How do Dutch crowdfunding
platforms, create trust for their
informal investors?
Business Studies | Bachelor Thesis
July 2015
Student: Roy Bachet | 0250910 Supervisor: Liang Zhao
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Statement of Originality
This document is written by Roy Eduard Emil Bachet, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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How do Dutch Crowdfunding Platforms create trust for their informal
investors?
Roy Bachet, Universiteit van Amsterdam
Abstract: This thesis researches how crowdfunding platforms can create trust for informal
investors. This is done out of the informal investors perspective. A decision model was constructed based on 4 segment of a crowdfunding project: 1 company information, 2 the project owner, 3 about the project & 4 the investment in the project. The model consist of 21 statements of hard and soft information divided over these segments. By testing of this model is valid. Crowdfunding platform can adjust their presentation of their project to create more trust for their informal investor. Beside that the model can be used as signalling tool for investors.
Methodology: questionnaire where the respondents were ask to value (Likert-scale) and
rank statements of project information.
Population: 102 Dutch responders mostly between 18-44 years old 88%, female-to-male
ration 37-63%
Results & Conclusion: The model has proven valid and hard information is ranked higher
than soft information.
Keywords: hard information, soft information, crowdfunding, crowdinvesting, crowdlending,
crowdfunding platform, Dutch crowdfunding platforms, informal investor, trust, trustworthiness, signalling, decision model informal investor.
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Table of content
Literature review
6Crowdfunding
6Crowdfunding platform
9Trust & Crowdfunding
11Informal investor
12Crowdfunding in the Netherland
12Conceptual framework
14Hard and soft information.
15Investor Trustworthiness model
161. Company information 17
2. The project owner 18
3. About the project 19
4. About your investment in the project 19
Methodology
20 Data collection 22 Sampling 22 Operationalization 23 Data analysis 23 Findings 24Relevance of the statements. 25
Ranking the statements 25
Segment – Company information 28
Segment – the project owner 28
Segment – The project 29
Segment – Your investment in the project 29
Comparing male and female responders 30
Conclusion
30Limitations
31Literature
31Appendix
38Questionnaire
38Questionnaire response
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How do Dutch Crowdfunding Platforms create trust for their informal
investors?
Nowadays crowdfunding is a more common phenomenon. People heard something about it, but don’t know exactly what it is and how it works. So what is crowdfunding?
What are crowdfunding platforms and how do they create trust for me to invest?
From the start of the start of this millennium till now, there were two worldwide negative financial events: the dot-com bubble (1999-2001) and the mortgage crisis (2007-2008). After these events trust in the financial sector has dropped (Bernstein, 2014).
In the Netherlands the financial sector got its own share; the Ice-save debacle, the collapse of DSB, the state that had to support ING financially, ABN and SNS became state banks. This resulted that banks became more strict in regulations in giving credits and a lower return on their savings and investments.
To get projects financed other means needed to be looked for. For investors normal saving accounts as well as bonds, deposit have a low return. If investors want a higher return, they too have to search for alternatives.
The intermediate role banks have to bring these two groups together shrunk. Crowdfunding took some part of the pie. The recent years crowdfunding is a new phenomenon to invest and to finance projects. Crowdfunding platforms were created, which brings projects and investors together. These platforms play an important role in reducing information
asymmetries (Belleflamme et al., 2013) and to build trust in crowdfunding markets (Agrawal et al., 2013; Heminway, 2013; Vass, 2013).
The question that arises, is how do these platforms give security to their customers. Because of the different kinds of crowdfunding this thesis will only focus on platforms that give a return on investments.
To research this further the Dutch crowdfunding platforms are chosen, because of the recent changes in bank sector and the low return on savings in the Netherlands. The expectation is that the crowdfunding market will grow and that trust will play a bigger role as well.
6 This leads to the following research question:
How do Dutch Crowdfunding platforms create trust for their informal investors? To answer this question the following has to be researched;
1. What is crowdfunding and which types are distinguished? 2. What extra value do crowdfunding platforms offer investors? 3. Which criteria do platforms have to create trust?
4. What are informal investors?
5. Which types of trust and which are applicable for informal investors?
By answering these questions a better understanding of the several trust issues
crowdfunding platforms and informal investors have concerning crowdfunding is found. This thesis will be an addition to the research field in the trust creating in online platform environment and especially the (Dutch) crowdfunding platforms.
Literature review
The literature review consists of a better understanding of crowdfunding, trust and the relationship between these elements.
First Crowdfunding will be reviewed and an explanation of which definitions are used. Secondly trust and the relation with crowdfunding. Third crowdfunding platforms. Last but not least a definition of an informal investor will be given.
Crowdfunding
Crowdfunding is a relatively new research topic. In the growing research field most of the articles begin explaining crowdfunding. This thesis will do the same:
“Crowdfunding is asking a crowd to donate a defined amount of money for a specific cause, project or other use in exchange for various rewards.” Silva Puras (2015)
“Fact of the matter is that it has been around for centuries in the form of raising money from people for elections, wars, social causes and micro financing. Much before the formation of intermediaries like crowd funding websites and social networking websites entrepreneurs engaged in personal crowd funding initiatives.” Lasrado & Lugmayr (2013). That is why they have made an overview on different perspectives on Crowdfunding. To get a better
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Ordanini (2009) An initiative undertaken to raise money for a new project proposed by someone, by collecting small to medium-size investments from several other people (i.e. a crowd).
Belleflamme et.al (2011)
Involves an open call, mostly through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights .
Ideavibes (2011) Raising financing via the internet online through the collective efforts of a group of individuals referred as crowd.
Rubinton (2011) The process of one party Financing a project by requesting and
receiving small contributions from many parties in exchange for a form of value to those parties.
Mollick (2012) Funding of efforts (cultural, social or business) by drawing small contributions from large number of individuals using the internet.
Lehner (2013) Tapping a large dispersed audience, dubbed as ‘the crowd’, for small sums of money to fund a project or a venture through social media communication via the Internet
Table 1: Definition of Crowdfunding, Lasrado, L. A. & Lugmayr, A.(2013)
Using these perspectives Lasrado & Lugmayr (2013) defined crowdfunding as: “process of an individual or group of individuals raising capital for a cause; be it cultural, social or business by attracting small contributions from a large crowd using social media and internet as the medium for communication.”
