How Communities make Crowdfunding Campaigns more Successful: Research into the Success of Crowdfunding Communities and Considerations towards a Successful Crowdfunding Campaign.
Charlotte van Dijk 10608931
University of Amsterdam Graduate School of Communication
Abstract
Only 41% of all crowdfunding projects succeed in reaching their target goal and little information is known about why projects fail or succeed. Since social capital and engaging communities are seen as a determinant for a crowdfunding campaign’s success, it is the purpose of this research to analyse how these communities can turn the crowdfunding campaigns into a success, what their drivers are and which of these drivers are the most important. The research employs a qualitative approach, performing in-depth interviews with ten start-up founders and/or campaigns managers of successful crowdfunding campaigns in 2014. Campaigns were selected on crowdfunding platform and amount raised during the campaign, to represent a diverse set of crowdfunding campaigns that vary in terms of community, investors, successes and perspectives. Results of the research show ten reasons for success of the campaign, which are turned into seven considerations for
founders of start-ups and/or communication managers of crowdfunding campaigns, who are starting a crowdfunding campaign in the future, to create a community which can determine the success of the crowdfunding campaign.
Introduction
Crowdfunding is continuously growing in the Netherlands. In the first half of 2014 about 23 million euros was crowd invested in Dutch start-ups, 21% more investment through
crowdfunding than the first half of 2013. In this first half year, more than 900 projects found crowdfunding investment with an average amount of €25,000 per campaign (Douw & Koren, 2014). Not only in the Netherlands, but also globally is crowdfunding growing tremendously with a total of €5 billion crowd investments worldwide (Crowdfunding.nl, n.d.). Success stories like the campaign for the Pebble watch are making the news, and more and more start-up companies are searching for alternative ways of financing their company, besides the more traditional ways as financing through banks, venture capitalists (VC’s) and angel investors. For instance, Pebble was able to receive $1 million dollars in their crowdfunding campaign in only 28 hours and ended up with an amount of over $10 million (with an initial pledging amount of $100,000) (Kickstarter; Pebble, n.d.). With the growing number of start-ups finding investment through crowdfunding, more knowledge is needed about the
determinants of the success of a crowdfunding campaign.
According to the Kickstarter Statistics (2014), one of the largest platforms in
crowdfunding, only 41% of all the projects succeed in reaching their goal, and a meager 11% of all projects don’t receive any pledge at all. Schneider (2013), writer of the Huffington Post, explains the large number of failing campaigns by saying that the most important reason for crowdfunding projects to fail is by not having enough social capital and by not engaging with the community. Also other studies on crowdfunding discuss the importance of social capital, which is defined as “the sum of the actual and potential resources, embedded within, available,through, and derived from the social contacts of an individual or
organisation” (Nahapiet & Ghoshal, 1998, p. 243). McAdam (1982) explains the link between social capital and community commitment by saying that when people have a strong attitude towards a community (they feel motivated and have a responsible sense of belonging) they will mobilise their social capital more effectively and willingly. Other studies prove this implication. For example, Colombo, Franzoni and Rossi-Lamastra (2015) prove that the determinant of a successful crowdfunding campaign is the internal as well as the external social capital of the campaign, and Burtch et. al (2013) discuss the importance of connecting with the community through social media during the crowdfunding campaign. They say that social media marketing is a direct determinant of a campaign’s success and that
“crowdfunding helps to create a lot of buzz, word-of-mouth, and awareness of a project, which then eventually helps in the final demand or consumption of that project” (p.15). Even though research proves the importance of social capital and the importance of engaging with the community as a determined for a successful crowdfunding campaign, yet only 41% of all campaigns succeed. In order for a larger number of campaigns to succeed in the future, more research is required to gain knowledge about how these communities can turn the
crowdfunding campaigns into a success, what their drivers are and which of these drivers are the most important. This research intends to contribute to filling those gaps.
In the upcoming research, an analysis about previous studies on crowdfunding and communities will be made in order to research crowdfunding campaigns and the successful elements of communities during these campaigns. Different drivers of successful
communities and campaigns will come forward by performing a qualitative research in which ten founders and/or communication managers who created a successful crowdfunding campaign in 2014 will be interviewed. As a conclusion, practical considerations are given for founders of start-ups and/or communication managers of crowdfunding campaigns, who are starting a crowdfunding campaign in the future, to create a community which can determine the success of the crowdfunding campaign.
