneurial financing. An important implication is that this study can help policy makers to better understand the RBC industry, which is essential in developing relevant policies in this under-governed area. Finally, this research contributes to growing knowledge and interest in entrepreneurial finance, especially in the online alternative finance market, which is beneficial for both researchers and educators

Assortment Optimization with Customer Choice Modeling in a Crowdfunding Setting

Crowdfunding, which is the act of raising funds from a large number of people's contributions, is among the most popular research topics in economic theory. Due to the fact that crowdfunding platforms (CFPs) have facilitated the process of raising funds by offering several features, we should take their existence and survival in the marketplace into account. In this study, we investigated the significant role of platform features in a customer behavioral choice model. In particular, we proposed a multinomial logit model to describe the customers' (backers') behavior in a crowdfunding setting. We proceed by discussing the revenue-sharing model in these platforms. For this purpose, we conclude that an assortment optimization problem could be of major importance in order to maximize the platforms' revenue. We were able to derive a reasonable amount of data in some cases and implement two well-known machine learning methods such as multivariate regression and classification problems to predict the best assortments the platform could offer to every arriving customer. We compared the results of these two methods and investigated how well they perform in all cases

Venture Capital Funding After Crowdfunding Success: A Study of Successful Kickstarter Campaigns

For start-ups, a successful crowdfunding campaign could generate significant opportunities to access additional funding resources. This paper contributes to advancing our understanding of how characteristics of a successful Kickstarter campaign may determine a start-up’s follow-on fundraising performance, with a special focus on future venture capital (VC) financing. We draw on 483 successfully crowdfunded projects on Kickstarter and more than 80 follow-on VC investments throughout the period 2010-2018 to investigate how various venture quality attributes (e.g. high pledged amount, strong social media alliance) and uncertainties (e.g. large number of backers) contribute to the subsequent increase (or decrease) in VC investments. Our results show that larger public investments (i.e. pledge amount) signal greater public confidence, translating into significant rise in the probability and amount of subsequent VC financing. We also find that founders’ professional connections (in LinkedIn) factor in the venture’s future funding success by raising both the probability and number of subsequent VC rounds. Statistically significant results were found supporting our hypothesis that VCs tend to devalue a large crowd of backers, presumably due to future market loss concerns. Both the probability and the number of follow-on VC rounds were negatively affected by a high number of backers. Finally, we show that serial creators with back-to-back crowdfunding successes are more likely to go back to the crowd for future funding needs which translates into higher probability, number and size of subsequent crowdfunding rounds. However this strong association was not found to be negatively affecting the degree of future VC involvement

Financing for Society: Assessing the Suitability of Crowdfunding for the Public Sector

In what follows, we offer the first systematic study to assess the suitability of investment-based crowdfunding for the public sector. Our research engaged six public sector case studies along with external partners to evaluate the economic, legal, political, and technical potential of crowdfunding as an additional form of finance for public sector infrastructure projects. The UK has a long tradition of using private sector finance to fund public sector infrastructure projects such as: bridges and tunnels, hospitals, housing, prisons, rail, roads, and schools. The NHS has a long tradition of using private finance and, as it is unable to borrow money in the same way as other public bodies, this trend appears set to remain. So, as the UK crowdfunding sector continues to grow and to mature, we wanted to use our research to: • help overcome existing knowledge barriers; • test whether or not crowdfunding could offer better value to the public sector; and to • assess if the internal capacity required to develop crowdfunding for the public sector could be minimised so that it mirrored that for the PWLB, or via PPP project finance, as common sources of public sector funding. To achieve this, it was vital that our research to assess the suitability of crowdfunding directly engaged and collaborated with public sector bodies in order to generate a robust evidence base of case studies for others to draw upon

Social Media & Place Making

My research addresses the intersection of two concepts: urban transformation and place making. Firstly, concerning Urban transformation, there is the crisis of the city that has created vacant and underused spaces. These areas invite interventions from the local communities and bottom-up solutions to real, local and social problems. Secondly, regarding the relation between people and surroundings, I consider place making that is a process intrinsically connected with socio-spatial relations of a community. In my thesis digital transformation is the interpretation key of the two concepts, technologies, new media and the increased interaction between local actors. The aim of this project is to verify the role of internet technology and social media in the process of place making. As part of the study there will be an interrogation about the social media: how digital networks changed the relations of space with the general public

Development of small and medium enterprises: the EU and East-partnership countries experience: monograph

The monograph reveals challenging issues of small and medium enterprises development in the European Union and East-Partnership countries. Special attention is paid to a new paradigm of financing investments and fostering innovations at all levels of legal entities including SMEs, enhancing innovative entrepreneurship in conditions of global social and technological challenges as well as determining priority sectors for small and medium enterprises as drivers of economic growth. The authors of the monograph emphasize on such European approaches to financing SMEs as crowd-funding and SME-bonds, analyze experience of applying fiscal instruments to support investment and innovations. The researchers underline the role of social investment as an innovative strategy for European SMEs that could be applied in Ukraine and East-partnership countries, suggest new conceptual approach to the evaluation of innovative business development. They also analyse trends of Ukrainian IT enterprises development in the context of modern information services in a global market. Additional attention is paid to the analysis of SMEs’ entrepreneurial potential in conditions of global social and technological changes, estimation effects of applying electronic governance technologies to provide administrative services by public authorities of various levels of governance. Finally, the researchers disclose economic mentality of legal entities as an informal side of financial assets and substantiate the necessity of creation entrepreneurial universities as drivers of innovative development of economy. The materials of the monograph will be useful to scholars, financial managers of companies, financial analysts, representatives of state bodies who implement the state policy in the field of SMEs development in the East-partnership countries, as well as students of economic universities

Making Sense of Rewards-Based Crowdfunding: Understanding the Lived Experience of Nascent Entrepreneurs

Rewards-Based Crowdfunding has recently received increasing academic attention. It has been conceptualised as a source of finance that has reshaped the funding cycle. However, little is known about the lived experience of entrepreneurs using it to start a venture. In comparison to other, more traditional sources of finance, the monetary values raised are relatively small, and successful campaigns rely on a wide network of contacts on social media, who act co-creatively. Moreover, empirical research has largely used data collected by online platforms, resulting in a narrow focus on campaign success, rather than insights into enactment of the phenomenon. Therefore, research on the lived experience of entrepreneurs engaged in this phenomenon can contribute strongly to the advancement of the field. Drawing on six cases in the UK, this thesis employs an interpretivist, hermeneutic approach, adopting a sensemaking lens. Utilising in-depth interviews, online archival research and combined with the hermeneutic preunderstandings of the researcher, the study sought to gain rich insights into the phenomenon. The findings identify insights in three specific themes; (1) multi-dimensional aspirations, (2) complementary resourcing and (3) the practice of ‘entrepreneuring’. Further, from the hermeneutic consideration of the whole phenomenon, three approaches of seeking; (1) alignment, (2) sufficiency, and (3) flexibility, comprise key influencers in enacting their ventures using the phenomenon. The entrepreneurs have leveraged Rewards-Based Crowdfunding to acquire patient cashflow, market-traction and “marketing potential of persuasion” capital resources, hybrid activities which complement financial resources. Further, the findings show that the entrepreneurs leveraged alignment to increase the speed of tie formation and their ties are complex and dynamic. The identification of such approaches are significant theoretical contributions the thesis makes to resource theory, network tie theory and the broader Rewards-Based Crowdfunding literature. Furthermore, the study makes a general contribution to the study of the lived experience of entrepreneurial venture enactment. Future research should build on the insights, taking a contextual approach