By Valtteri Kaartemo, Head of Research at Masar Smart Energy
Each successful entrepreneur seems to have an opinion on how to design and manage a crowdfunding campaign. Unfortunately, these comments tend to overemphasize the personal experience, and it is challenging to tell whether this advice is valuable for another fund-seeker in another context. I have also been involved in a couple of successful crowdfunding campaigns, and honestly I would not feel comfortable saying that everything that was done in these campaigns influenced its success. Therefore, I do not give my answer based on my reflections. Instead, I let the science tell us what influences crowdfunding performance for real.
As I was curious answering to this question, I reviewed 51 crowdfunding performance articles that had been published in scientific journals by the end of 2016. As a result, I identified four main categories that affect crowdfunding performance: (1) campaign-, (2) crowdfunder-, (3) crowdfunding platform-, and (4) fund-seeker-related factors.
The results show that some of the ideas suggested by seasoned entrepreneurs do not necessarily affect crowdfunding performance positively. Yes, rewards are important for attracting crowdfunders but, for instance, it is not clear how many reward tiers there should be. One research says that a greater number of reward levels is associated with crowdfunding performance, and the other one says that fewer meaningful reward tiers are characteristic to successful campaigns. In addition, it seems that the role of rewards varies between crowdfunding categories. Interestingly, in equity-based crowdfunding it is more likely to meet the funding target when less equity is given away, thus signaling the fund-seeker’s belief in the potential of the company. These findings show that the answer to the question (“How to ensure success in crowdfunding?”) is not a simple one.
Moreover, academic research indicates that it is not enough to have a video to meet the funding target. In fact, my review reveals that there are far more sophisticated findings on how to signal quality in a crowdfunding campaign. For instance, Kim et al. (2016) thoroughly studied signaling credible claims in crowdfunding campaign narratives and found that the language of precision and distinction, such as having a completed campaign; having more referrals, funders, updates, and images; having longer word counts; and containing more negative emotional text influence crowdfunding performance positively in Indiegogo. Tirdatov (2014), in turn, found that the most well-funded projects contain three types of rhetorical appeals: ethos (emphasizing credibility of the speaker), pathos (producing emotions in the crowd), and logos (supporting claims through logical argumentation).
In addition to campaign-related attributes of a successful crowdfunding campaign, it is good to acknowledge the role of crowdfunder-, platform-, and fund-seeker-related elements. Understanding what kind of people typically fund certain campaigns helps fund-seekers to address their message to them, and to find a platform that is friendly to their project. Here, it is also important to be aware of yourself and how to present you and your company to the crowd.
My review provides the first systematic literature review on crowdfunding performance. By revealing state-of-the-art of elements of crowdfunding performance and classifying them in four categories the review helps both entrepreneurs and civil activists in designing campaigns that are more likely to meet the funding targets, as well as crowdfunding scholars to develop the field. The review shows that the results are partly mixed, and the attributes moderate the influence of each other. Therefore, it is awfully difficult to answer to this question at the early stage of crowdfunding industry. We just need to wish crowdfunding researchers give us more answers to this multi-billion dollar question. This would enable entrepreneurs to be more strategic rather than intuitive in designing and managing their crowdfunding campaigns.
Kaartemo, Valtteri (2017) The elements of a successful crowdfunding campaign: A systematic literature review of crowdfunding performance, International Review of Entrepreneurship, Vol. 15, No. 3, Freely available from:
This story was originally published here on September 4, 2017
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