Crowdfunding and communities Definitions of crowdfunding
The concept of crowdfunding draws inspiration from concepts like micro-finance (Morduch, 1999) and peer-to-peer lending (Lin, Prabhala & Viswanathan, 2009), but is most closely related to crowdsourcing (Poetz & Schreier, 2012). Crowdsourcing is the idea of collecting ideas, feedback and solutions from the crowd, to develop corporate strategies (Bayus, 2013; Howe, 2008; Kleemann et al., 2008). Although crowdfunding is based on this idea, it differs as it mainly concerns collecting money or investment through individuals, generally by using online social networks (Belleflamme, Lambert & Schwienbacher, 2014). A refined definition of crowdfunding by Mollick (2014, pp: 2) is:
„The efforts by entrepreneurial individuals and groups – cultural, social, and for-profit – to fund their ventures by drawing on relatively small contributions from a relatively large number
of individuals using the internet, without standard financial intermediaries.”
Also Gerber, Muller, Wash, Irani, Williams & Churchill (2014) agree with this definition and elaborate that this collectiveness of individuals is the main advantage of crowdfunding; crowdfunding allows start-ups to appeal for funds directly from their community, and is therefore very attractive to those who have limited access to funds. So, instead of using a small group of larger and more sophisticated investors, crowdfunding allows start-ups to receive small amounts by large audiences (the ‚crowd’). Nevertheless, the not all researchers agree with Mollick’s definition. For instance, Ordanini (2009) is referring to a ‘collective effort by people who network and pool their money together, in order to invest in and support efforts.’ From this perspective, crowdfunding appears to be an initiative from the crowd, and
not the entrepreneur or start-up. Other’s see crowdfunding as “an open call, mostly through the Internet, for providing financial resources either in the form of a donation or in exchange for the future product or some form of reward” (Belleflamme et al., 2014, p. 7).
In order to conduct the research of crowdfunding campaigns in a similar fashion, the one definition of Mollick (2014) will be taken into account. His definition shows how
crowdfunding is an initiative started by the entrepreneur to reach out to his or her community and emphasises the crowd in the form of a ‘large number of individuals’ and is most neutral in the sense of rewarding.
Rewards in crowdfunding
To attract social capital and to engage with the community, investors expect rewards from their investment. Belleflamme et al. (2014) stress the importance of choosing the right ‘type’ of rewards for a crowdfunding campaign, since a right type of reward can trigger an active group of crowdfunders during or after the campaign and can determine the successfulness of the campaign:
„To ensure a viable crowdfunding campaign, entrepreneurs must provide an appropriate environment for the crowdfunders to enjoy sufficient community benefits from their participation. The form and extent of community benefits will determine the type of
crowdfunding mechanism the entrepreneur should use.” (Belleflamme et al.,2014, p. 602).
Therefore, the start-up has to carefully select the type of reward for its future investors. Many researchers proclaim there are four different types of crowdfunding that make it possible for backers to be rewarded: loans, equity purchases, donations or pre-ordering of the product (see: Agrawal et al., 2011, 2013; Mollick, 2014). With the first model, the lending model, funds are used as loans whereby the backers are expected to receive a rate of interest on the capital invested. With the second model, the equity purchases model, investors receive equity stakes in return for their investment. The third model, the donation model, is commonly used by NPO’s and NGO’s to find support for their charity projects, whereby the backers are placed in the position of philanthropists, and expect no direct return for their donations.With the last model, the pre-ordering of the product (or reward-based model), backers invest money as a promise to receive the product after manufacturing. Alternately, reward-based crowdfunding treats backers as early customers.
Schwienbacher & Larralde (2012) identify these four types of rewards in a different manner. According to them only three types of crowdfunding exist: donations, and passive and active investments. The donations are the same as described above, but the passive and active investments differ. With the passive crowdfunding type rewards are given to the investors without any interaction between the company and its crowd. The investors are limited to the rewarding function. With the active crowdfunding type, investors are not only
supplying money, but they are also in constant dialogue with the company, helping for designing new features, testing products, suggesting paths or supplying their network scope and individual expertise. The crowdfunding is in this sense similar to crowdsourcing and can have a determining influence on the success of the campaign. Also Hui et al. (2014) agree with this and state that these active efforts are the direct advantages of crowdfunding compared to regular investment, and that these benefits are a few examples of community efforts that turn a crowdfunding project into success.
All these different types of rewards have an specific influence on the involvement of the community. Belleflamme et al. (2014) explain that, for instance, equity rewarded investors could be more involved during and after the campaign, because of their direct profit in terms of shares. The community stays in touch, since their reward will maybe pay in a few years. Also, the crowdfunding based on profit sharing become more beneficial with larger amounts, since the entrepreneur needs more individuals to participate in the campaign and can
therefore create a larger community. On the contrary, pre-order investors will receive the product right after the campaign and will not need a long-term relationship with the entrepreneur to receive their reward. But the entrepreneur can use the pre-ordering as a screening device and test the demand and willingness to pay for the product. It is therefore important for the entrepreneur to make a well thought decision about the effects of the different types of rewards and the influence it will have on the involvement of his/her community.
