Crowdfunding Mechanism Research Articles

Developing Islamic crowdfunding website platform for startup companies in Indonesia

PurposeThis study aims to develop an Islamic crowdfunding model based on a website platform for startup companies.Design/methodology/approachApart from reviewing related literature, specifically focus group discussion with 16 CEO of startup companies, in-depth interview with two crowdfunding provider, Fiqh expert and technology platform expert for the development of an Islamic crowdfunding website platform for startup companies.FindingsThe concept of Islamic crowdfunding is recommended as a funding solution for small and medium-sized enterprises and startup companies. Therefore, it was deemed crucial for this study to develop an Islamic crowdfunding model based on a website platform as a form of innovative acceleration to provide alternative funding for a startup company, which subsequently expands to a growing and sustainable business. Furthermore, the use of a website platform for the operation of a crowdfunding mechanism is deemed as an effective means to link cross-geographical investors with the startup company owners in Indonesia, specifically East Java.Practical implicationsIslamic crowdfunding website platform can be the solution for startup companies to obtain capital funds while startup companies are not able to provide collateral to attain financial assistance and experience problems. Expectedly, the government should provide legality, regulation, licensing and socialization matters pertaining to crowdfunding to obtain legal legality from the country.Originality/valueThere is still no research to develop the Islamic crowdfunding model using a website platform. This study was expected to provide essential insights on the effective development of an Islamic crowdfunding website platform integrated with startup companies, investors and Sharia committee.

Are Cryptocurrencies a Good Investment?

This article identifies the many risk factors an investor should consider before adding cryptocurrencies to their investment portfolio. The returns yielded by these digital assets can in some cases be high, but an investor should seek to understand what risks exist as well. There are numerous factors to consider when investing in any asset. Traditional assets may prompt a fundamental analysis of an industry, company (business plan, financials, leadership) and other considerations. However, cryptocurrencies are not traditional assets. This investment/speculative environment contains: extremely volatile assets, a largely unregulated crowd funding mechanism, chronic theft and loss, money laundering, high transaction processing latency, potential market manipulation, and an overhanging ethical question. This article is not meant as investment advice, but points to many risk factors that are not generally present when investing in traditional assets/companies, and highlights the fact that the data needed to perform due diligence is often lacking.

Purchase Intention for Crowd-funded Milk Products with Integrated Photovoltaic Water Pumping Systems in China

In comparison with current financing mechanisms for renewable energy systems, crowd-funding financing mechanism offers a new potential source of financing with recent use of social media. Crowd-funding financing mechanism can also increases the social supports for renewable energy systems as users and investors turn to be more actively engaged in energy systems. As a new potential source of financing, crowd-funding mechanism has different forms, including donation, lending, equity and product reward approaches. In this paper, discrete choice model was used to explore whether crowd-funding financing with a novel sociotechnical product reward practice, has the attractions for potential customers to pay for a more sustainable milk product with distributed photovoltaic (PV) system. We empirically investigated the reward-base crowd funding with the specific integrated photovoltaic water pumping (PVWP) system in dairy milk production in China. 48 in-depth interviews were adopted for qualitative analysis of determinants of customer milk purchase decision. The ordered probit regression was employed with 357 online surveys to systematically estimate the purchase intention for the online-crowd-funding sustainable milk. Customer behaviours, environmental consciousness, and the individual socio-demographic factors were tested as potential explanatory variables. In the survey and depth interview samples, we found interviewees as potential customers showed strong purchase intentions to the crowd funding dairy milk for noticing milk quality and nutritious improvement, emission reduction and environmental benefits by the integrated PVWP system. In our findings of the regression results, the females, customers with young children or planning to have children were found with higher willing to purchase than other customers for crowd funding the sustainable dairy milk. The familiarity and popularity with online shopping and pre-sale purchase in China made customers more open and active towards pre-pay and crowd-funding mechanism.

Current students as university donors?: determinants in college students’ intentions to donate and share information about university crowdfunding efforts

Crowdfunding has gained popularity as a fundraising strategy for reaching an online “crowd” of contributors, with many making small donations and promoting the project online to social networks. Universities are exploring crowdfunding as a strategy to connect with non-traditional donors beyond alumni – including students. While higher education institutions may hope to include students given their perceived comfort with online giving and crowdfunding’s focus on small gifts, scholars have not examined students’ perceptions about such activities. Adopting the Existence Relatedness Growth (ERG) theory, this study uses a survey to explore factors that motivate or hinder students’ supportive behavior intentions through a crowdfunding mechanism, specifically donation intention and word-of-mouth (WOM) intention. Suggestions are made for universities to develop communication that creates a philanthropy culture and engages students as potential donors.

