Learning from Prior Experience: An Empirical Study of Serial Entrepreneurs in IT-enabled Crowdfunding

Crowdfunding has gained momentum in recent years. Although an increasing amount of research has been devoted to this domain, the dynamics of this phenomenon has yet to be fully studied. The current study strives to bridge this gap by examining the impacts of prior experiences from serial entrepreneurs’ perspective. Drawing on organizational learning theory, we theorize about the differential effects from several experience dimensions: direct vs. indirect experiences, successful vs. failed experiences, experience richness and diversity of prior experiences. Employing a panel-level analysis approach, we document positive effects of both direct and indirect learning. However, the successful, rich and diverse experience do not always seem to facilitate learning and consequently lead to enhanced performance. Our study applies the organizational learning theory to the crowdfunding context to extend the existing crowdfunding literature in information systems by investigating the dynamics across campaigns. We also provide practical implications for entrepreneurs and platform operators

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

Chinese-Style Of Reward-Based Crowd-Funding: Financial Approaches Or Marketing Tools?

Crowd-funding is an emerging industry in China. However, Chinese crowd-funding market has some different characteristics to its US-based or Europe-based predecessors. Some of Chinese founders regard reward-based crowd-funding as a funding approach, while others highlight its marketing functions. Thus, which play more important role at present? This paper investigates the reason for the special performance of reward-based crowd-funding in China from multiple perspectives. The results indicate that the special institutional environments of China---lack of perfect social credit systems and legal systems, not granting legal definition and status for crowd-funding, leads to an inevitable result that Chinese founders make heavy use of the marketing functions of crowd-funding but make light use of the funding function at the present stage. With the perfecting of the institutional and legal environment, many small-and-medium-enterprises and individual entrepreneurs are expected to pay more attention on the funding function of crowd-funding than today

Crowdfunding success : a systematic literature review 2010-2017

Author's accepted manuscript (postprint).acceptedVersio

Winner Takes All? The “Blockbuster Effect” in Crowdfunding Platforms

Crowdfunding has gained momentum in recent years. Although an increasing amount of research has been devoted to the economic value of crowdfunding, the interactions and effects among crowdfunding projects have yet to be fully studied. The current study strives to bridge this gap by examining the impacts of blockbuster projects — i.e., overwhelmingly successful projects – on the crowdfunding platform. Hypotheses are formulated based on the theory of network effects. Our preliminary results suggest the blockbuster projects exhibit positive spill-over effects within project category but cannibalization effects across categories. We also find evidence of lasting positive/negative network externality within/across category/categories. Further analysis suggests that fresh backers who are attracted to the platform by the blockbuster projects tend to be more engaged and more active. Our research aims to extend the emergent crowdfunding literature by examining network externalities among projects. We also provide practical implications for project creators and platform administrators

How to Manage Crowdfunded Projects: Empirical Evidence from a Comparative Study of Game Development Projects

This study expands current understanding of the crowdfunding phenomenon by explaining how crowdfunding initiatives that have succeeded in hitting their financial target— referred to as crowdfunded projects— can continue to succeed by delivering their promise within the schedule, budget, and quality guidelines. The study develops propositions that elaborate the importance of undertaking four broad strategies—namely, project management, communication, community, and open innovation— during crowdfunded projects. It then reports the results of an in-depth, comparative qualitative study of two exemplary game development projects to evaluate the applicability of the propositions and create a better understanding of their underlying concepts. The findings confirm the propositions by demonstrating how the two projects differed greatly in the use of strategies. Furthermore, the exploratory nature of the comparisons enriches the propositions by revealing new concepts that need to be considered in the successful implementation of the identified strategies

Equity crowdfunding, shareholder structures, and firm performance

This is the author accepted manuscript. The final version is available from Wiley via the DOI in this record.Research question/issue: This paper provides a first-time glimpse into the postcampaign financial and innovative performance of equity-crowdfunded (ECF) and matched nonequity-crowdfunded (NECF) firms. We further investigate how direct and nominee shareholder structures in ECF firms are associated with firm performance. Research findings/insights: We find that ECF firms have 8.5 times higher failure rates than matched NECF firms. However, 3.4 times more ECF firms have patent applications than matched NECF firms. Within the group of ECF firms, we find that ECF firms financed through a nominee structure make smaller losses, whereas ECF firms financed through a direct shareholder structure have more new patent applications, including foreign patent applications. Theoretical/academic implications: Our findings suggest that there are important adverse selection issues on equity crowdfunding platforms, although these platforms also serve as a catalyst for innovative activities. Moreover, our findings suggest that there is a more complex relationship between dispersed versus concentrated crowd shareholders and firm performance than currently assumed in the literature. Practitioner/policy implications: For policy makers and crowdfunding platforms, investor protection against adverse selection will be important to ensure the sustainability of equity crowdfunding markets. For entrepreneurs and crowd investors, our study highlights how equity crowdfunding and the adopted shareholder structure relate to short-term firm performance.Research Foundation—Flander