Missing in this definition is clearly statement the exchange for a form of value between these parties Rubiton (2011). To elaborate on this exchange the crowdfunding definition of Lambert and Schwienbacher (2010) is applicable. They extend the definition of
crowdsourcing provided by Kleemann et al. (2008), by describing crowdfunding as “an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes”.
In Germany there was a distinction between crowdfunding and crowdinvesting. The difference is the exchange between these parties. Whereas crowdfunding stands for donating and getting no financial and sometimes no physical reward. Crowdinvesting contains at least a financial return. Although this difference is very clear this German difference is not adopted in the general literature.
Silva Puras (2015)makes another attempt to describe crowdfunding more general and uses the umbrella of crowdfunding. Under this umbrella (image 1) are three types of
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Image 1 , umbrella of crowdfunding, source: Silva Puras 2015.
Crowdlending, also known as peer-to-peer lending, is the process by which many individuals lend small amounts of money to a borrower. Almost the same process but instead of lenders there are investors who get a fractional ownership of the company is called equity-based crowdfunding. Non-equity-based crowdfunding is the same process except there isn’t any financial exchange, repayment or ownership transition (Silva Puras, 2015).
Where Puras shows a clear relationship between the investment and award, this isn’t always the case. Sometimes the project owner adds reward next to expect return on donation or investments. For example by crowdlending the lenders get beside their financial return a tangible return, like a product or service with discount. In a lot of crowdfunding projects there is some kind of value of doing it together and showing gratitude to each other.
9 Figure 1. Crowdfunding cycle
The crowdfunding cycle (figure 1.) gives an outline on the different types of crowdfunding. The table below gives an overview the most common ways of funding and the associated return and platform. Almost each kind of platform has his own focal point for funding and return. The reward based funding, can be found across different kind of platforms.
Kind of funding Minimal expected return Site or Platform
Investment in equity Equity Equity or lending
Lending Financial return Peer-to-peer or Lending
Reward based donation Service or product Equity, lending and Donation
Donation Gratitude Donation
Table 1. Crowdfunding return and platform
Crowdfunding platform
Taking all of the above in to consideration. Crowdfunding is a perfect example of a two-sided market. According to Eisenmann et al.(2006) a two-sided market links together two
individual user groups in a network. The interaction between this parties can be done on a platform or an intermediar could bring both parties together. In either case trust plays an important role to overcome asymmetric information like hazards and adverse selection.
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A platform could be either a digital marketplace or a certain web page for exchanging funds. It could also be an intermediary or a broker who introduces investees to investors (Tomczak, Brem, 2013). Belleflamme et al. (2014) point out that the central difference between equity crowdfunding and traditional capital-raising is the funding process itself: Entrepreneurs make an open call for funding on a crowdfunding platform, and investors make their
decisions based on the information provided therein. Moreover, the crowdfunding platform facilitates the transaction by providing a standardized investment contract and settling the payments (Ahlers et al. 2013).
In this way three main actors in Crowdfunding are defined: 1. the fund-seeking entrepreneurs or project owners.
2. the crowdfunders, members of the general public, also called informal investor.
3. the intermediary, usually an online crowdfunding platform . (Valanciene and Jegeleviciute , 2013)
Crowdfund platform select projects they want to get funded on their platform (Collins and Pierrakis, 2012 ). The appraisal and quality of start-ups and young companies cannot be observed directly , “Resource holders therefore assess value by estimating the conditional probability that a firm will succeed, given a set of observable characteristics of the
organization” Stuart et al. (1999). Every platform has a set to measure their preferred characteristics of a project. Little research is done on that specific topic.
P2P networks have relied upon social networks to overcome adverse selection in their lending practices by building social networks on their lending platforms ( Yum et al. 2012). Research claims that social networks built on the online platform help to overcome
information asymmetries between lenders and borrowers (Herrero-Lopez 2009, Greiner and Wang 2007, Freedman and Jin 2008). Michaels (2012) even states that the absence of group liability in the online platform makes it less effective in P2P market.
(Equity) Crowdfunding platforms uses other instruments to decrease information
asymmetry, they don’t have these social groups, but do have number of investors invested in the project, and a percentage of fund amount.
Information asymmetries among market participants can have negative effects on the markets in which information is used (Heminway, J.M. 2014). Platforms can diminish these negative effects by giving disclosure requirements that respond to information asymmetries. Common problems that arise with intermediaries are the securities intermediary context. “The nature of the intermediary’s compensation and the potential effects of cross-subsidies may incentivize intermediaries to selectively report information to the market. Significant regulation (including recent regulation of public accountants) exists to prevent conflicting interests from impinging on the policies underlying the federal securities laws” (Heminway, J.M. 2013).
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The online environment, where most crowdfunding platforms are located, could also hinder the trustworthiness (Klafft 2008a,b) “Transactions in e-credit marketplaces often involve fictitious user names, so that there is inherent risk of default through fraud in the online platform” (Greiner and Wang 2007). As well as the uncertainty of receiving your money back at all.
This thesis will not present the technology behind platforms and it will not outline the web programming and of online environment either, that is out of the scope of this work. The research on how crowdfunding platforms can create trust for informal investors starts by further analysis on the literature of trust and platforms. Most of the research of trust comes from crowdlending platforms, also known as peer to peer platforms. By comparing the different criteria found in the literature with Dutch crowdfunding platform. A
comparison can be made between the Dutch situation and the literature.
Trust
Therefore trust plays a major role in coping with information. Information asymmetry is one of the fundamental problems that online platforms and thus crowdfunding platforms face. (Yum. et al, 2012). Information asymmetry can lead to adverse selection and moral hazard (Akerlof, 1970; Pauly, 1974).
“Trust (or, symmetrically, distrust) is a certain level of subjective probability with which an agent assesses that another agent or group of agents will perform a particular action, both before he can monitor such action (or independently of his capacity ever to be able to monitor it) and in a context in which it affects his own action .” Gambetta (1988). “Trust is a reliance upon information received from another person about uncertain environmental states and their accompanying outcomes in a risky situation.” Schlenker (1973).
Astha, A. & Assadi, D. (2009) found in their research three different factors or a combination of them, explaining the making of trust in transactions: “personality of the one who trusts, competence and reputation of the one who inspires trust and finally the governance of a legal, auto-regulated or cultural third party that enforces trust.”
