Discovering the underlying dynamics of crowdfunding networks: entrepreneurs’ ties, crowdfunders’ connections and community spin-offs

Abstract

PurposeThis paper aims to investigate the underlying dynamics of crowdfunding networks. The study examines the impact of actors’ connections, i.e. entrepreneurs’ ties and connections between crowdfunders, on funding success, i.e. the funding amount collected at the end of crowdfunding campaigns. Furthermore, this research explore the role of communities within crowdfunding platforms.Design/methodology/approachThe study leverages the network theory and uses a quantitative methodology based on a regression analysis (ordinary least squares). Data collection was done through Ulule, a leading crowdfunding platform in Europe.FindingsThe research provides a description of the structure of crowdfunding networks and their communities. The results show that actors’ connections play a key role in affecting the funding success. Both the entrepreneurs’ ties, i.e. the connections of the entrepreneur before the launch of the campaign and the connections between crowdfunders, i.e. the ties established within crowdfunding communities (redundancy and effective size), positively affect the funding amount collected at the end of the campaign.Research limitations/implicationsThis paper has useful implications for several stakeholders such as entrepreneurs, platform managers, communities’ managers, policy makers and authorities. Entrepreneurs should expand and strengthen their ties before the launch of the online call, while managers of platforms/communities should stimulate connections between actors, in particular between crowdfunders within communities, and improve the online spaces of campaigns with new dedicated sections or specific forums. Policy makers and authorities should design specific policies, favor the rise of new types of entrepreneurship (e.g. community spin-off) and support the development of new tools and communities.Originality/valueThis is one of the first empirical studies that explore the underlying dynamics of crowdfunding networks. Results revealed by the analysis might steer other scholars’ interest towards this research path. The connections between crowdfunders within the communities have been neglected so far. This research proposes an original network approach based on typical network parameters. The study sheds some light on the importance of actors’ connections and adds new knowledge in a recent research stream that is still in its infancy.