Project Creators Research Articles

The Influence of Fixed and Flexible Funding Mechanisms on Reward-Based Crowdfunding Success

This study examined whether fixed or flexible funding mechanisms influence crowdfunding success. Under the fixed funding mechanism, the pledges contributed to the crowdfunding campaign projects are returned to the backers if the project fails, whereas, under the flexible funding mechanism, the project creator can keep all the raised pledges, irrespective of whether the project succeeds or fails. Secondary data consisted of reward-based crowdfunding projects retrieved from The Crowd Data Centre. Logistic regression was employed to respond to research objectives. The results reveal that the fixed funding mechanism increases the probability of success more than flexible funding. Entrepreneur experience, spelling errors, and project description negatively affect crowdfunding success, and backers positively affect crowdfunding success. The findings guide entrepreneurs seeking financing to design and choose an appropriate funding mechanism that effectively reduces the failure rate. Although many entrepreneurs seek funding in the crowdfunding market, relatively little research has been conducted on the influence of flexible or fixed funding mechanisms on crowdfunding success in Africa. This study provides entrepreneurs with appropriate financing strategies that enhance crowdfunding success. The empirical literature indicates that the flexible funding mechanism creates distrust among backers due to unrealistic target amounts.

Knowledge sharing between project creators and backers in rewards-based crowdfunding

PurposeIn the context of rewards-based crowdfunding, this study aims to examine the role of project backers as providers of knowledge inputs beyond just financial capital.Design/methodology/approachThis study uses binomial regression to study the relationship between project creators’ and backers’ knowledge sharing, and the relationship of these two knowledge-sharing elements with achieving above-goal funding levels.FindingsThis study finds that the project creator’s knowledge sharing is significantly and positively related to backers’ knowledge sharing and that this relationship is moderated by the type of project. Furthermore, backers’ knowledge sharing is positively related to above-goal funding outcomes for a project.Research limitations/implicationsThis study established the link between creators’ and backers’ knowledge sharing in rewards-based crowdfunding, which has been underexplored in the literature. This study’s direct attention to the role of knowledge as a key resource in rewards-based crowdfunding and crowdsourcing in general.Practical implicationsFor entrepreneurs seeking crowdfunding, this study highlights the importance of knowledge sharing with their project backers to attain above-goal funding. Furthermore, eliciting backers’ knowledge input acts as a signaling mechanism that increases the crowd’s confidence in the project. It also endows entrepreneurs with knowledge resources that can improve project outcomes and achieve broader market success postcrowdfunding.Originality/valueTo the best of the authors’ knowledge, this study is one of the first to focus on knowledge content as a critical element in project backer-creator communication in rewards-based crowdfunding. This study also delineate the various knowledge types shared between the project creator and backers in both rewards-based crowdfunding projects.

Blockchain-Driven Collective Funding Dapp

Abstract: Blockchain technology has emerged as a disruptive force with the potential to revolutionize various industries, including crowdfunding. This study explores how blockchain can be applied to crowdfunding platforms to enhance transparency, security, and trust in the crowdfunding process. Through a thorough review of existing literature, analysis of current platforms, and the development of a prototype Decentralized Application (DApp) using React.js, Solidity, and other relevant technologies, this research demonstrates the promising prospects of blockchain in reshaping crowdfunding. The primary outcomes include mitigating fraud, enhancing accountability, and empowering both project creators and contributors. This paper offers a detailed examination of the research, laying the groundwork for a blockchain-driven collective funding DApp that utilizes React.js for frontend development, Solidity for smart contracts, and other contemporary technologies.

The golden-mean fallacy: A medium-attractiveness face predicts less funding on a crowdfunding platform

We examine the effects of facial attractiveness stereotyping in reward-based crowdfunding decisions. Our findings indicate that to a certain extent, a project creator's facial attractiveness is a valid heuristic cue that influences the evaluation of the project's future potential. Based on a large dataset, we propose a U-shaped relationship between project creators’ facial attractiveness and crowdfunding performance. The results imply that potential backers believe that projects initiated by creators whose facial attractiveness is either high or low (vs. medium) have greater future potential, leading to better crowdfunding performance. Additionally, we find that the effects of attractiveness are moderated by the narrative person used in the project introduction and by project updates on the project's progress schedule. Specifically, the U-shaped effect is stronger when attractive (vs. less attractive) project creators describe their projects in first- (vs. third-) person narration, and the effects of facial attractiveness are also enhanced by project updates. Our findings suggest that facial attractiveness is an actionable funding tool, thereby extending our understanding of the complex effect of facial attractiveness in funding.