Trust in transaction is often a slow process. “It start with minor transactions in which little trust is required because little risk is involved and in which partners can prove their
trustworthiness, and consequently expand their relation and engage in major transactions (Shapiro 1987).” During this process, trust can be measured by verifying information of the other, before hand and afterwards. The findings of these outcomes creates knowledge and insight of the other party. Which form an image, identity or predicatabilty of a person or organization. The perspective of the one who trusts plays a major role how they judge and what their expectations of their counterpart is, the one they trust (Astha, A. & Assadi, D.2009). People try to measure others by their identity, as an effect most Identities focused on being trustworthy or successful Herenzstein et al. (2011).
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The degree of trustworthiness is the central factor for whether trust increases or decreases (Tullberg, 2008). A certain level of trust has to be enough to invest, this level of trust divers between individuals. People tend to invest in their reputation, which will reflect on their environment even though the immediate payoff for trusting is poor (Charness, et al 2011). Duarte et al. (2012) show that project owners who are perceived as less trustworthy are also less likely to have project requests filled. Even so borrowers that deemed trustworthy
receive 31% more bids than the average (Gonzalez, L. & McAleer, K., 2011). The project owners that had a perception of being trustworthy, had better credit scores and less default (Duarte et al., 2012).
Crowdfunding & Trust.
The interaction between investor and investee can be done on a platform or an intermediar could bring both parties together. In either case trust plays an important to overcome hazards or adverse selection.
The research done in this thesis focuses on crowdfunding platforms. To get a better insight at trust and crowdfunding platform, peer-to-peer platforms and other online platforms are used.
To understand how trust operates, it is also important to examine the dimensionality of trust and perhaps reconsider the construct of trust in the context of online environments. Trust in online environments is based on beliefs in the trustworthiness of a trustee, which is
composed of three distinct dimensions - integrity, ability, and benevolence (Gefen, et al. 2008). Bart et al.(2005) found that the influences of the determinants of online trust are different across site categories and consumers. Online trust partially mediates the relationships between Web site and consumer characteristics and behavioural intent. Crowdfunded can be put under the business marketing topic Bart et al (2005) use, the determents that are valued high: information on the site, security, absence of errors, entrepreneurship financial risk navigation and presentation.
Funders might rely on the platform or other third party agency to verify the credentials of others on the platform (Astha, A. & Assadi, D., 2009)
Next to the trustworthiness of projects on a platform, which are based on the project characteristics, the characteristics of a platform have their influence on trustworthiness as well. In thesis the aim is to get a better view on what the informal investor finds important, in such way that platforms can add this to their presentation of their projects.
Informal investor
After the definition of informal investors, their behavioural influences and actions of informal investors will be described.
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Investors provide financial resources with an expectation of return on their investment (Mollick, 2014). Investors are very important stakeholders for entrepreneurs, so these entrepreneurs can acquire resources needed for project survival and growth.
Actors that are investing in crowdfunding projects, can be seen as investors (Schwienbacher & Larralde, 2010; Ordanini et al, 2011). Informal investors refer to individual actors and not venture capitalists, which could be an investor as well.
Malmendier and Shanthikumar (2007) define small investors as those who invest relatively small amounts of money (Belleflamme et al, 2014), and receive a relatively small return. Freear et al (1994) state that small investors have little financial knowledge and experience compared to venture capitalists. The costs to evaluate project are relatively higher for small investors compared to venture capitalist. Where the amount invested is higher, thus the cost of evaluating is relatively lower (Ahlers et al., 2013).
The research of signalling of start-ups and ventures by small investors is very little and according to Ahlers et al ( 2013) no paper has examined signalling in the context of equity crowdfunding before 2014.
Research of Potzsch, S. & Bohme, R. (2010) has shown that start-ups and portal want fewer restrictions whereas investors demand more disclosure, limits on amount entrepreneurs can raise, lower threshold for audited financial statement to name a few. They see a rise of demand by investors to get as much disclosure as possible. Thus the investor wants more information to make an investment.
When the investors find themselves to be without financial expertise and unconfident to make their own investment decisions, they try to learn from their peers as much as possible. “A related outcome is that, when people make decisions based on imperfect information in the financial markets, they tend to herd” ( Yum, et al. 2012).
Research on peer-to-peer lending shows that investors can follow two types of herding: irrational herding and rational herding. Zhang & Liu (2012) analysis shows that rational herding beats irrational herding in predicting lending performance. Zhang & Liu (2012) describes rational herding as observational learning. Lenders will try to take advantage of collective intelligence in their loan decision-making process (Yum, et al 2012).
When more information becomes available to rational investors, they will use the collective intelligence of the marketplace lesser and become more depended on their own capacity to infer trustworthiness and the decision to invest becomes more structured (Yum, et al, 2012). In the conceptual model different information, hard and soft, are put together to get an insight in the validation and ranking of the different kind of information.
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Crowdfunding in the Netherland
Crowdfunding is a novelty in the Netherlands. The earliest registered figures found on crowdfunding funding are from 2011 by Douwen & Kouren. Image 2. shows the increase of the total amount funded in business organisations only. Expectations are that the total amount keeps on rising (Douwen & Koren, 2015).
Image 2. Crowdfunding amount in the Netherlands. (source: www.douwenenkoren.nl) Last year a sector society group was created that collects these data and created an overview of the Dutch Crowdfunding market and their platforms.
There are a lot of platforms created in the Netherlands in the last couple of years. Douwen & Koren found that there are more than 23 crowdfunding platforms active in the Netherlands that use Equity and debt based funding sometimes combined with another reward. The difference between these platforms is the minimum investing amount reaching from €10-€1000. Not all of these platforms are making profit (yet). The viability as a valid form of investing has to be proven over the years.
Field research also showed that platforms sometimes worked together to get a the same project funded, in other words the projects is placed on two sites. This happened mostly with regional sites that wanted to attract more exposure.
Image 3 shows some of the different crowdfunding platforms in the Netherlands. To further elaborate on Dutch crowdfunding platforms won’t amount much extra value to the research.
15 Image 3 crowdfunding platforms in the Netherlands
Conceptual framework
“Given the relatively high uncertainty in borrower trustworthiness and the lack of lender expertise and information, estimating borrower trustworthiness is a probabilistic problem.”( Yum, et al, 2012). Investors are screening projects with different strategies according to the level of uncertainy associated with the project. Publicly observable characteristics are used in their decisions making (Zhang, J. & Liu, P 2012). When informal investors can get the same information as private financial institutions they can value and screen the same (Sugar, 2010). Potzsch, S. & Bohme, R. 2010 has shown that the investor demand more disclosure by the crowdfunder and platform. Unverifiable information is associated with an increase in borrower defaults (Yum, et al, 2012). When more information becomes available to rational investors, they will use their own capacity to infer trustworthiness and the decision to invest becomes more structured (Yum, et al, 2012). How would they value trustworthiness of a project?
