Download crowdfunding

SHARING INFORMATIO​N
IN A VIRTUAL
COMMUNITY OF
CROWDFUNDI​NG :
the case of Kickstarte​r
University of Porto (UP)
CEF.UP, CETAC.MEDIA
authors NUNO MOUTINHO / PEDRO LEITE
e-mail [email protected] / [email protected]
PORTO, NOVEMBER 8, 2013
Roadmap
 Definition
 Literature Review
 Analysis
 Quantitative
 Qualitative
 Conclusions
crowdfunding
Definition
what does
crowdfunding
mean?
crowdfunding
Definition
“ Crowdfunding is a tool that is emerging as an
alternative to traditional forms of financing”
“It occurs when a large group of people, seen
as the crowd, agrees to collaborate with small
amounts of money to a project, in exchange for
a reward”
452 active platforms in April 2012
(Massolution)
crowdfunding
CHARACTERIZATION OF THE CROWDFUNDING PROCESS
Definition
BUSINESS IDEA IS
CONCEIVED
PLATFORM IS
SELECTED
PROJECT IS
DEFINED
INITIATIVE IS
APPROVED AND
GOES PUBLIC
CONTRIBUTIONS
ARE MADE FROM
THE CROWD
1. Entrepreneur conceives a business idea and decides to implement it.
2. Selects crowdfunding as fundraising method. Then, he chooses the
platform according to the nature and the goals of the initiative.
3. A video and a description of the project are built; the deadlines, rewards
and finacial goals are defined. Information is submited to the platform.
4. If requirements are met, project is accepted in the platform, and is made
available to the crowd. Entrepreneur advertises the initiative through his
circles.
5. During this timeline, project stands in the front of the world, and
contributions are accepted for each level of reward.
END OF
DEADLINE
6. At the end of the deadline, project may reach, exceed or fall below its
financial goals. If it fails, the amount collected never leaves the
investors’ account. There are no limits for amounts collected.
INITIATIVE IS
IMPLEMENTED
7. If successfull, initiative is implemented according with the description.
REWARDS ARE
DISTRIBUTED
8. After the previous, rewards are produced and distributed, and in many
cases the venture proceeds with activity.
crowdfunding
Literature Review
 Crowdsourcing
 outsourcing + crowd
 Innovation
 open innovation
 lead user theories
 innovation characterization
 impact diffusion processes
 product life cycle
 relation with rhizome
 Power of the crowd
 why is a crowd different from an individual
crowdfunding
Research
Largest
crowdfunding
platform to date.
Funding of
initiatives that
belong to the
creative industries.
crowdfunding
Research
Collected information about all successful projects
Since May 2009 until February 2012
2,75 years
total of 18.430 initiatives
crowdfunding
Quantitative analysis
(1) number of the project
(2) name of the project
(3) date of funding
(4) short description of campaign
(5) pre-determined goal in dollars
(6) capital pledged in dollars
(7) financing rate
(8) number of backers
(9) average contribution in dollars
(10) category of the project
(11) sub-category of the project
(12) number of comments from backers
(13) number of updates from the
entrepreneur
(14) number of levels of reward
(15) city
(16) state
(17) country
(18) name of the entrepreneur
(19) number of other projects backed
by the entrepreneur
(20) URL to the project
Financing Rate =
Capital pledged
≥1
goal
Stability tests
Ordinary Least Squares (OLS)
Stepwise Method
crowdfunding
Quantitative results
$128.333.380,96 collected
average goal of $5.000 per project
average collection of $6.963,29 per project
average of 95 backers per project
average contribution of $81.42
crowdfunding
Quantitative results
Number of campaigns successfully financed per month
1400
1200
1000
800
600
400
200
0
crowdfunding
Quantitative results
Money collected per month
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
crowdfunding
Quantitative results
Category
Number of projects
%
Collected
Art
1749
9%
$
7.551.031,00
6%
Comics
422
2%
$
3.576.117,84
3%
Dance
428
2%
$
1.418.837,00
1%
Design
506
3%
$ 14.807.199,00
12%
Fashion
260
1%
$
1.549.196,00
1%
Film&Video
5164
28%
$ 41.304.377,00
32%
Food
430
2%
$
3.852.034,00
3%
Games
405
2%
$
4.655.087,00
4%
Music
5578
30%
$ 28.405.638,12
22%
Photography
584
3%
$
2.798.028,00
2%
Publishing
1249
7%
$
6.349.992,00
5%
Technology
231
1%
$
6.491.232,00
5%
Theater
1424
8%
$
5.574.612,00
4%
crowdfunding
%
Quantitative results
average
return of
the project
crowdfunding
Quantitative results
Methodology:
• OLS with stepwise method
• It adds predictor variables to the regression that best
correlate with the dependent variable and subtracts
predictor variables that least correlate.