Capitalizing on the Moment: The Strategic Role of Information Disclosure in Online Crowdfunding

Online crowdfunding platforms have created new avenues for investors to finance existing businesses or new business ventures of project creators. Project creators who launch crowdfunding campaigns can provide progress updates to potential investors throughout the fundraising process, helping to alleviate potential investors’ uncertainty about the project’s success. However, limited attention has been given to the strategic decisions of project creators on when to provide campaign updates. In this study, we focus on the timing strategy of information disclosure and investigate the effectiveness of campaign updates at different timing and performance level. Using a dataset from a leading online crowdfunding platform, we find that updates are more effective at the earlier stage of a crowdfunding campaign in attracting investors, and they play a different role depending on the project’s fundraising performance. For underperforming campaigns, the effectiveness of updates is more salient at the early stage of the campaign, whereas we find no differential impact at the later stage. By employing text analyses on the project descriptions and updates, we also derive insights about how the content of updates impacts their effectiveness at different stages of the campaign. Finally, our results also show that the timing of updates is more important for less experienced project creators, whereas the content of updates is more important for experienced project creators. These results provide important insights for project creators to strategically manage their campaigns in online crowdfunding platforms.

Crowdfunding Using Blockchain

Abstract: Crowdfunding is a method of raising funds for innovative projects by collecting small amounts of money from a large number of people, typically through an online platform. However, crowdfunding platforms have certain issues that need to be addressed, such as the lack of investor guarantees and control over contributions. To tackle these problems, this paper proposes the use of blockchain technology to create a decentralized, secure, and private crowdfunding platform. The platform will employ smart contracts to create interactive forms for campaign creation, donation, and approval, enabling both project creators and investors to efficiently raise and manage funds. Additionally, all transactions made on the platform will be recorded on the blockchain, which will provide transparency in the fundraising process and allow donors to track their contributions

Signaling theory in charity-based crowdfunding: Investigating the effects of project creator characteristics and text linguistic style on fundraising performance

This research investigates the influence of project creator characteristics and text linguistic style on the effectiveness of fundraising campaigns within the realm of environmental crowdfunding. Drawing on a dataset encompassing 2641 campaigns conducted on the Tencent Gongyi platform spanning from April 2012 to December 2022, the study employs stratified regression analysis to discern the factors that contribute to variations in fundraising outcomes. In terms of hard information, the outcomes reveal that organization size, registration date, prior project initiation experience, and the organization's rating wield a noteworthy influence over the ultimate crowdfunding performance. Conversely, when considering soft information, the presence of negative emotional signals in crowdfunding texts was found to positively correlate with fundraising success. However, emotional intensity exhibited a negative impact on fundraising performance. These findings have substantial implications for practitioners engaged in environmental crowdfunding endeavors. When initiating a project, the creator should demonstrate his or her competence as much as possible to enhance credibility and in addition, should try to show negative signals in the text.

Multimodal dynamic graph convolutional network for crowdfunding success prediction

Crowdfunding creates opportunities for creative people to raise funds so their ideas can be brought to life. However, the failure of fundraising leads to certain losses for project starters. Crowdfunding success prediction allows them to learn about the probability of fundraising success as early as possible, which can reduce their losses or lead them to modify project content for increasing the probability. Crowdfunding success prediction is a challenging classification task because there is diverse descriptive data but relative little supervisory information. There has been a lot of work done based on post-launch factors, but pre-launch prediction is more valuable for project creators and crowdfunding platforms. Although some efforts on pre-launch prediction were also made, most of them only analyze one or more of metadata, text and image, and the multimodal study about text and video is lacked. Considering this, we propose a multimodal dynamic graph convolutional network for crowdfunding success prediction based on text and video data. Specifically, sentences and frames are viewed as nodes, and edges are constructed based on location relationships and cosine similarity, which reconstructs the text and video into a multimodal graph and allows multimodal features to interact in the form of a graph. Besides, dynamic graph convolution is utilized to fuse the features of nodes, where dynamic means the structure of graph changes during graph convolution. Besides, we make two multimodal crowdfunding datasets containing metadata, text, image, video and project status, and they are utilized to validate the effectiveness of crowdfunding prediction models. Experiments conducted on them show that our model outperforms existing state-of-the-art baselines, and interaction and fusion in the form of a graph can effectively integrate features from multiple modalities.