Successful crowdfunding campaigns
The intense growth of crowdfunding platforms worldwide in the last few years demonstrates the successes crowdfunding can bring to start-up companies. Despite the many successes, there is no clear line of what determines a successful crowdfunding campaign; the success of a crowdfunding campaign is perceived differently across the various platforms. World’s largest crowdfunding platform Kickstarter is using an ‘all-or-nothing’ approach where a campaign has to reach its minimum pledging goal in order to be successful and receive any funds (Kickstarter.com, n.d.). Other platforms, like for instance Indiegogo, also give the option to receive the money pledged, even when the minimum has not been reached (Indiegogo, n.d.). Regardless the various definitions of successful campaigns, all
crowdfunding campaigns go through similar phases. According to Ordanini, Miceli, Pizzetti & Parasuraman (2011) follow all crowdfunding campaigns a similar pattern of community engagement during the campaign. As seen in Figure 1, the first stage of a crowdfunding campaign is called the phase of ‚friend funding’ where personal connections of family and friends are supporting the campaign initiators. The second phase is ‘getting the crowd’ where social media play an important role in getting the message out there and motivating and involving other people through word-of-mouth communications, just as Burtch et al. (2013) mentioned. This second phase is also the most delicate phase since many projects never
leave this stage. Never leaving the ‘getting the crowd’ stage and being unable to trigger the crowding process is seen as the primary reason for crowdfunding projects to fail. The following ‘engagement moment’ only happens for a few projects. The engagement moment triggers a chain reaction of investments and facilitates rapid growth towards the investment target, since investors notice the success of the campaign and want to be ‚in’ before the closure of the campaign. Getting into this engagement stage involves a mix of
entrepreneurship and social network participation (Ordanini, 2009) and involves great skills in building a community. For a crowdfunding campaign manager to be able to get to the
‘engagement moment’ in a crowdfunding campaign is crucial for the success of the campaign.
Also Hui, Greenberg & Gerber (2014) discuss the topic of different stages within a successful crowdfunding campaign and also involve the community. According to them, there are five stages when it comes to crowdfunding campaigns and the work it brings: preparing the campaign material, testing the campaign material, publishing the campaign material, following through with project goals and reciprocating resources. All campaigns face these different stages from beginning till the end, and in all stages the community is involved. In the first stage, preparing the campaign material, the entrepreneur is preparing the material, whereby the community could be involved by giving advice or expertise on the material. In the second stage, testing the campaign material, the community can give feedback on the prepared campaign material. In the third stage, publishing the project, the campaign is being marketed by using campaign material. The community is herewith involved by spreading the word and building an audience. In the fourth stage, following through with project goals, the goals set in the campaign need to be realised and rewards need to be send. The community can help with this by providing support and offering expertise. In the last stage, reciprocating
resources, support and expertise is given back to the community in the form of knowledge or funds.
It can be concluded that the community plays in important role during the crowdfunding campaign; as well as for using the community to reach the final target by reaching the engagement stage (Ordanini et al., 2011), as well as for using the community in preparing, testing, publishing, following through and reciprocating resources (Hui et al., 2014). Also, as earlier literature showed, is building an active and supportive community a determining process to make a crowdfunding campaign successful; an active community can be accomplished by choosing the right type of reward (Belleflamme et al., 2014). To be able to research the elements of a successful community in this research, literature on
communities will be discussed first.
Online and offline communities
Offline communities can be defined by two different definitions. According to Gusfield (1975) can offline communities be distinguished by the geographical notion of community (e.g. town or neighbourhood) and the relational notion (e.g. the character of the relationship like
profession or religion). As an addition, McMillan & Chavis (1986) spoke about the sense of being in a community and added four criteria to the definition: the feeling of membership, the feeling of influence, the integration and fulfilment of needs, and the shared emotional
connection. These offline communities can also develop online and seem to break barriers offline interactions are not able to, like breaking the barrier of time, space and scale.
According to Hui et al., (2014, p.63) are online communities any „virtual space where people interact to converse, exchange information or resources, learn, or play”, and exist on
technology platforms like blogs, forums, wikis and networking sites, and are among the most popular destinations on the Internet (Resnick & Kraut, 2012). Online communities are
engaged with the same purposes that offline groups, networks, and communities are also engaged with and provide their members with opportunities for companionship, social support, entertainment, information sharing and learning. Knowledge sharing and trust can be sustained and cultivated through common identity, clear purpose, active involvement of an experience and credible moderator and enforced appropriate online behaviour (Resnick & Kraut, 2012). Also Booth (2012) agrees and explains that one of the most difficult challenges in online communities are sustaining and fostering knowledge sharing and trust, one of the most important values for commitment in a community.