USA crowdfunding sector development

Crowdfunding, or collective financing, is a relatively new phenomenon in the US financial sector. This article discusses the motives for its emergence, the main elements of the crowdfunding mechanism and its existing models. The main focus is on Equity-based Crowdfunding and the Law on Startups (Jumpstart Our Business Startups Act (JOBS)), which contains regulations of joint-stock crowdfunding.The main results of the application of the rules of regulation of joint-stock crowdfunding and critical assessments of this law are discussed. According to the results of this study, conclusions are drawn about the continuation of the search for a balance of interests of crowdfunding participants in the field of its regulation and that this type of crowdfunding, occupying its niche in the US financial sector, will continue to develop.

Crowdfunding mechanism comparison when product quality is uncertain

AbstractMany entrepreneurs have recently employed crowdfunding to raise money. Although there are several crowdfunding mechanisms, there is no clear dominant strategy for the type of mechanisms that should be adopted by the entrepreneur. This paper compares two commonly used mechanisms of crowdfunding by building a two‐person and two‐period model where the entrepreneur first makes the decision then two consumers follow. The all‐or‐nothing () mechanism allows entrepreneurs to set a funding target and keep nothing unless the goal is achieved. In contrast, entrepreneurs under the keep‐it‐all () mechanism must also set a target and keep any funds regardless of whether the goal has been achieved. To compare these two mechanisms, we assume that customers are not sure about the quality of the product, which is very common in reward‐based crowdfunding. Using a unified model, our results show that large or poorly scalable projects are more likely to choose the mechanism.

The effect of heterogeneous defectors on the evolution of public cooperation

In recent years,more and more private capital join the construction of cultural facilities and the organization of cultural activities in China. Actually, the organization of cultural activities by crowd-funding mechanism is a kind of multi-player game. Not all players who donate different amount of money are real cooperators. In fact, some cunning defectors may donate a little money to avoid the gossip and punishment. This part of people are very tricky. They could be seen as heterogeneous defectors. The role of heterogeneous defectors is investigated in cooperative behaviors of complex social network. Numerical results show that heterogeneous defectors could be a buffer for maintaining the public pool when synergy factor is low in public goods game (PGG). It is relatively easy to be cooperators for heterogeneous defectors when synergy factor is high in PGG. To better improve cooperation, punishment towards heterogeneous defectors and complete defectors is introduced. We are glad to find that when the defectors’ loss is equal to or larger than the altruistic cooperators’ punishment cost, the mechanism could make great effect. In addition, the role of heterogeneous defectors depends on the relationship between the punishment cost and the defectors’ loss.

Go-Mudaraba: The Solution of Poverty and Unemployment in the Digital Era

The problem of poverty and unemployment is not a recent issue in Indonesia, an effort to emphasize poverty and unemployment re-emerged. The government has been tried to overcome it in various ways. However, this condition is too hard to be solved if depend only on its government. In the digital era financial technology becomes an important thing, because it has a great influence in the needs of people’s lives. A fintech mechanism that can change this condition becomes an urgent need. This study intended to apply financial technology to solve the problem of poverty and unemployment in digital era. This research used is qualitative. The type of data used in this study is secondary data. Data collection used is the study of library and documentary. The results of this study provides a proposing Mudaraba financing mechanism that can directly finance SMEs (Micro and medium enterprises) activities in the form of an online fintech platform called Go-Mudaraba. In practice, Go-Mudaraba fintech be an intermediate to link the owner of the capital fund (Shahibul Mal) with the managing party (Mudarib) through the crowdfunding mechanism.

Challenges and dynamics of FinTech crowd funding: An innovation system approach

FinTech crowd funding mechanism has gained popularity as an alternative of entrepreneurial financing worldwide. This paper reviews the challenges and dynamics of FinTech crowd funding platforms in the continents of USA, Europe and Asia. The case study analysis of Thailand, an emerging Asian country, under the policy direction of “Thailand 4.0” provides interesting results that can be applied to other developing economies with regard to start-up financing. The findings point out the barriers both at the policy and operation levels underlying the Thai entrepreneurial innovation system. The paper provides lessons and implications to strengthen the FinTech crowd funding platform.

