Creating a computer mediated equity crowdfunding mechanism based on regression and sentiment analysis

Abstract

The rise of crowdfunding provides a viable alternative to the traditionally opaque capital market and significantly reduces the cost due to information asymmetry among founders, investors, and intermediaries. Numerous research studies have been conducted to predict the success of a crowdfunding campaign, including subjectivity vs objectivity, overstatement, keywords, frequency, length of interactions between founders and investors, etc. However, very few of them, if any, shed lights on actionable implementations to offer suggestions and aid entrepreneurs, especially those from disadvantaged backgrounds and dont have access to financial advisors, navigating through the fundraising process. Through analysing two studies examining founder and investor communication, one focusing on unilateral communication and message conveyed by founders to potential investors, the other focusing on bilateral interaction between the two parties, using sentiment analysis, this paper aims to provide a reference for creating a computer-mediated mechanism, offering entrepreneurs suggestions for future campaigns, and bringing equity to the capital market across different geographies.