Determinants of success on Crowdfunding in Europe. : Evidence from Kickstarter Platform
Sammanfattning: Crowdfunding has become an alternative source of funding for small medium enterprises (SMEs) due to inadequate or lack of finance at its start-up. There has been lot of analysis by scholars pertaining the determinants of crowdfunding success and the objective of this theory is to pinpoint the factors of a successful crowdfunding project based on the most analyzed determinants by prior researchers (technology-based projects, social media and entertainment-based projects, other projects (such as food, publishing, arts), visual features (such as pictures, comments, updates, videos,etc), as well as investors contribution. Also, to find out if the analysis of prior researchers are in line with the result of our analysis, we based our study on a sample of 1000 projects inclined on a crowdfunding platform (kickstarter) as at 2019. The econometric models used for the analysis were based on logit model, linear probability model, mean difference test and probit regression model (to serve as a check on robustness). The result of our analysis was indeed in line with prior research (Mollick, 2014; Schwienbacher et al., 2014, etc) except for technology-based projects. The outcome of our analysis depicts that the higher investors contribution, the higher the success of crowdfunding. Nevertheless, technology-based projects are less reliable and are less funded on kickstarter platform; thereby, having a low success rate on crowdfunding platforms. More funds were also made on projects relating to social media and entertainment (M&E) and other projects such as publishing, food,etc. The result of the probit regression shows a correct check on the analysis made even though, there might be slight differences in figures as compared to the result of the logit regression. The result of the probability of success rates of projects based on our four main variables of interest was 75% averagely for both logit and probit regressions performed. Start-ups (SMEs) frequently achieve a higher funding support depending on their projects at hand and this can be absolutely motivated by the presence of a high social media networks (thus, founder's link through Facebook, LinkedIn,Twitter and projects related to entertainment). Hence, from our analysis, the determinants of success of crowdfunding projects included high investors contribution, social media and entertainment projects, as well as, social media networks, project funding goal, project updates, project description and country selection of projects. Also, we found out that, project duration and visual description of projects such as images and videos do not contribute to the funding success of crowdfunding on kickstarter platform.
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