One way of solving this challenge of sustaining and fostering knowledge sharing and trust is by creating communities of practice (Wick, 2000), a group of professionals with similar task responsibilities and Gusfield (1975) earlier referred to this as a community with a relational notion. And according to Lehman (1988, p.95) “trust has to be achieved within a familiar world”. The founders of the term community of practice, define the term as “a system of relationships between people, activities, and the world; developing with time, and in
relation to other tangential and overlapping communities of practice” (Lave & Wenger, 1991, p.98). Communities of practice have the ability to share their experiences with each other more easily and have the capacity to stimulate exchange of knowledge (Ardichvili, Page & Wentling, 2003) since they can relate to each other. But communities of practice also receive a lot of critiques (Cf: Contu & Willmott, 2003; Fox, 2000; Handley et al., 2006; Marshall & Rollinson, 2004; Mutch, 2003). The context in which a community of practice is surrounded is a major factor determining its success for creating and transferring knowledge, and drivers as power, trust, predispositions, size and spatial reach, w(h)ithering the community, and fast and slow communities (Roberts, 2006) are creating these critiques. It is therefore important to consider the environment and have in mind that the communities can be more complex.
Another way of sustaining and fostering knowledge sharing and trust within a
community is by frequent communication and face-to-face contact. Face-to-face contact and regularly contact with one another outside an online community results in more trust (Matzat, 2010). For instance, members can maintain existing offline contacts via online
communication, or they can create opportunities for offline meetings with members. Various studies proved that the use of Internet comes with new or pre-existing offline contacts (Franzen, 2002; Hampton & Wellman, 2003; Hlebec, Manfreda, & Vehovar, 2006; Wellman, Boase, & Chen, 2002) and online group communication can lead to new offline contacts (Matzat, 2004; Parks, 1996; Parks & Roberts, 1998; Zhao, 2006). Boden & Molotch (1994) reassure the importance of face-to-face contact in order to cement and sustain trustful relationships and mentioned there is a ‘compulsion of proximity’ in order to trust each other within communities. Möllering (2005) contradicts this by saying that ‘active’ trust (trusting something without any familiarities) can be created in a community. Nevertheless, it can only succeed when members continuously and intensively communicate “in order to maintain reflexively the constitution of their social world”.
Despite the differences in online and offline communities, in order to achieve commitment among community members, trust and knowledge sharing needs to be sustained and maintained by creating communities of practice and by continuous and intensive (face-to-face) communication.
Communities in crowdfunding campaigns
This study will research communities before, during and after the crowdfunding campaign. Members of communities can include friends, family and all other supporters, believers, and users in contact with the start-up during this process. The community members are linked by their common believes in the start-up and the common funds invested, and can therefore be seen as a community of practice (Wick, 2000) and although the duration of the campaign is limited, many entrepreneurs are motivated to build lasting relationships long after their campaign ends. In order to do so, entrepreneurs need to work and focus on attracting and maintaining members to these communities in crowdfunding campaigns. Abundant research
has been done on how to motivate people to join online communities and the results show that community managers must be insisting on reaching out to potential community members personally (Markey, 2000; Milgram, 1963), giving people a feeling that their membership will make a difference on community health (Locke & Latham, 2002), persuading people by sending clear messages, receiving high status and a critical number of people to join (Guadagno & Cialdini, 2005) and showing them there is a real urgency to join (Locke & Latham, 2002) as it counts for a crowdfunding campaign. Attracting new members to the communities can be realised naturally, by using social media to reach as many people as possible (Burtch et al. 2013) or with the help of digital influencers, marketing campaigns and press (Resnick & Kraut, 2012). According to Uzunoglu & Kip (2014) can the use of digital influencers, like bloggers, be seen as an important strategy in increasing the influence
among online communities,since bloggers are seen as early adopters of innovation, having a central communication role in diffusing innovation. Digital influencers could be strategically used by brands to attain an authentic and trustworthy presence among communities, and also crowdfunding campaigns can benefit from this attention. In this way is a crowdfunding community nothing different than a regular community.
Research question
From the literature on crowdfunding can be derived that crowdfunding campaigns are heavily dependent on the support of its crowd, and that communities can have an important
influence in the success of the campaign. An active community is seen as a direct driver for a crowdfunding campaign’s success (Larralde & Schwienbacher, 2012; Belleflamme et al., 2014), just as engagement with the community (Ordanini et al., 2011; Hui et al., 2014) and creating trust and commitment within the communities. To research how these communities can turn the crowdfunding campaigns into a success, what their drivers are and which of these drivers are the most important, the research question of the research will therefore be:
How can communities make crowdfunding campaigns more successful?