Crowdfunding as a Social Phenomenon: A Bibliometric Exploration of Research Trends and Societal Implications

From a marginal to a relevant social phenomenon, crowdfunding has changed traditional funding patterns and caused far-reaching consequences in most areas of society. Actually, very little is known about the multi-faceted implications brought about by crowdfunding. Grounded on existing research, this paper contributes to an understanding of the overall societal impact created by crowdfunding through a bibliometric analysis. This methodology applies co-citation analysis, citation analysis, and keyword co-occurrence analysis to 561 journal publications retrieved from Scopus until August 2024. The results show that there are five major research clusters: Financial Technology and Consumer Behaviour, Entrepreneurial Finance and Innovation, Economic Impact and Business Models, Islamic Finance and Crowdfunding, and Social Impact and Public Goods. The paper contextualises crowdfunding within the framework of democratising access to capital, innovation, and social causes. It also underlines the integration of Islamic finance principles into crowdfunding models. The research set’s theoretical implications serve as the foundation for revised frameworks on entrepreneurship, venture capital, and social impact assessment, which incorporate the influence of crowdfunding. Platform operators, project creators, and investors need to adapt their strategies to evolving consumer behaviours, comprehend backer motivations, and take into account the wider societal impact of the projects they fund. The present research enables future studies of crowdfunding in terms of long-term impact and is a valuable insight for scholars, practitioners, and policymakers to steer their way forward in this fast-changing field.

Crowdfunding With Cognitive Limitations

To achieve the desirable funding target in a crowdfunding campaign, the project creator needs to accurately anticipate the pledging behaviors of contributors with practical cognitive limitations. In this paper, we present a study on how the contributors’ cognitive bounded rationality affects the creator’s campaign decisions. Specifically, we consider a two-stage crowdfunding model, where a creator first announces the project decisions (i.e., price and the minimum number of required contributors), and then the contributors choose their pledging behaviors (whether and how to contribute) as they arrive stochastically. We consider the cognitive hierarchy model, where contributors are classified into different levels according to their capability of anticipating other contributors’ behaviors. Surprisingly, we show that the cognitive limitation may improve the chance of project success, especially when the crowdfunding target is high. We prove that with a high average contributor cognitive level, a low funding target, and a low difficulty of motivating the lowest cognitive level contributors, the creator can achieve a close-to-optimal revenue by simply assuming that contributors are fully rational. Otherwise, ignoring the contributors’ cognitive limitations can lead to a significant revenue loss.

Machine Learning and Non-Investment Crowdfunding Research: A Tutorial

This study is intended for researchers (and doctoral students) interested in learning more on the use of machine learning methods in non-investment crowdfunding (i.e., reward- and donation-based). In particular, the study illustrates the insights that machine learning methods could provide on non-investment crowdfunding, for example, through data and information visualization, the ranking of features importance, and prediction assessment metrics. Specifically, I use four machine learning methods (gradient boosted decision trees, random forests, shallow neural networks, and support vector machines). As the literature shows, machine learning methods outperform classical regression models when the underlying relations are nonlinear. As such, the study offers some insights on the nonlinear relationships that could exist between the explanatory variables and the likelihood of success for art projects (e.g., threshold and Goldilocks effects). The study also offers some guidance to art project creators.

Predicting the fundraising performance of environmental crowdfunding projects: An interpretable machine learning approach

Crowdfunding has become a pivotal fundraising method for environmental organizations. However, the fundraising performance of environmental crowdfunding projects remains subpar, prompting the need for improvements. Effectively addressing this challenge entails the precise prediction of each project's fundraising performance and a comprehensive understanding of the intricate correlations between various features and fundraising success. In response to these imperatives, this study introduces an interpretable framework meticulously designed for predicting the fundraising performance of environmental crowdfunding projects. This comprehensive framework integrates ten theoretically significant features to form the predictive model's feature set. It adopts a diverse array of eight algorithms for training and harnesses SHAP values and ALE plots for insightful post-hoc interpretation, thereby providing valuable insights into the nuanced roles played by these features. Validated on a dataset comprising 3,101 environmental crowdfunding projects from Tencent Charity, the proposed framework outperforms state-of-the-art methods, demonstrating an improvement of 5.9% in predictive performance. Furthermore, the post-hoc interpretation techniques accurately depict the roles of the features. This study carries substantial practical implications for environmental crowdfunding project creators to optimize project design, for crowdfunding platform administrators to enhance platform performance, and for local governments to improve regional environmental governance.

