Mining and investigating the factors influencing crowdfunding success

Abstract

Crowdfunding is an innovative and relatively new financial method that connects entrepreneurs and investors through the Internet. It allows entrepreneurs to raise often small amounts of funds from a large number of investors to finance start-ups. The gaming industry is a suitable market for crowdfunding and has uniquely interesting characteristics that are worthy of exploration. The article examines which factors can influence the success of crowdfunding campaigns in this industry. The study uses principal component analysis, logistic regression and the OneRule method to analyze 9,962 projects between 2009 and 2018. Several attributes, including textual variables are identified that influence the success of crowdfunding campaigns. The findings provide valuable insights for the success surrounding such campaigns and have implications for practice.

The role of semantics in the success of crowdfunding projects

“…The set we used for our analysis included the number of photos, the number of videos, the number of updates, the funding goal, the number of previously created projects by entrepreneur, the number of successfully completed (a.k.a. backed) entrepreneur's projects, and the time to achieve that goal (i.e., the project's deadline) [7,12,[17][18][19][20][21][22].…”

Psychological Determinants of Investor Motivation in Social Media-Based Crowdfunding Projects: A Systematic Review

“…Agrawal et al ( 2015 ) notice that in the first phases of a crowdfunding campaign, family members and friends are important patrons. In the first phases, social networks can contribute toward improving the reputation of start-ups and can operate as a signal in respect of their quality (Song et al, 2019 ). Consequently, for the success of start-ups, developing the social networks of entrepreneurs is an essential prerequisite.…”

“…Crowdfunding evolved in a solid, powerful, popular, and achievable means of funding projects worldwide and is legally recognized in more and more countries around the world. Cable, 2010;Allison et al, 2015;Oranburg, 2016;Smith and Hong, 2016;Nevin et al, 2017;Rodriguez-Ricardo et al, 2018;Brem et al, 2019;Song et al, 2019;Kim et al, 2020a Crowdfunding is social and collaborative: it uses social media-based platforms with truly interactive features. Potential investors and consumers interact with the entrepreneurs via comments, reactions, etc., they follow-up the status of the crowdfunding campaign and the progress of the funded project.…”

“…In his turn, Foster ( 2019 ) synthesized five reasons why entrepreneurs find crowdfunding attractive: (1) it allows them to finance new projects, keeping their equity capital and avoiding debt; (2) they create a preliminary market, by attracting clients before production is completed; (3) getting their clients engaged in a unique manner, by creating a conversation around the product or service, which can result in obtaining valuable feedback on design and functions, which does not happen in the case of traditional forms of financing; (4) reducing the negative impact of implicit biases associated with underrepresented entrepreneurs; (5) it allows for efficient use of the entrepreneurs' social networks in an inexpensive manner. Crowdfunding is sometimes the only means of financing start-ups, given that mainstream sponsors such as banks and venture capitalists generally seek projects that are more mature and entail lower levels of risk, and are seldom willing to give a change to inexperienced entrepreneurs or to products having uncertain chances of success (Song et al, 2019 ), particularly given that start-ups financed via crowdfunding platforms are often underdeveloped at the time of their initial presentation. The feedback received from investors thus becomes very important and helps creators to adapt their campaign and anticipate any problems, to get to know their clients' preferences and to address the needs of as wide an audience as possible, which could then become loyal customers.…”

“…On the potential investors' side of the story, as shown in Kuppuswamy and Bayus (2017), Rodriguez-Ricardo et al (2018), and Allon and Babich (2020), the individual's levels of innovativeness and creativity and the satisfaction to see an idea turned into reality are key determinants to the intention to participate in crowdfunding. Other motivators identified in our analysis are the investors' desire to transfer their prior knowledge, expertise and experience in the project' field (Saxton and Wang, 2014;Dejean, 2019;Kim et al, 2020a), and the positive relationship between entrepreneur and investor, based on perceived sympathy, openness and trustworthiness (Mollick, 2014;Saxton and Wang, 2014;Agrawal et al, 2015;Moritz et al, 2015;Polzin et al, 2018;Foster, 2019;Mendes-Da-Silva et al, 2019;Song et al, 2019).…”