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Article
Publication date: 6 July 2018

Marc R.H. Roedenbeck and Manfred Lieb

This paper aims to investigate how a small business is able to continually use entrepreneurial financial sources (i.e. crowdfunding) within and after a successful…

Abstract

Purpose

This paper aims to investigate how a small business is able to continually use entrepreneurial financial sources (i.e. crowdfunding) within and after a successful transformation from an entrepreneur. It additionally investigates how a market incumbent is able to successfully join the market of entrepreneurial financial resources.

Design/methodology/approach

Therefore, a comparative case study using qualitative and quantitative data as well as triangulation technique is conducted within the international board game (or tabletop) market at the crowdfunding platform Kickstarter. The US company CMON, which has developed from an entrepreneur to a small business and beyond, is compared with the German incumbent Pegasus. Based on an analysis of a set of key performance indicators suggested in the literature, qualitative and quantitative variables are deductively derived to measure their impact on the financial goal achievement, thereby showing their impact on the goal achievement. During the analysis, additional variables are identified inductively.

Findings

As a result, several qualitative components are found to be crucial, including oral storytelling and computer animated videos/images, a perfect multilingual product language, prototyped components, an active community and a depth and regularity in campaign updates. In quantitative terms, important components include having more product images than longer project descriptions, more optional buys than different but fixed project rewards, a big social network (on Twitter and Facebook), and the number of updates.

Research limitations/implications

Based upon the data and findings, this study invites for more research, especially in conducting a larger scale quantitative analysis using the developed framework to compare more cases within a branch, cases across branches and cases with different background stories.

Practical implications

But to successfully run a crowdfunding campaign, entrepreneurs and incumbents can use the provided measures as a first design- and decision-roadmap, as well as copying the new business strategy of continually practicing crowdfunding for new products.

Originality/value

Despite its limits, this paper offers the first in-depth qualitative and quantitative crowdfunding case study showing on the one hand a new business strategy about crowdfunding as well as providing a structured measure to compare crowdfunding project performance.

Details

Journal of Research in Marketing and Entrepreneurship, vol. 20 no. 2
Type: Research Article
ISSN: 1471-5201

Keywords

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Case study
Publication date: 2 July 2018

William D. Schneper and Colin Martin

Pebble Technology Corporation (Pebble) was an early entrant into the smartwatch industry. Pebble’s Founder, Eric Migicovsky, began thinking about creating a smartwatch in…

Abstract

Synopsis

Pebble Technology Corporation (Pebble) was an early entrant into the smartwatch industry. Pebble’s Founder, Eric Migicovsky, began thinking about creating a smartwatch in 2008 while still an undergraduate engineering student. After selling about 1,500 prototype watches, he was accepted into Silicon Valley’s prestigious Y Combinator business start-up program. Finding it difficult to attract investors, Migicovsky launched a crowdfunding campaign that raised a record-breaking $10.27m on Kickstarter. The case concludes shortly after Apple’s unveiling of its soon-to-be-released Apple Watch. The case provides an opportunity to evaluate Pebble’s various strategic options at the time of Apple’s announcement.

Research methodology

The authors observed over 30 h of video and audio recordings of speeches, interviews and other events involving Pebble’s founder, other Pebble executives, investors and competitors. These recordings are all publicly available. Whenever possible, the authors also reviewed the Twitter feeds, Facebook sites and personal websites of Pebble’s top executives over time. Similarly, the authors followed Pebble’s official website, corporate blog and Kickstarter campaign websites. The authors also drew from numerous media reports. Due to the public nature of the data, no company release is provided nor has any information been disguised in any way.

Relevant courses and levels

The case is designed for both undergraduate and graduate students for courses in strategic management.

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Book part
Publication date: 20 July 2016

Denis Frydrych, Adam J. Bock and Tony Kinder

This study examines how narratives and legitimacy formation affect crowdfunding capital assembly from distributed, heterogeneous investors.