Research on the Influencing Factors of Crowdfunding Project Financing Performance: Based on the Six Basic Theories of Finance

Crowdfunding has emerged as a popular method for financing innovative projects. This study examined the impact of six basic theories of finance on the success of Kickstarter crowdfunding projects in the creative and innova-tion categories, with a funding goal between $10,000 and $1,000,000. Col-lected data on a sample of 5,270 successfully funded projects and used web scraping techniques to extract the relevant information, along with conduct-ing interviews with the project creators to gather additional information. The six basic finance theories were operationalized as time value of money, risk and return, diversification, asset allocation, market efficiency, and behavior-al finance. Used a multiple regression model to analyze the data and found the time value of money, return, diversification, behavioral finance, and as-set allocation have a positive impact on the success of crowdfunding, while risk and market efficiency have a negative impact on the success of crowd-funding, albeit weak. This study contributes to the existing literature on crowdfunding and provides insights for project creators and investors on op-timising crowdfunding success.

Crowdfunding using Blockchain Technology

Crowdfunding is an online method of raising funds that was initially intended for individuals to contribute small amounts of money to support innovative projects. This fundraising method allows people to invest in entrepreneurial ventures through an intermediary platform. However, the current issue with traditional crowdfunding methods is that the third-party intermediaries do not guarantee the money invested by the backers, and the investors do not have control over their contributions. This paper proposes a blockchain-based crowdfunding solution to provide a private, secure, and decentralized platform for crowdfunding. The main aim of this paper is to enable investors to contribute to any project efficiently by creating smart contracts that give them control over their invested funds. Additionally, both project creators and investors can effectively manage and allocate funding for the project

The contribution of crowdfunding for philanthropy: A systematic review and framework of donation and reward crowdfunding

AbstractWhich novelties do donation‐ and reward‐based crowdfunding bring to philanthropy? Scholars interested in crowdfunding contributed to developing empirical explanations on which features impact online giving. However, the focus on theory building is limited. We developed a theoretical framework by categorizing the empirical findings reported in 198 studies, which resulted in four crowdfunding features impacting giving: (1) project creator, (2) social information, (3) rewards, and (4) project description. We explain why these features impact giving by integrating them with insights from several fields of social sciences, deriving seven giving mechanisms. We conclude that with impacting donations via crowdfunding, three giving themes exist: being affected by (1) the perceived project's quality, (2) social connections and/or (3) tangible rewards. The categorization of mechanisms for giving allows initiators to extract best practice examples for increasing the probability of successful crowdfunding projects considering the giving mechanisms.

Crowdfunding sustainable products with the product search matrix: niche markets vs. mass markets

AbstractThis exploratory research aims at analyzing the success factors of environmentally sustainable products in crowdfunding campaigns by considering aspects such as the customer needs to be addressed by those products, the technology of those products, and the market targeted (niche vs. mass market).Original data from creators of environmentally sustainable products in crowdfunding campaigns were collected through a questionnaire and then analyzed with regression analysis and additional descriptive statistics.Results suggest that crowdfunding platforms are not the most appropriate instrument for addressing completely new customer needs with sustainable products nor for developing completely new technologies as the success of such initiatives is quite low. Moreover, results suggest that sustainable products, developed through crowdfunding platforms, targeted at niche markets are more successful in terms of financing than mass market products. In light of the results achieved, the paper formulates managerial suggestions for project creators in terms of paying attention to selecting the appropriate financing channel in light of the product characteristics.