The research on how crowdfunding platforms can create trust for informal investors starts by further analysis on the literature of trust and platforms. Most of the research of trust comes from crowdlending platforms, also known as peer to peer platforms.
Within the field of crowdfunding, A lot of research is done on crowdfunding, on the motivation, but little research on trust. There isn’t a clear model how informal investors make their decision. A lot of research is done on the motivation of informal investor. The main goal of this research is to get an insight into the valuation of trustworthiness based on the information projects are already displaying. Assuming that information can increase or decrease the trustworthiness of a project. The goal is to find what kind of information is used by crowdfunding project.
Interesting fact is that there isn’t an regulated template platforms should use to display the project features. There are only regulations on hard information, but that is limited too. Even so each crowdfunding platform has its own set of information.
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The aim of the conceptual framework is to create a model that consist of information that informal investor use for decision to invest. Because of the wide variety of information given by crowdfunding project on platforms. A qualification is made of each type of information found in the literature or in practice. This information will be supported by other researches and be categorized as either hard or soft information.
Hard and soft information.
There are different types of information, each bring their own kind of message. Those message can be categorized in two kind of information: hard and soft information. How do you make a distinction between hard and soft data. When researching lenders on Prosper, Berkovich (2011) made the following difference between hard and soft data.. “ “Soft” data contains the images and text, (..) “hard” data contains credit score and other public
variables.” (Berkovich, E. 2011). Or Herenstein et al (2011) qualify every information that has an aspect of narratives as being as soft information or humanizing information , Larrimore et al (2011). Simply stated: Hard information are quantitative and easy to measure, the
valuation of the information is quite clear. Whereas soft information is qualitative and isn’t that straight forward and can be interpreted differently.
An example: As said before in Dutch regulations the following hard information should be given: Duration of the loan, desired loan amount, payback period. Beside that each Dutch site should give a warning that investing and lending are related to risk (www.afm.nl). This warning can be considered information too, because its valuation is hard to measure it is soft information.
To classify the information in hard or soft, it is necessary to know which kind information is needed by informal investors to know before they invest. There is quite some literature on different information or signals there are used in presenting a project. Bringing streams of literature together help to get more insight in the decision process and suggestions for a decision model.
“Information representing economic ability and verified certificates were positively associated with loan funding success.” Greiner and Wang, 2007. Investors make their investment decision mostly on hard information ((Iyer et al. 2009, Potzsch, S. & Bohme, R. 2010) and use very similar rules as traditional banking system Klafft (2008). Hard information alone isn’t enough for lenders to fund a project alone to do a proper evaluation. If
information is hard to verify or can’t be trusted the funding won’t go through Larrimore et al. (2011). But they will use another decision process for high risk-borrowers. Yum, et al, (2012). “The quality of young companies often cannot be observed directly, evaluators must appraise the company based on observable attributes that are thought to co-vary with its underlying but unknown quality. Resource holders therefore assess value by estimating the conditional probability that a firm will succeed, given a set of observable characteristics of the organization.” (Stuart, et al, 1999).
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In those cases soft information could affect loan funding decisions (Michaels 2012, & Herzenstein et al. 2011) and even increases favourable funding of the project. According to Larrimore et al.’s (2011) soft information or humanizing personal information by project owner doesn’t have a positive association with the funding success and thus funders are misrepresenting themselves (Berger and Gleisner 2009). Whereas Berkovich (2011) says: “Lenders that can effectively use soft data have an advantage over uninformed lenders who base their decisions purely on hard data”. But Yum, et al, 2012 & Ahlers, et al (2013) found that detailed information about equity and risk are effective signals, and have the most effect on funding success. Other information had less to no impact on funding success. Whereas Mollick (2014) found that higher quality level project are more likely to be funded. This high quality wasn’t based solemly on hard information. Due to the disagreement between authors both kind of information will be put in to the research, because of the role they play in the decision model of the informal investor.
Investor Trustworthiness model
Measuring the valuation of hard and soft information by informal investors will give an better insight in their decision process. By knowing which kind of information they value, trustworthiness can be improve by adjusting the presentation of projects on crowdfunding platforms.
Trustworthiness of a project is dependable of several aspects of a project. Lacking trust in one of those aspects has effect on the project as a whole. Each aspect has different kind of information or statements, an informal investor can use to value the trustworthiness of a project. For informal investors the following aspects should have effect on the
trustworthiness of the project: 1. Company information 2. The project owner 3. About the project
4. About your investment in the project
18 Figure2 Investor Trustworthiness model.
Below the aspects and their statements are described in further detail. 1. Company information
For investors the characteristics of the organization are important. Bertoni,P., et al. 2012 shows that Venture Capatalist look at the following dimensions of an organization: “industry of operation, age, size(number employees), stage of development (seed, start up,
expansion), localization and distance of the investee company from the premises of the VC at the time of the investment”. Research by Agrawal, et al (2013) showed that distance between the project and the investor plays a very limited role. Mollick (2014) found that it did play a role, because of gathering and monitoring the progress of their investment, the place of operation and their population is related to the project success. When the place is the same as the investor funds appear to be funded quicker and against a lower interest rate, because of common law and local banking system. Especially in nations with higher Hofstede masculinity scores (Gonzalez, L, 2014).
The following statements belong to this aspect.:
Hard statements Financial status of the company: solvability, rentability, liquidity. Credit rating of the company.
Soft statements Place of business (or the active area of the business). How many employees the company has.
Presentation of the company organization structure – Organogram Pictures of the products & services the company provides
19 2. The project owner
Information about the identity background and characteristics type this aspect of the model. According to Herzenstein, et al (2011) identity and personal characteristics (Ravina 2008) plays an important role in investing, even “their picture, and even the vicissitudes of their life, family and so on” (Sugar, 2010).
Research by Barasinska and Schaefer (2010) found gender of the project owner may be platform-specific. In the US female owners had better chances to get funded then male in the US, but in the German situation no affect was found (Barasinska and Schaefer, 2010). The trustworthiness of the managers was rated by their photographs by Pareek, A. & Zuckerman, R. (2014). Their research showed that when the manager of a project was perceived as trustworthy, as a result the project got greater fund flows than managers that were perceived as less trustworthy. Even when they got a poor past-performance and generate lower risk-adjusted returns.