Abstract

Purpose

This study examines how narratives and legitimacy formation affect crowdfunding capital assembly from distributed, heterogeneous investors.

Methodology/approach

The study explores a dataset of 80,181 projects from Kickstarter, a rewards-based crowdfunding platform, between 2009 and 2013. We explore the link between project-related variables, legitimacy formation and outcomes.

Findings

Entrepreneurs design narratives and create project legitimacy by exploiting crowdfunding platform-specific features. First, lower funding targets and shorter campaign durations confer positive project legitimacy. Second, entrepreneurs exploit reward-levels as narrative tools that encourage funders to engage with the project. Third, visual pitches transmit a broader sociocultural narrative, leveraging emotional rather than financial reasoning. We also note certain gender effects.

Research implications

Crowdfunding platforms allow entrepreneurs to pitch business ideas to a broad online audience. We show that project legitimacy, including both structural and narrative elements, is linked to crowdfunding outcomes. In particular, legitimacy is co-created through the generation of a persuasive narrative linking the entrepreneur and investor cohort.

Practical implications

Entrepreneurs use crowdfunding platforms to generate a coherent narrative around unfamiliar business models. Generic platform tools may be set and manipulated in online crowdfunding pitches to support project legitimacy. Ultimately, these are less important than establishing an affinity-based narrative that engages and exploits investor participation. Successful crowdfunding pitches co-author the project story with investors.

Originality/value

Crowdfunding has been traditionally understood as simply an online-mediated venture resource assembly tool. A narrative framework highlights the critical role of legitimacy formation in a disintermediated investment system.

Details

International Perspectives on Crowdfunding
Type: Book
ISBN: 978-1-78560-315-0

Keywords

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Book part
Publication date: 20 July 2016

Liz Gerber and Julie Hui

We are interested in how and why people use or take part to crowdfunding projects.

Abstract

Purpose

We are interested in how and why people use or take part to crowdfunding projects.

Methodology/approach

Over the past four years, we have interviewed over 120 crowdfunding requesters and supporters of over 15 project types from dance to technology to publishing.

Findings

The key contributions of this research are: An understanding of the work involved, an understanding of motivations for participation, and an understanding of how the design of platforms influences engagement.

Originality/value

We adopt a computer-supported cooperative work approach from sociology, computer science, and design to provide a new perspective to researchers who seek to understand user behavior, motivations, and the mechanisms in place to support engagement with crowdfunding technology.

Details

International Perspectives on Crowdfunding
Type: Book
ISBN: 978-1-78560-315-0

Keywords

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Book part
Publication date: 28 February 2020

Andy Miah

This chapter examines the catalysts that led drones to become a vast consumer market in a very short space of time. It tells the story of the drone’s resurgence as an…

Abstract

This chapter examines the catalysts that led drones to become a vast consumer market in a very short space of time. It tells the story of the drone’s resurgence as an object of popular desire and how this reflects a certain kind of technotopian allure, which is found more widely in the technological consumer culture. In so doing, it examines the historical origins of the drone across military aviation and musical culture, along with the major achievements in modern civilian drone exploration. The chapter also draws on literature in design theory, historical analyses of drone patents and speculative fictions within product development to articulate the central drivers behind the proliferation of drones in civil society.

Details

Drones: The Brilliant, the Bad and the Beautiful
Type: Book
ISBN: 978-1-83867-985-9

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Article
Publication date: 24 July 2020

Lafaiet Silva, Nádia Félix Silva and Thierson Rosa

This study aims to analyze Kickstarter data along with social media data from a data mining perspective. Kickstarter is a crowdfunding financing plataform and is a form of…

Abstract

Purpose

This study aims to analyze Kickstarter data along with social media data from a data mining perspective. Kickstarter is a crowdfunding financing plataform and is a form of fundraising and is increasingly being adopted as a source for achieving the viability of projects. Despite its importance and adoption growth, the success rate of crowdfunding campaigns was 47% in 2017, and it has decreased over the years. A way of increasing the chances of success of campaigns would be to predict, by using machine learning techniques, if a campaign would be successful. By applying classification models, it is possible to estimate if whether or not a campaign will achieve success, and by applying regression models, the authors can forecast the amount of money to be funded.