Methods Research method
To research a possible ‘successful’ role of communities in crowdfunding campaigns, qualitative research is performed with in-depth interviews. For this research explorative research is chosen in the form of a case study, with in-depth, descriptive questions (Morse & Field, 1995). In this research the case study will develop an in-depth understanding about how the communities in various crowdfunding campaigns differ and how they provide insight into successful crowdfunding campaigns in general. To research the case studies, a ‘general
interview guide approach’ was used; the interviews are semi-structured and allow data collection to be the same throughout all interviews, yet allows adaptability and freedom in the interview questions, because of follow-up questions (Bryman, 2008).
Procedure
A total of 45 founders or creators of successful crowdfunding campaigns were selected through stratified and snowball sampling and approached by email and telephone, asking them to participate in a research about the role of communities in their campaigns. Ten people responded positively. Individual interviews were conducted after the campaigns and were conducted over the phone (n=4) or in person (n=6). All interviews were audio recorded with the program QuickTime on a laptop, as well as the program Dictaphone on a telephone. The duration of the interviews lasted between 28 and 54 minutes and the total data collection lasted for three weeks. The first interview was considered as a pilot test (Kvale, 2007) in which any flaws, weaknesses and limitations within the interview could be tested.
At the beginning of the interview participants were informed about participating in scientific research, whereby all results would be used for scientific reasons only, and all results would be reported anonymously. The topics used for the interviews were selected beforehand and written down in an interview guide and therefore the interviews were semi-structured. The first theme started with general questions about the company, the position of the participant, and how long the participant worked for or when he/she founded the
company. Thereafter questions were asked concerning the motivation for the companies to receive funding by crowdfunding, type of investors, the rewards for investing and the type of community. The second theme of the interview guide was concerned with the different stages of a crowdfunding campaign as referred to by Hui et al. (2014): preparing the campaign, testing the campaign, publishing the campaign, following through campaign goals after the campaign and reciprocating resources. In Table 1 all themes and topics are shown. In all of these stages the role of the community was questioned and to what extend their role was successful to the campaign. As a last question of the interview it was questioned whether the interview covered all necessary information about the crowdfunding campaign and whether participants wanted to add some information. For this last question there were no directing topics, since the participants were asked to speak their mind and add missing information.
At the end of the interview participants were thanked for their time and willingness to participate and were told to receive the final research in the beginning of February 2015.
Table 1: Themes and topics from the interview guide
Participants
The participants were all founders of start-up companies, or communication managers of the crowdfunding campaign in a start-up, and had therefore the best knowledge of the perks of the campaign. In order to be considered, participants needed to have finished a successful crowdfunding campaign in 2014 and speak English (n=4) or Dutch (n=6). To receive reliable results throughout different campaigns, the participants were selected based on the platform the campaign had run on and the total amount raised in the campaign, and were selected from crowdfunding platforms in The Netherlands. In Table 2, all participants are reported anonymously and shown by different characteristics.
Table 2: Participants (=P)
Theme Topics
About the crowdfunding campaign Motivation for using crowdfunding Rewards for investors
Type of investors Amount raised Role during campaign During the crowdfunding campaign.
(Stages by Hui et. al. (2014)) Preparing the campaign Testing the campaign Publishing the campaign
Reaching goals after the campaign Reciprocating resources
P Sex Reward Min. € Total € % Platform Company
description Position
1 M Equity 300,000 300,000 100% Symbid Pension platform for entrepreneurs PR & communicatio ns 2 M Equity
Discount 25,000 51,000 204% Leapfunder Crowdfunding platform for design Co-founder 3 F Pre-order Discount 3,500 10,825 309% Crowd
About Now customisable Platform for shoes
Founder
4 F
Pre-order 3,500 11,095 317% About NowCrowd Personalised Candles Founder 5 M Equity 100,000 560,125 560% One Planet
Crowd community for Online car sharing
PR & communicatio
ns
6 F
Analysis
The analysis is conducted by the step-by-step principle as referred to in methodological literature (Cf.: Chairman 2006; Strauss & Corbin 1998; Wester & Peters 2000; Corbin & strauss 1990; Schafraad, 2014), where seven steps of analysis will make ‘sense’ out of the data and compile the data into sections or groups of data, also referred to as themes or codes (Creswell, 2003, 2007).
The first step is preparation (Schafraad, 2014), whereby all ten interviews were transcribed word-by-word with the use of the internet program transcribe.wreally.com. From these transcribed interviews, further analysis of the data could be performed.