Psychological ownership and disownership in reward-based crowdfunding

Crowdfunding backers can develop psychological connections with reward-based crowdfunded ventures and provide product development feedback, brand evangelism, and legitimacy, before, during, and after crowdfunding campaigns. Yet how backers form psychological connections to ventures and how these connections change over time remains understudied. Through netnographic inquiry of 3,759 comments from 828 backers on the Oculus Kickstarter forum and interviews with 19 backers, this paper shows how backers come to feel a sense of psychological ownership through investment of self, feelings of efficacy, and intimate knowing. The paper then advances this line of inquiry by theoretically and empirically developing psychological disownership, which entails backers disavowing a once psychologically owned target in response to a perceived violation. Psychological disownership manifests through breach of trust, disillusionment, loss of identity, and loss of efficacy. Finally, the paper offers several avenues for future research on backer-venture relationships in crowdfunding and actionable insights for crowdfunding project creators.

Untangling the influence of perceived sustainability orientation on value-co-creation behavior in crowdfunding process: investigating a mediation model

PurposeSustainability-oriented projects are prevalent on crowdfunding platforms nowadays. The relationship between crowdfunding and sustainability has attracted the attention of many scholars. This study aims to examine the effects of perceived sustainability orientation on value-co-creation behavior from the perspective of backers and explore the mediation effects of three psychological factors: perceived affective reaction, perceived self-effectiveness and perceived risk.Design/methodology/approachThe study recruits 455 backers to evaluate 100 projects on a crowdfunding platform. Structural equation modeling based on partial least squares is used to analyze data and test the hypotheses.FindingsThe results show that perceived sustainability orientation influences value-co-creation behavior through perceived affective reaction and self-effectiveness. Furthermore, perceived sustainability orientation impacts participation behavior through perceived risk.Research limitations/implicationsOur study mainly focuses on sustainability-oriented and reward-based crowdfunding projects. Future research can examine other types of projects and other crowdfunding platforms.Practical implicationsThese findings can provide implications for project creators to improve the values co-created with backers in future sustainability-oriented projects. Furthermore, the findings can provide implications for backers and help them evaluate crowdfunding projects.Originality/valueThe existing studies are mostly concerned with project creators’ perspectives. This paper is one of the few to investigate how a project’s sustainability orientation influences backers’ psychological factors and value-co-creation behavior.

Crowdfunding: A New Approach to Entrepreneurship's Startup Phase

Investors may support new commercial, cultural, or social enterprises in exchange for future commodities and activities. Crowdfunding is an essential part of project finance right now. Many people are intrigued about how crowdfunding works and how it may help start new businesses. Still, there is a lack of understanding and expertise on how crowdsourcing works and how it may assist these new initiatives to be successful. The most challenging task is obtaining financial support before establishing an entrepreneurial or creative venture. If the developer lacks links to venture capitalists or banks and a solid financial track record or commitment, they may have trouble getting project funding. This article explains crowdsourcing, a new kind of finance for company owners and project creators. According to this survey, the industry is not mainly established. Instead, it outlines CF's qualities and critical players. Crowdfunding enables a creative or patronage concept to be realized by collecting finances from many people online. Crowdfunding may be the answer for businesses or creatives that need resources. Research has uncovered many crowdsourcing business concepts and finance sources. We used empirical data to evaluate how it would assist capital deficit units and the strategy's merits and downsides from the founders, funders, and platform perspectives.

Winner Takes All? The Blockbuster Effect on Crowdfunding Platforms

Blockbuster projects on crowdfunding platforms are those that have achieved outstanding and exceptional performance. Regarding the impact of blockbuster projects on crowdfunding platforms, there are two plausible yet opposing predictions: they may exhibit both a negative effect by monopolizing backer attention and resources and a positive effect by increasing the activeness of backer side. This tension could be further complicated, considering that blockbusters are inherently heterogeneous. Drawing on the cross-side network effects literature and integrating insights from the unique features of crowdfunding, we develop a theoretical framework highlighting the multidimensional view of blockbuster effects: blockbuster projects have an overall positive effect on the performance of concurrent projects (overall effect), and such positive effect is stronger for related blockbusters (local effect) and blockbusters emerging before the focal project (temporal effect). With data from a leading crowdfunding platform, the empirical analyses largely support our proposed framework. Using off-platform data and backer data, we unveil the mechanism driving the blockbuster effects: blockbusters increase the popularity of the platform, whereby backers participating in the blockbusters tend to develop positive impressions and heightened expectations, so that they are likely to participate in other concurrent projects. Our findings have important implications for project creators and platform operators.