Design/methodology/approach

The authors propose a solution in two phases, namely, launching and campaigning. As a result, models better suited for each point in time of a campaign life cycle.

Findings

The authors produced a static predictor capable of classifying the campaigns with an accuracy of 71%. The regression method for phase one achieved a 6.45 of root mean squared error. The dynamic classifier was able to achieve 85% of accuracy before 10% of campaign duration, the equivalent of 3 days, given a campaign with 30 days of length. At this same period time, it was able to achieve a forecasting performance of 2.5 of root mean squared error.

Originality/value

The authors carry out this research presenting the results with a set of real data from a crowdfunding platform. The results are discussed according to the existing literature. This provides a comprehensive review, detailing important research instructions for advancing this field of literature.

Details

International Journal of Web Information Systems, vol. 16 no. 4
Type: Research Article
ISSN: 1744-0084

Keywords

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Article
Publication date: 1 February 2016

Jake Hobbs, Georgiana Grigore and Mike Molesworth

Crowdfunding has become a significant way of funding independent film. However, undertaking a campaign can be time consuming and risky. The purpose of this paper is to…

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Abstract

Purpose

Crowdfunding has become a significant way of funding independent film. However, undertaking a campaign can be time consuming and risky. The purpose of this paper is to understand the predictors likely to produce a film campaign that meets its funding goal.

Design/methodology/approach

This study analyses 100 creative crowdfunding campaigns within the film and video category on crowdfunding website Kickstarter. Campaigns were analysed in relation to a number of variables, followed by a discriminant analysis to highlight the main predictors of crowdfunding success.

Findings

This study finds key predictors of crowdfunding success and investigates differences between successful and failed crowdfunding campaigns. The attributes of these predictors lead us to question the long-term ability of crowdfunding to aid companies poorer in terms of time, financial and personnel resources, and therefore arguably in the greatest need of crowdfunding platforms.

Practical implications

The findings provide insight to practitioners considering the crowdfunding approach and offers knowledge and recommendations so as to avoid what can be naïve and costly mistakes. The findings highlight that crowdfunding should not be considered lightly and can be a considerable investment of resources to be successful.

Originality/value

The analysis of crowdfunding campaigns provides details on the significant predictors of crowdfunding success particularly relevant to creative campaigns. The findings provide a critique of previous claims about the benefit of crowdfunding for creative SMEs.

Details

Internet Research, vol. 26 no. 1
Type: Research Article
ISSN: 1066-2243

Keywords

Content available
Article
Publication date: 26 July 2021

Jeremy St John, Karen St John and Bo Han

This study furthers one’s understanding of the motivations of the crowdfunding crowd by empirically examining critical factors that influence the crowd's decision to…

Abstract

Purpose

This study furthers one’s understanding of the motivations of the crowdfunding crowd by empirically examining critical factors that influence the crowd's decision to support a crowdfunding project.

Design/methodology/approach

Backer's comments from a sample of the top 100 most funded technology product projects on KickStarter were collected. A latent Dirichlet allocation (LDA) analysis strategy was adopted to investigate critical motivational factors. Three experts mapped those factors to the known theoretical constructs of social exchange theory (SET).

Findings

Although backers are motivated by value, they are also motivated by far less tangible social factors including trust and a feeling of psychological ownership. Findings suggest that the crowd is far more than a passive group of investors or customers and should be viewed as participatory stakeholders. This study serves as guidance for project owners hoping to motivate the crowd and for future investigators examining backer motivations in other types of crowdsourcing projects.