The second step is the step of open coding (Strauss & Corbin 1998; Wester & Peters 2000) or initial coding as referred to by Charmaz (2006). In this step all data was opened for conceptual possibilities. The interviews were broken down to blocks as themed in the
interview guide and coded from there. A propriety word processing programme was used for coding, in which remarks could be added for themes, codes and memos. The themes, codes and memos were posted on relevant quotes in relation to the research question. Examples of codes could be: ‘reason for success of campaign’, ‘social media tool’ or ‘organising event’. When necessary, memos were added as a mnemonic or as a link to other quotes, like for example ‘contradiction use community’. After all interviews were coded, all quotes were put into one list.
The third step is called intermediate coding, or axial coding (Corbin & Strauss, 1990) and was making categories to fit the different codes. The codes with the same type of code were put into a table, were every column divided the theme, participant, code and quote. Now, all quotes were ordered by code instead of by interview and relationships between different codes became visible. An example of this table can be found in appendix 1. The codes were first ranked by theme (about the crowdfunding campaign and during the crowdfunding campaign), whereafter they were ranked by campaign stage (in case of the theme ‘during the crowdfunding campaign’) or by code. In this stage, not all quotes and
7 F Loan 18,000 18,000 100% Crowd
About Now Coffee BarCreative Co-founder 8 F Equity 50,000 115,000 230% Leapfunder Travel
planning platform Founder 9 M Pre-order Discount 5,500 16,068 292% Kickstarter Cat Playhouses Founder
10 F Equity 32,500 32,500 100% Symbid Bra Design Founder
P Sex Reward Min. € Total € % Platform Company
codes fitted into the two themes. Therefore, two more themes were added: success of the campaign and lessons learned. The new scheme with themes and topics is shown in Table 3.
Table 3: Themes and topics after analysis
In the fourth step, the advanced coding or selective coding (Corbin & Strauss, 1990)
matching codes were put together in a scheme and compared with memos. Because of this advanced coding two concept-indicator models appeared. During this ordering, the codes with quotes about the crowdfunding work in general were separated from the quotes about the role of the community during the crowdfunding work, to be able to see the difference in campaign work. While separating these codes, a difference in relationship was seen between the different stages of a crowdfunding campaign and the community. For the first two stages (preparing and testing) the relationship was one-way: the community was helping the founders with the preparation and testing of the campaign, but the founders did not help them. In the last three stages (publishing, reaching goals and reciprocating resources) the relationship was (in most of the cases) a two-way relationship, where the community was helping the entrepreneurs with their campaign and the entrepreneurs were giving their knowledge and advice back to the community. This relationship can be seen in Figure 2. After the relationship between community and entrepreneur was seen in the different stages of the campaign, also the relationship between the community and the reasons for success of the crowdfunding campaign appeared. The community proved to be extremely involved in most successful elements in the campaign. In Table 4 the relationship between the reason for success of the campaign and involvement of the community are stated.
Theme Topics
About the crowdfunding campaign Motivation for using crowdfunding Rewards for investors
Type of investors Amount raised Role during campaign Type of community During the crowdfunding campaign Preparing the campaign
Testing the campaign Publishing the campaign
Reaching goals after the campaign Reciprocating resources
Success of the crowdfunding
campaign Community Company mission
Giving back to community Trust
Face to Face contact Ambassadors
Lessons learned Pushing possible investors Preparation campaign
Figure 2: Relationship between entrepreneur (left) and community during campaign stages.
Table 4: Relationship between reason for success of campaign and involvement community.
Reason for success of
campaign Elements for success Involvement community
Community Ambassadors Family and friends like to promote
beloved one.
Goodwill and trust Family and friends like to grant beloved one and invests because of trust in beloved one.
Board of Advisors Board of Advisors is mostly created after crowdfunding campaign from community and is helpful for reaching campaign goals. Investment Own network invests between
25-75% (and sometimes 100%) in campaign.
Creating a buzz Community Friends and family are sensitive for frequency of addressing: they invest and share campaign.
Media Community encourages media
from own network and shares on social media.
Trust Trust through amount
invested Family and friends pledge first 20% whereas more investors follow. Trust through transparency Trusting in a two-way relationship,
because of personal contact Concept and strategy
campaign Pitch, mission & strategy x Events and face-to-face
contact Events Thank you events’ for investors creates trust and two-way relationship.
After discovering patterns between the different stages of the campaign, some of the quotes and statements were miscoded and needed to find its place in a different scheme or code. This step is called ‘additional coding’ (Schafraad, 2014) where the researcher looks upon the codes with a fresh look to see if codes or quotes would be best fitted in a different theme, stage or code. Nevertheless, the small adjustments did not change the concept-indicator models.
In the sixth step and seventh sept, the final result was created of the different relationships and the concept-indicator models (Schafraad, 2014). Two processes were further developed and elaborated and lead to the final results. The results were elaborated and written down in a logical structure. Themes, stages, theoretical memo’s, codes, quotes and concept-indicator models were used.