Wojciechowski (2009) described the importance of project creator credibility Investors are more confident to fund project owners with good credit histories and are less confident were credit ratings are bad . (Freedman and Jin, 2008 ). Next to that availability of the project owner has slightly positive effects on the project funding success (Yum, et al, 2012). The following statements belong to this aspect.:
Hard statements Credit rating of the project owner Education level of project owner
Soft statements Contact information of the project owner
Personal information of the project owner (age, marriage, kids, gender, hobbies) Picture of the project owner
3. About the project
The reason why capital is required is of highly importance (Macht, S.A. & Weatherson, J. 2015). Achleitner, et al (2013) and Sievers, et al (2013) found that detailed information about equity and risk are effective signals also used by venture capatils, and have the most effect on funding success. (Ahlers, et al, 2013)
“A high funding target implies that more effort is required by the project owner to legitimate the requested funding” Frydrych, D., et al(2014). Thus transparency and persuasiveness about the project is a necessity of the project owner. Thus giving a through description of the project and their operation plan will give a better decision position for the informal investor.
When platforms give information of a project the usely put a virual pitch of the project in a video.( Frydrych et al .2014)
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Several researches showed the importance of recommendations by third parties are valued as important. This herding behaviour can play a role directly or indirectly (Zhang, J. & Liu, P 2012). Some platforms show the individual investment made per project, while others do not openly present this information ( Burtch et al ., 2013). Beside that Mollick (2014a) finds that investors with a large number of friends associated with success, such as friends and likes on facebook (Moisseyev, 2013). Measuring this statement will make sure how informal investors value recommendations by others. This is consistent with previous research (Ho 2010).
The following statements belong to this aspect.:
Hard statement Detailed description with specific figures (calculations) on how the raised money will be invested.
Soft statements Textual explanation of the business plan.
A general description on how the raised money will be invested A short video of the business plan by project owner.
Recommendations about the project by other third parties and other investors. 4. About your investment in the project
This aspect features statements that are important for the informal investor and their involvement in the project. Bertoni, et al. (2012) characterize investments dimensions as: syndication, duration and exit mode. In other words how much can you invest, how can you invest, how long is the investment due. What is the motivation of the project owner to use and what will be the return (Macht, S.A. & Weatherson, J. 2013).
Stiglitz and Weiss (1981) have predicts a higher interest rate can imply lower rate of return because higher interest attracts lower quality borrowers. Prystav, F. 2015, found that investors are attracted by high monthly liquidity of borrowers. Gonzalez (2014) found that investors who got the same common laws as the residence of the company can lead to longer approved payback periods and lower interest rates. However Mollick (2014) found that only a minority of successful funded project-raising, manage to deliver the promised return on time.
The following statements belong to this aspect.:
Hard statements Details on the payback period of your investment. Interest rate you get on your investment.
Project information on the loan duration.
Soft statement Textual motivation by the project owner of choosing crowdfunding to fund the project
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Hard or Soft information resource Company information
Pictures of the company logo Soft Pareek, A. & Zuckerman, R. 2014 Pictures of the products & services the company
provides.
Soft Duarte, et al, 2012 Place of business
(or the active area of the business).
Soft Agrawal, et al, 2013, Mollick, 2014 & Gonzalez, L, 2014
How many employees the company has Soft Bertoni,P et al. 2012 Presentation of the company organisation structure -
Organogram
Soft Bertoni,P et al. 2012
Credit rating of the company. Hard Freedman and Jin 2008, Gonzalez, L, 2014 & Duarte, et al, 2012
Financial status of the company: solvability, rentability, liquidity.
Hard Freedman and Jin 2008 The project owner
#16 Education level of project owner Hard Sugar, 2010 & Ravina 2008 #1 Picture of the project owner Soft Pareek, A. & Zuckerman, R. 2014,
Ravina 2008 & Duarte, et al 2012. #2 Contact information of the project owner Soft Prystav, F. 2015 & Yum, et al 2012 #3 Personal information of the project owner (age,
marriage, kids, gender, hobbies)
Soft Sugar, 2010, Herenstein et al 2011, Potzsch, S. & Bohme, R. 2010, Prystav, F. 2015
Barasinska and Schaefer, 2010 #4 Credit rating of the project owner. Hard Wojciechowski 2009, Freedman & Jin
2008, Gonzalez, 2014 & Duarte, et al (2012) The project
#6 Textual explanation of the business plan. Soft Potzsch, S. & Bohme, R. 2010, Prystav, F. 2015 , Frydrych, et al 2014
#7 A general description on how the raised money will be invested
Soft Potzsch, S. & Bohme, R. 2010, Prystav, F. 2015
Frydrych, et al. 2014 #8 A short video of the business plan by project owner. Soft Frydrych, et al. 2014 #10 Recommendations about the project by other third
parties and other investors.
Soft Zhang, J. & Liu, P 2012. Mollick, 2014, Ho 2010, Gonzalez, L, 2014
Burtch et al ., 2013 #13 Detailed description with specific figures
(calculations) on how the raised money will be invested.
Hard Prystav, F. 2015, Frydrych, et al.2014 Macht, S.A. & Weatherson, J. 2015 Your investment in the project
#20 Interest rate you get on your investment. . Hard Stiglitz and Weiss (1981),
Prystav, F. 2015 & Gonzalez, L, 2014 Macht, S.A. & Weatherson, J. 2013 #9 Textual motivation by the project owner of choosing
crowdfunding to fund the project.
Soft Frydrych, et al 2014 #11 Project information on the loan duration. Hard Bertoni,P. et al 2012,
Prystav, F. 2015 Gonzalez, L, 2014 Mollick 2014
#12 Details on the payback period of your investment. Hard Bertoni, et al 2012, Prystav, F. 2015 Gonzalez, L, 2014,
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The model will be tested to make sure that the statement addressed in the model is valid. This will be done by individually valuing of the statement, after this is done in each aspect the statements will be ranked. By doing so an insight is created in which information is valued as important and which is ranked higher. The results will show the trust aspect of the decision process of Dutch informal investors.
Methodology
The criteria, hard and soft, found in the literature is used in the questionnaire. This
questionnaire is given to informal investors to know what they value the most. The different criteria are questioned by a valuation method and ranking method. By using Likert scaling the value of each criteria is measured. The relevance of the statements was measured by using the Likert Scale of Importance (Very Important, Moderately Important, of little importance, unimportant). This scale was chosen because all of the answers held some importance, except the last one.