Using past contribution patterns to forecast fundraising outcomes in crowdfunding

The crowdfunding mechanism has proven to be a practical way of raising funds, especially with the widespread use of the Internet. However, one limitation of current crowdfunding platforms is that it is hard for creators and backers to anticipate the success of a campaign. This paper tackles this limitation. We take a two-pronged approach to building our forecasting model. First, we explore the nature and heterogeneity of contribution dynamics in crowdfunding campaigns and compare them across two natural groups (successful and unsuccessful campaigns). We then use insights generated from our exploratory analysis and draw upon the general laws of motion for stochastic processes in order to introduce a new dynamic model for predicting crowdfunding outcomes. Our model incorporates the history and dynamics of both the focal crowdfunding campaign and other campaigns for predicting outcomes. We compare our model to other parametric and semi-parametric benchmark models, and show substantial improvements.

How the expanded crowd-funding mechanism of some southern rural areas in China affects cooperative behaviors in threshold public goods game

The pursuit of high cooperation rates in public goods games has attracted many researchers. However, few researchers attach much weight to the influence of emotions on decision-making, especially on public goods games. From ancient to modern times, publishing the list of cooperators to stimulate cooperation has been a common phenomenon in some southern rural areas in China. Actually, the published list can influence individuals’ behaviors by affecting their emotions. Here we extend the method of publishing the list and optimize it by adding a lobbyist mechanism. Through numerical simulations, we find that the role of lobbyists can not be ignored unless the synergy factor is larger than a certain value. Additionally, we find that publishing the list certainly has a great effect on individual’s cooperative behavior. But whether to publish the list or not and how to publish the list depend on the situation.

Optimal Crowdfunding Design

This paper investigates the optimal design of crowdfunding where crowdfunders are potential consumers with standard motivations and entrepreneurs are profit-maximizing agents. We characterize the typical crowdfunding mechanism where the entrepreneur commits to produce only if aggregate funding exceeds a defined threshold. We study how the entrepreneur uses this threshold, in conjunction with a minimal price, for rent extraction. Compared to a standard posted-price mechanism, total welfare may rise because the entrepreneur can adapt the production decision to demand conditions, but may fall because rent-seeking can worsen. Crowdfunding platforms can raise threshold credibility. So we also compare outcomes when the entrepreneur commits to a threshold against those where the entrepreneur simply decides on production after observing crowdfunder bids. Finally, we contrast crowdfunding with the optimal mechanism where production is contingent on a general function of all bids, rather than the simple sum of bids obliged by the aggregate threshold rule. Crowdfunding is very different, for instance, never committing to produce the good when aggregate bids fall short of the fixed cost (even absent credit constraints).

Optimal Crowdfunding Design

This paper investigates the optimal design of crowdfunding where crowdfunders are potential consumers with standard motivations and entrepreneurs are profit maximizing agents. We characterize the typical crowdfunding mechanism where the entrepreneur commits to produce only if aggregate funding exceeds a defined threshold. We study how the entrepreneur uses this threshold, in conjunction with a minimal price, for rent, extraction. Compared to a standard posted price mechanism, total welfare may rise because the entrepreneur can adapt the production decision to demand conditions, but may fall because rent-seeking can worsen. Crowdfunding platforms can raise threshold credibility. So we also compare outcomes when the entrepreneur commits to a threshold against those where the entrepreneur simply decides on production after observing crowdfunder bids. Finally, we contrast crowdfunding with the optimal mechanism where production is contingent on a general function of all bids, rather than the simple sum of bids obliged by the aggregate threshold rule. Crowdfunding is very different, for instance, never committing to produce the good when aggregate bids fall short of the fixed cost (even absent credit constraints).

Product and Pricing Decisions in Crowdfunding

This paper studies the optimal product and pricing decisions in a crowdfunding mechanism by which a project between a creator and many buyers will be realized only if the total funds committed by the buyers reach a specified goal. When the buyers are sufficiently heterogeneous in their product valuations, the creator should offer a line of products with different levels of product quality. Compared to the traditional situation where orders are placed and fulfilled individually, with the crowdfunding mechanism, a product line is more likely than a single product to be optimal and the quality gap between products is smaller. This paper also shows the effect of the crowdfunding mechanism on pricing dynamics over time. Together, these results underscore the substantial influence of the emerging crowdfunding mechanisms on common marketing decisions.

Product and Pricing Decisions in Crowdfunding

This paper studies the optimal product and pricing decisions in a crowdfunding mechanism by which a project between a creator and many buyers will be realized only if the total funds committed by the buyers reach a specified goal. When the buyers are sufficiently heterogenous in their product valuations, the creator should offer a line of products with different levels of product quality. Compared to the traditional situation where orders are placed and fulfilled individually, with the crowdfunding mechanism, a product line is more likely than a single product to be optimal and the quality gap between products is smaller. The paper also shows the effect of the crowdfunding mechanism on pricing dynamics over time. Together, these results underscore the substantial influence of the emerging crowdfunding mechanisms on common marketing decisions.