Results
The analysis of the interviews showed the different relationships between the community and the entrepreneur throughout different phases of the crowdfunding campaign, but also showed the relationship between the community and the reasons for successful crowdfunding
campaigns. In this section the results of the three main themes will be discussed with regard to the influence of the community. The last theme of the interview, the lessons learned, is incorporated throughout the results.
About the crowdfunding campaign
When analysing the crowdfunding campaign, some topics came forward like the motivation for using the crowdfunding campaign, the rewards chosen for the crowdfunding campaign, the type of investors of the campaign and the type of community.
Motivation for using crowdfunding
The motivation for the different start-ups to use crowdfunding as investment differed per start-up. Some of the start-ups only wanted to use crowdfunding out of practical reasons. For example, participant 6 (P6 - see Table 2) confessed that they used crowdfunding because they didn’t have the money themselves. By doing crowdfunding it was a easy way to receive money and print the magazines. Thereby P8 used crowdfunding as a way to combine multiple interested investors into one investment round without having them to know each other. Others used the crowdfunding platform as way to test their product and a way to test their audience. P3 said in this case: “With crowdfunding I could really test if my audience and target group was interest in my product and got excited about it. This was my main
motivation to use crowdfunding, and I think it worked! It was successful!”. Also P7 agreed with this by saying that a potential unsuccessful campaign is, besides a loss of face, also a reality check that perhaps your product or service could be unsuccessful as well.
A total of 5 participants saw the crowdfunding campaign as a way to create a community. P1 said: “Most important reason was to also use it as crowdsourcing. To see whether our plan was attractive to people. And actually we hoped that quite a bit of the people who were crowdfunders would also become participant in our service”. As for P5, the existing community was already part of the plan: “We saw a great opportunity to include our community with our company by giving them the option to buy shares. In this way they would even become more involved.”
The intention to use crowdfunding for investment differed per start-up, but all start-ups concluded that the campaign increased the size of their community. P9 concluded: “Although I didn’t intend to create a larger community through crowdfunding, the campaign was actually the best thing I could do. Now I have so much more people willing to help!”
Rewards for the investors
The type of the rewards differed by start-up: 5 start-ups rewarded in shares (equity), four start-ups rewarded in pre-order of their product and 1 start-up rewarded with a favourable loan. The reward for most of the start-ups was not a choice; with their type of product or service there was no other option. Only P10 admitted that it was a tough decision to choose the rewards: “With the large amount of money we intended to raise, shares could have been an option as well. At the end we choose for pre-order because our community was so
enthusiastic about the product, they wanted to have it as soon as possible!”. In this case, the community was responsible for the decision in which reward to choose for the start-up.
Type of investors
Although investors can choose to stay anonymous on the crowdfunding platform, most investors reveal themselves. Because of this, the start-ups do have an idea about who invested. Most startups (8 out of 10) concluded that between the 25-75% of the investment came from friends and family, or people from the ‘second layer’, and were therefore known by the entrepreneur. Only for two start-ups the largest share of investors was unknown before investing (P1 and P5). These were also the two entrepreneurs with an amount raised above €100,000. Most participants explained that the first amounts helped the start-ups to get further. P3 said about this: “Nobody wants to be the first investor, this is really hard. You need to have friends and family to invest money and write recommendations”. The starting amount showed some faith to other potential investors and people trusted the campaign more when other backers already invested. In case of P5, most investors were unknown to the entrepreneur, but were already users of the website. She said about this: “The backers were people who used the website, people who used our product and people who believed in the future of the product. They invested because they believe in the concept op the company and wanted to be part of the future’s success”.
Thereby, all participants concluded there is a division between active and passive backers. P8 says about this: “Some of the investors I will never hear of; they just wait and see what happens. And some of them called me, asked me what happened, help me, they try to connect their own network. One investor is part of the board of advisers, so he helps me out a lot!”. Even though most participants do see a big difference in investors, they believe the majority of the investors is passive.
Type of community
The definition of community differed for every start-up. As for the larger campaigns, the campaigns raising more than €100,000, the definition of community was interpreted as all the people involved with their company (also the unknown people). As for the smaller
campaigns, the campaigns raising less than €100,000, community was defined as their network, and the second layer of their network.
Even though there was a difference in the definition of the community, most start-ups concluded that the community had changed during or after the crowdfunding campaign. Where before the campaign the community merely existed out of friends and family, the community grew with believers, users and investors afterwards, because of good publicity. A successful crowdfunding campaign mostly comes with great publicity and makes the
community grow. P9 says about this: “Not so much during, but after the campaign our
community got a boost because of great publicity. We received requests from cat-lovers from all over the world!”.