• This way one generates a regression equation using
only the predictor variables that make a significant
contribution to the prediction.
crowdfunding
Quantitative results
Variables
Coefficients
t
Sig.
(Constant)
114,427
24,084
,000
Backers
,289
36,430
,000
Project category: Design
115,538
9,798
,000
Comments
-,092
-6,490
,000
Project category: Games
45,910
3,562
,000
Entrepreneur backed
1,090
4,016
,000
Project category: Fims&Video
-14,637
-3,288
,001
Levels of reward
-1,677
-3,629
,000
Project category: Technology
52,026
2,857
,004
Updates
,747
2,494
,013
Project category: Art
13,770
2,069
,039
crowdfunding
Quantitative results
Significant variables towards the financing rate:
• backers; comments; updates; nº projects backed by
the entrepreneur; design, technology and games
categories
• music and film&video have higher number of financed
projects but small average returns
• design a simple reward system
crowdfunding
Qualitative analysis
• case study with 6 projects:
 higher financing rate within the categories positively
related to success: games, design and technology
 the highest financing rate in the films & video (category
that holds a negative relationship with success)
 the highest financing rate of all projects
 the black sheep – the closest to failure
crowdfunding
Qualitative analysis
• We performed a survey to 6 specialists (investors,
entrepreneurs, platform managers, fundraising activities).
• Each person received the link for each project and was
asked to complete an online questionnaire.
• The idea was to form a juri of specialists .
crowdfunding
Tephra: the Steampunk RPG
RPG Board Game
Higher financing rate in Games category
crowdfunding
Tephra: the Steampunk RPG
Critical factors of success:
“they attacked an audience that is typically passionate for
this hobby, which is typically open-minded and eager to
spend more” Platform Manager
“rewards are well designed and fair, which makes sense for
who wants to play the game” Fundraiser
crowdfunding
Printrbot: Your First 3D Printer
3D Printer
Higher financing rate in Technology category
crowdfunding
Printrbot: Your First 3D Printer
Critical factors of success:
“the possibility of having this object at home is attractive and
seems to convince whoever has that financial capability”
Entrepreneur
“in a global perspective, the project is very realistic in the
communication, in the goal and reward fields” Platform Manager
considering that lowest level was at $499
crowdfunding
Elevation Dock: The Best Dock For iPhone
Dock for the iPhone phone
The Highest financing rate in our sample
crowdfunding
Elevation Dock: The Best Dock For iPhone
Critical factors of success:
identification of benefits for the consumer
quality of construction
accessory for a successful product
original, unique and design object
opportunity to buy cheaper and before ($79 instead of $120)
“preoccupation to show the human character of the
entrepreneur” Investor
crowdfunding
Qualitative Results
Critical factors of success:
A higher enrollment of consumers means more backers
Show tangibility (prototype or technical illustration)
Invest in the planning with a good concept, video and description
Offer attractive rewards, and added value to higher levels
Create sense of urge
Appealing rewards to the masses or niche
Communication and advertisement
Give attention to interaction
crowdfunding
Conclusions
Crowdfunding can finance entrepreneurial
ventures. It is essential to:
- involve backers and raise their number;
- design a simple rewards system with lower
make good use of video and description tools.
number of levels of rewards;
- be an active entrepreneur within the platform,
backing other projects (crowdfunding is also a
social media platform);
- make good use of video and description
tools.
crowdfunding
SHARING INFORMATIO​N
IN A VIRTUAL
COMMUNITY OF
CROWDFUNDI​NG :
the case of Kickstarte​r
University of Porto (UP)
CEF.UP, CETAC.MEDIA
authors NUNO MOUTINHO / PEDRO LEITE
e-mail [email protected] / [email protected]
PORTO, NOVEMBER 8, 2013