Research limitations/implications

Online chatter in the form of user-generated comments is an excellent data source for researchers to mine for value and meaning.

Practical implications

Given strong feelings of psychological ownership, project owners should actively engage the crowd and solicit the crowd for advice and help in order to motivate them.

Originality/value

The study presents the first empirical exploration of backer motivations using LDA guided by theory and the knowledge of experts. A framework of latent motivational factors is proposed.

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

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Article
Publication date: 24 August 2021

Marwan Abdeldayem and Saeed Aldulaimi

The purpose of this study is to analyze crowdfunding (CF) as new entrepreneurial finance (EF) tool and to predict the success of CF projects in the Middle East region.

Abstract

Purpose

The purpose of this study is to analyze crowdfunding (CF) as new entrepreneurial finance (EF) tool and to predict the success of CF projects in the Middle East region.

Design/methodology/approach

This study was conducted in seven Middle Eastern countries (i.e. Turkey, Egypt, Iraq, Saudi Arabia, Bahrain, Kuwait and UAE) in addition to serval CF platforms that are commonly used by crowd funders in this region (such as Kickstarter, GoFundMe, Beehive and Zoomal) with total members (195,193). A pilot sample of 20 units was used to validate and verify the research instrument of the study. The research sample consists of 1,910 respondents from the seven countries included in the study. The study emphasizes the partners, micro-structures, administrative conditions and CF advancement in the Middle East.

Findings

The findings reveal that CF’s presence positively impacts fundraising success and that CF platforms are an effective financial technology (Fintech) tool for financing entrepreneurs in the Middle East. The study shows that the success of CF projects in the Middle East can be anticipated by estimating and breaking down enormous information of web-based and social media movement, human resources of funders and online venture introduction. The authors conclude with recommendations for future EF and CF research.

Originality/value

This study aims to analyze the CF and EF principles in the Middle East region as the CF experience and practice in this part of the world tend to be unexplored in terms of research. Presently a very few numbers published research on CF exists. Moreover, to the best of the knowledge, there is no single study investigating CF as an alternative financing source in the Middle East. In particular, the study.

Details

International Journal of Organizational Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1934-8835

Keywords

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Book part
Publication date: 20 July 2016

Abbey Stemler

The purpose of this chapter is to expose the limitations of the equity-based crowdfunding provisions of the 2012 JOBS Act. These provisions have received much attention…

Abstract

Purpose

The purpose of this chapter is to expose the limitations of the equity-based crowdfunding provisions of the 2012 JOBS Act. These provisions have received much attention because they have the potential to open funding opportunities to countless underfunded entrepreneurs and small businesses. In addition, they can provide everyday investors with new ways to diversify their portfolios. However, the author asserts that the JOBS Act is unlikely to be successful in its current incarnation, because it overly burdens the entrepreneur with reporting and accountability requirements, among other things. The author resolves these issues by articulating a regulatory alternative to the JOBS Act.

Methodology/approach

This chapter reviews the general requirements for equity-based crowdfunding under the 2012 JOBS Act. It also reviews the various approaches individual states and other countries have taken to promote equity-based crowdfunding.

Findings

The existing law and proposed regulations for equity-based crowdfunding under the JOBS Act are overly burdensome and will impair the ability of entrepreneurs and small-businesses to successfully use equity-based crowdfunding throughout the United States. Regulators and other lawmakers need to adopt new rules focused on protecting consumers via spending limits.

Research limitations/implications

Most of the research is based on theory, because the equity-based regulations have not been finalized or implemented at the federal level. However, the United States can learn much from the equity-based crowdfunding efforts of individual states and other countries.

Originality/value

This chapter’s critique is designed to engage lawmakers, regulators, entrepreneurs, and small businesses in a new discussion about equity-based crowdfunding regulations.

Details

International Perspectives on Crowdfunding
Type: Book
ISBN: 978-1-78560-315-0

Keywords

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