Secondly a ranking method is used to see which criteria is more important for the informal investors to trust the platform and invest. In the literature there is some discussion about which criteria, hard or soft, influences the investor the most. By valuing and ranking the criteria insight is created which criteria is the most valued. Beside that demographics of the interviewee are conducted to be sure that the respondents are a diverse group and
represent the crowd.
Data collection
The conceptual framework is tested by sending out questionnaires to Dutch residents, crowdfund and non-crowdfund a like. In this way a wide scope of people can react and the statements can be measure more diverse.
The research on trust is to measure trust for Dutch Platforms, because Dutch platforms target Dutch population, the questionnaires are send to Dutch people.
By using the questionnaires objectivity toward the respondents is kept. Not meeting in person reduces the personal bias of the researcher.
The questionnaires are send by a link, by email, facebook and whatsapp. Because the questionnaires were sent by multimedia, there is a possibility of participant error and bias. The respondent could discuss the questionnaire with others and therefor been influenced. This could result in a different intentional answer.
English is used as the questionnaire language instead of Dutch. This makes the survey easier to duplicate for research in other countries. Adaptations can be made easier as well.
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Sampling
For this survey the target population is individuals that are considering crowdfunding or individuals investing their money. This group is extremely wide and hard to cover all. To get as much responds as possible the questionnaire is send to friends, family and fellow
students.
Crowdfunding platforms weren’t used to distribute the questionnaire, because they target crowdfunders only. This will lead to an imbalance population of responders. The survey tries to reach people that already invested in projects on a platform, but non crowdfunders as well.
The survey intends to measure how important the different statements are to create trust by potential investors. This means people that already invested, but also non-investors. By including crowdfunders and non-crowdfunders a comparison between those two can be made. Within these groups there is a deviation:
-in the non-crowdfunder group
-people that are interested in crowdfunding -people that aren’t interested in crowdfunding -in the crowdfunder group:
-A invested once friends project.
-B invested once in a non-friends project.
-C invested in several project, but only in friend projects. -D invested in several project of friends and non-friends.
Barasinska and Schaefer (2010) & Gonzales and Komarove (2014) both found different gender relations with investing, one where it did make a difference and one where it did not. By using demographic features: age, education & gender there will be a better
understanding in de different backgrounds of the responders.
Operationalization
The questionnaire is based on the statements in the conceptual framework. These statements are first rated in how important the statement is and later these are scaled in their own subgroup. See Appendix for the whole questionnaire. Although the
questionnaires are to Dutch residents, English is used as the questionnaire language instead of Dutch. This makes the survey easier to duplicate the research in other countries. Besides that most Dutch residents can read and speak English on a moderate level and could cope with these questions.
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First the respondents have to rate 21 statements on importance. This is done by a Likert scale, five-level scale. The scale used is “Very important”, “important”, “moderate
important”, “of little importance”, and “unimportant”. All of these statements are used by platforms and have to be taken seriously. By using this scale the importance of each statement is taken into account, where other scales of importance can give lower value to these statements. The statements were presented differently to each respondent to make sure that there wasn’t any guidance by the structure of the questionnaire.
Secondly the respondents have to rank the same statements in their groups. The groups are divided in four main groups, each group having its own set of statements:
1. company information has 7 statements: 5 statements of hard information, 2 with soft information.
2. project owner’ 5 statements: 2 statements of hard information, 3 with soft information. 3. the project 5 statements: 1 statement of hard information, 4 with soft information. 4. your investment in the project has 4 statements: 3 with hard information, 1 with soft
information.
In all these groups the statements are presented differently per questionnaire to make sure that respondents get different order to answer the statements. This eliminates guidance by filling in the questionnaire. The order of the groups is fixed, this to make sure that the respondent starts with the question with the most statements and end with the groups with the lowest. This to make the respondent motivated to complete the questionnaire.
Third and last the respondent has to give his or her demographics, these are necessary to test the if there are gender difference as well as the level of crowdfunding experience. This is done by multiple choice questions , whereas the last question is used to have an insight in how many of the respondents actually have use crowdfunding.
The survey was designed in Monkey Survey (www.monkeysurvey.com). The survey was distributed in my personal network and send out to more than 450 personally by email. As well as by whatsapp (mobile application) and facebook (my personal page and group pages). All responders were asked to forward the survey. By doing a so large heterogeneous crowd of Dutch residents could be reached.
Data analysis
Data analysis will be done by the measuring the weighted arithmetic average and looking at the absolute numbers of the responders. The value question which were answered on a Likert scale has the following values: “Very important”=1, “important”=2, “moderate important”=3, “of little importance=4”, and “unimportant”=5. The ranking questions were also measured with the arithmetic average, only the ranking questions were valued from 1 to 7, were as ranked #1 had a score of 7, #2 has a score of 6, etc. dependable on the amount
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of statement. When there are 4 statements the highest score given to the 1st ranked would be 4 etc.
The respond rate is hard to measure, because there wasn’t a rating system in the messages. Besides that the forwarding of the survey by responders isn’t taken into account. This makes it even harder to measure the responds rate. (see appendix for response questionnaire ).
Findings
A total number of 102 responders filled in the questionnaire complete, including 36% female and 64% male. The ages range from 18-60+, the majority of the responders are between age 18-44 , 89%. 88% has a Bachelor degree or higher. Within this population 14% is a student and 16% works part-time and 65% works full time. Based on annually income of employed people between the age of 18-44 the could have the means to invest in projects and qualify to be an informal investor.
The results will be discussed as follows first the valuation of the statements, secondly the ranking of the statements per segment. After that there will be a short comparison of the responders on gender and their crowdfunding experience.
Taking into consideration that crowdfunding is a novelty in the Netherlands. Therefor the knowledge of each responder isn’t the same. Next to that people can have different motives to invest, the two extremes: to support or to get financial gain. This thesis research the valuation and ranking of information given by a project and not the motive of the investor.
Relevance of the statements.
The relevance of the statements was measured by using the Likert Scale of Importance (Very Important, Moderately Important, of little importance, unimportant). This scale was chosen because all of the answers held some importance, except the last one.
The order of valuing the statements will be measured by the weighted arithmetic average. The statements with a low weighted arithmetic average is consider to be important. Outcome of the research shows that the majority of the respondents valued all of the statements in the first three scales of importance. Thus valuing the statements as information needed to evaluate an investment.
There weren’t any big differences found between the hard and the soft information. The highest valued statement is the soft statement #14 “A general description on how the raised money will be invested”. The lowest valued statement is a soft statement as well: #2 “Pictures of the company logo.”
There weren’t much responders that valued the statements as unimportant. Most of the statements weren’t valued unimportant then by six responders or less. Exceptions are soft statements: #2, #9 &
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#11 that were value by 10 to 12 responders as not important. Two of those statements contained pictures #2 “picture of the company logo” & #9 “picture of the company owner.”
One responder commented that rationally the picture of an owner wouldn’t be of
importance in the questionnaire, but maybe in real life it did play a role. Like Pareek, A. & Zuckerman, R. (2014) address that having a picture of a trustworthy person would have a positive effect on doing the investment.
Five statements weren’t valued by any responder as unimportant, soft statement #3, #13 & #14 & hard statement #20& #21. #3 “Pictures of the products & services the company provides”; #13 “Textual explanation of the business plan”; #14 “A general description on how the raised money will be invested”; #20 “Project information on the loan duration”; #21 “Details on the payback period of your investment”. Those statements combined form an abstract of the investment.
The conclusion of valuing of the statements is that both hard and soft information are necessary for valuing a business by an informal investor. Both soft and hard information has their importance, not all soft information is considered to be of high importance, but a fair amount is. The statements #3, #13 & #14 & hard #20& #21 should be always included in the crowdfunding request on a crowdfunding platform.
Below the score of each statement in the Investor Trustworthiness model with the weighted arithmetic average for each segment. Making the project and the investment in the project the two most important segments.
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Answer Options important Very Important Moderately Important Importance Of Little Unimportant Score Company information #1 H Financial status of the company: solvability, rentability, liquidity. 35 32 18 14 3 2,20 #2 S Pictures of the company logo 9 20 26 35 12 3,21 #3 S Pictures of the products & services the company provides.
20 51 21 10 0 2,21
#4 S
Place of business (or the active area of the business). 25 43 26 5 3 2,20 #5 S Presentation of the company organisation structure - Organogram 6 34 39 18 5 2,82 #6 S How many employees the company has. 6 24 36 31 5 3,05 #7 H
Credit rating of the
company. 19 40 33 7 3 2,36
The project owner #8 H Education level of project owner 10 25 36 25 6 2,92 #9 S Picture of the project owner 14 20 30 26 12 3,02 #10 S Contact information
of the project owner 30 35 26 9 2 2,20
#11 S
Personal
information of the project owner (age, marriage, kids, gender, hobbies)
7 22 33 30 10 3,14
#12 H
Credit rating of the
project owner. 20 38 28 11 5 2,44
The project #13 S
Textual explanation
of the business plan. 38 38 25 1 0 1,89
#14 S
A general
description on how the raised money will be invested
62 29 8 3 0 1,53
#15 S
A short video of the business plan by project owner.
17 41 28 13 3 2,45
#16 S
Recommendations about the project by other third parties and other investors.
14 42 32 13 1 2,46
#17 H
Detailed description
28 (calculations) on
how the raised money will be invested.
Your investment in the project #18 H
Interest rate you get
on your investment. 37 39 18 6 2 1,99 #19 S Textual motivation by the project owner of choosing crowdfunding to fund the project.
24 42 25 8 3 2,25 #20 H Project information on the loan duration. 36 35 22 9 0 2,04 #21 H Details on the payback period of your investment. 41 41 16 4 0 1,83
Ranking the statements
Each of the statements is ranked by segments. For each segment the prioritizing of the statements will be given. Comparison between hard and soft information will be given. The order of ranking the statements will be measured by the weighted arithmetic average. The statement with the highest weighted arithmetic average is consider to be the most
important. Overall hard statement were ranked the highest most often.
Segment – Company information Soft or
Hard statement 1 2 3 4 5 6 7 Total
Rank Score
Value Score
#1 H
Financial status of the company:
solvability, rentability, liquidity. 48 20 12 5 7 5 5 102 5,61 2,20 #2 S Pictures of the company logo 3 4 9 10 11 17 48 102 2,4 3,21 #3 S
Pictures of the products &
services the company provides. 24 13 12 14 14 17 8 102 4,37 2,21 #4 s
Place of business (or the active
area of the business). 12 20 22 15 14 12 7 102 4,38 2,20
#5 S
Presentation of the company organisation structure – Organogram
6 6 22 26 16 18 8 102 3,76 2,82
#6 S
How many employees the
company has. 0 3 9 12 26 29 23 102 2,65 3,05
#7 H Credit rating of the company. 9 36 16 20 14 4 3 102 4,82 2,36
The hard segments were ranked higher than the soft items. The financial status of the company was ranked 1st and the credit rating 2nd in this segment. The 3rd place is a tie “the
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place of the business”& “pictures of the products & services the company provides”. In the literature much is said about the place of the business, and researched seem to have
different opinions of the effect of naming this feature. This research showed that the place is indeed important for the investors. About the pictures of the company products and service nothing really specific found in the literature to explain high importance of investors of this feature. By showing pictures the business operations become more visible. Whereas the organisation structure and the amount of employees also give a view of the operation level.
Segment – the project owner Soft
or Hard
Statement 1 2 3 4 5 totaal Rank score
Value score
#8 H Education level of project owner 16 26 21 22 17 102 3,02 2,92 #9 S Picture of the project owner 7 19 11 27 38 102 2,31 3,02 #10 S Contact information of the project owner 20 28 27 14 13 102 3,27 2,20 #11 S
Personal information of the project owner
(age, marriage, kids, gender, hobbies) 16 10 24 25 27 102 2,64 3,14 #12 H Credit rating of the project owner. 43 19 19 14 7 102 3,75 2,44
In this segment the overall statements aren’t valued high. A hard statement was ranked first. The literature gives the importance of the picture of the project owner as of highly influence. Out this research it wasn’t show. Maybe the responders filled it in rationally and
uncongiously it would affect when making a decision to invest. The same goes for personal information of the project owner.
Segment – The project
Statement 1 2 3 4 5 totaal Rank Score
Value Score
#13 S Textual explanation of the business plan. 21 28 27 18 8 102 3,35 1,89 #14 S
A general description on how the raised
money will be invested 22 31 21 13 15 102 3,31 1,53 #15 S
A short video of the business plan by
project owner. 17 14 20 21 30 102 2,68 2,45
#16 S
Recommendations about the project by
other third parties and other investors. 5 11 15 37 34 102 2,18 2,46
#17 H
Detailed description with specific figures (calculations) on how the raised money will be invested.
37 18 19 13 15 102 3,48 1,87
This segment is valued the highest by the responders. This seems logical, because this segments features the details of the project. In this segment the only hard statement is
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ranked the highest above the other soft statements. Interesting fact is that statement #14 was valued “ very important” the most by the majority of the responder. In this segment the statement is ranked behind the two other statements. Recommendations by others aren’t that high valued by the responders as the literature would suggest. Maybe the responders make their financial decisions by themselves and they don’t want outside influence. Or maybe they aren’t aware how third party actions affect their decisions, or maybe they are aware of this herding affect and they don’t value it that much.
Segment – Your investment in the project Soft
or Hard
Statement 1 2 3 4 Totaal Score Rank ValueScore
#18 H
Interest rate you get on your
investment. 24 34 28 16 102 2,65 1,99
#19 S
Textual motivation by the project owner of choosing crowdfunding to fund the project.
35 12 7 48 102 2,33 2,25
#20 H
Project information on the loan
duration. 18 21 35 28 102 2,28 2,04
#21 H
Details on the payback period of
your investment. 25 35 32 10 102 2,74 1,83
In this part there where four statements to be ranked, three qualified as hard and one as soft. When the weighted score is taken two hard statements, #18 & #21, are ranked higher than the soft statement, #19. Nonetheless the soft statement is ranked the highest most often, as well as ranked the lowest. The reason why the same statement is at such extreem could be the point of view of the investor. The motive of the project owner could be more important to the investor that the prodidcted financial return.
The ranking in the segments shows that the hard statements come on top all most all the time. Only in the last segment “investment in the project” there is a difference between highst ranked and highest overall score.
Comparing male and female responders
Responses from men and women can vary and differ. In this research there were hardly any difference between men and women. The only big difference is that the female responders have invested more than the male responders. The population isn’t big enough to make hard conclusions about this difference.
31 Responders No, and I am not interested No, but maybe I would consider it. Yes, I invested once in a friends project Yes, I invested once in a non-friends project Yes, I invested several times in only in friend’s projects Yes, I invested in several projects of friends and non-friends. Totaal Female 8 16 7 4 0 2 37 22% 43% 19% 11% 0% 5% Male 9 45 5 3 0 3 65 14% 69% 8% 5% 0% 5% Total 17 61 12 7 0 5 102 17% 60% 12% 7% 0% 5%
Comparing funders with non-funders.
The majority of the responders didn’t invest in a crowdfunding project, only 24% exactly did fund a project. Although most of these investments were done once friends projects, 50%, or non-friend, 29%. That makes 21% of these investors funded two or more projects. Interesting is that none of the responders funded in several non-friend project. Responders that funded several projects, funded both friends and non-friends projects. Maybe the first experience with funding a friends project triggered them to fund other projects as well. Because of the low amount of exactly funders comparison between funders and non-funders would be a little bite cooked.
Conclusion
Based on the findings the construction of the Investor Trustworthiness model is valid. The segments project and your investment were valued the most important. Overall the statements were proven to be of importance for the informal investor to value the trustworthiness of a crowdfunding project. Both soft and hard information is valued high. The priority of hard statements is higher than soft statements. During the valuing questions there wasn’t are clear difference between soft and hard statements. All the statements were valued in the top importance valuations. A reason for this could be as in the literature was stated that soft information can have a positive effect on investing when hard information is low, where as soft information can have a negative effect when this is poorly given, even when hard information is top of the bill. In the ranking segments it was clear that the hard statements were ranked higher than the soft statements.
Some statements would have expect to have more value given by the responders when looking at the amount of research there is done on specific statements, such as place and third party recommendations. As a contradiction the statement “Pictures of the products & services the company provides” score a higher valuation, give the low attention in literature. There weren’t notable difference between male and female responders. As well as between non-funders and funders.
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Overall conclusion is that Crowdfunding platform can use the Investor Trustworthiness model to make a better presentation of their projects to target their potential investors.
Limitations
.Before the findings of this thesis are implicated in practice, the limitations should be taken in to consideration.
First of all crowdfunding is a novelty in the Netherlands, there isn’t much research done on the specific Dutch situation. Especially no research on the trust aspect in specific the trust issue of Dutch Informal investors. Beside that there isn’t hardly any research done in trust of informal investors which covers a whole range of variable statements. Some of the
statements that are questions could appear similar to responders, this could lead to misinterpret the questions. Next to that responders could be filling it rationally, but could give other answers in practice.
To get a more accurate measure, more responders would be desirable. With a bigger population, better conclusion can be made. To be more specific research could be done on active investors alone. The non-investors group can be used as a control group. In this way the research group is more homogeneous and conclusion could be made more general. More female responders in the group would be better as well to give a more balanced response group.
Only the view of informal investors on trust is researched. There is no clear understanding on the motive to invest and what their values are, this could be either one or a mingle of these two extremes: to support or to get financial gain. Including motivation of the investor in the research would get a wider view on the decision making process of an informal investor.
The focus of the research was on the trustworthiness of information presentation of a crowdfunding project and not on the presentation of several projects on the platform itself. The selection of projects by crowdfunding platforms isn’t research. As well as how the platform monitor the project duration and pay-off. The two subjects: selection and
monitoring could play a big role in the trustworthiness of the platform and her presentation. Reputation literature on crowdfunding platform isn’t available yet. Most researchers take one of the biggest platforms or well-known ones in their specific country for their research. This selection is mostly based on their overall funded amount. Whereas crowdfunding is a specific new phenomenon funding amount can be gained very quickly, but actually results of success of their presented projects isn’t published much. Most of these publish research elaborate on success and delayed return of a project (Mollick, 2014).. The effect of these projects success and return practices on reputation isn’t researched. Whereas reputation of the platform can play a huge role in the trustworthiness to invest in a project.
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The presentation of country regulations or approval of market authorities on the platform site isn’t research either. By using reference of the platforms to market authorities and keeping the
regulations and showing that they follow the regulation, can have an impact on the trustworthiness of the platform
This thesis will did not present the technology behind platforms and their usability. Both can be a contribution to the trustworthiness of the platform. In the sense that they give more information about the whole process, and thus create a kind of control for the user of the platform. The techonology gives you information on the validity of the platform and its ongoing process. Usability gives a better look in the how-to-use and how to navigate on the platform.
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