Only the community of P5 was different than the other’s from the beginning: “I think we already had a strong community before we started with the campaign. Our community is extremely loyal and believes in the concept of the company.” Thereby, the start-ups of the campaign on the platform Leapfunder (P2 and P8) did not have a public campaign, so the investors were mainly people from their own network.
During the campaign
To research the crowdfunding work and the community work of the start-up during the campaign, the different steps by Hui et al. (2014) were taken into account: preparing the campaign material, testing the campaign material, publishing the campaign, reaching the goals and reciprocating resources.
Preparing the campaign
The time to prepare the campaign differed per start-up. The entrepreneurs P3 and P4 only had a few days to prepare since they were involved in an award winning race and therefore a crowdfunding campaign. P4 said about this: “Normally you would have enough time to
prepare your campaign, make a video etc. I had to do this in two days! I preferred to have done it a little bit more professional and spend more time, but either way it worked out.”
Others confessed to have spend up to three months to prepare their campaign or even longer. P8 explained she was preparing this for a longer time: “I have been telling about my start-up to my network for two years already, so people know about what I'm doing.. It's not that I'm doing something totally new.” Two participants saw the preparation time as a ‘lesson learned’ and would have preferred to have taken time more for preparation. P2 explained: “I wish I would've been able to speak to more people in time before the campaign was live. Now it was all a bit of a rush. I think preparing myself better before the campaign would've helped. And getting in touch with these investors before it was live would've been better.”
For the preparation of their campaign, some participants looked for help at external resources like other campaigns, blogs, videos and communities to learn about crowdfunding. P4 explains: “I watched a lot of other video’s, because I thought the video would be a deal maker or breaker for my campaign.” Others explained the platform already gave quite a lot of advice. P3 says: “I received a clear briefing from the platform, and from there I started
Googling and found some steps and best practices”.
When the participants were asked about how the community helped them with the preparation of the campaign, the reactions were 50-50%. The campaigns where the
community did help, talked about helping with the video and reading the business proposal. As for P8, two future main investors already helped by making the business plan. The campaigns where the community did not help, kept the preparation of the campaign internal in the company. One of them, P3, regretted this and said: “I know you need to have help from your community. I simply didn’t have the time, but I would recommend it to others. You need to look whether other people like your proposition and whether people are interested”.
Testing the campaign material
The second stage by Hui et al. (2014) involves the stage of testing the campaign material with others outside of the start-up, before publishing it online on the crowdfunding platform. According to the participants, this stage has been most skipped. Six participants simply answered “no” to the question whether they tested the campaign material with other before putting it online and explained this by saying they didn’t think it was necessary or didn’t have the time. Participants who did test the campaign material explained (P1): “Yes, we tested it with friends and relatives. We wrote a script for the video and tested that. We received some feedback and then changed it. So we used our network”. Most help was asked for the video, business proposal, rewards and texts.
Publishing the campaign
For most entrepreneurs publishing the campaign is considered to be a make or break moment, a time of stress and a time of hard work. It is a time to communicate and promote their campaign, their concept and their believes to the outside world. P1 told about this: “It's hard work. It's very important to know for people that they shouldn't just think 'oh I have a
project, I put it online' and then think things will go by themselves. The platform is just a tool to raise money and at the end it's you who has to raise the money, is not going by itself”.
For publishing the campaign all start-ups used, besides the crowdfunding platform, one or more social media. Mostly used social media were Facebook, Twitter and LinkedIn. Some participants also used Instagram or blogs. Thereby, all participants explained they used email and phone calls to reach their community. P10 explained: “It feels more personal to email and to call, you can really persuade people by talking to them personally”.
Only some participants were mentioned by the media. P3 and P4, who were part of a competition, explained they were featured in a large Dutch magazine with an interview, some websites and a few news stations. P8 explained she was asked to do a video interview about her campaign for an online video channel, which gave her campaign a real boost: “I was able to support my campaign in the interview: how I see the future, how I see the project. I think a lot of people only saw that interview and didn't even read my business plan. The interview was truly important”. Also P1 used the media to give his campaign a boost: “We did get a lot of PR; we were on the radio, Financieel Dagblad, Telegraaf and a lot of other media. But, they only came to us after we had raised more than 30% of the amount”. The other six participants did not sent out press releases to the press or didn’t seem interesting enough for the press to cover. P2 explained that for his type of crowdfunding the press would not have been interested: “A company raising funding is not worth it, the press wouldn't write about that”. Only one participant used influential members to promote her campaign: “I convinced two Dutch celebrities to invest a small amount of money and Tweet and Instagram about my campaign. Thereby I also used some people from the fashion industry to promote my product in their companies. It definitely created some buzz!”. Another participant (P9) who didn’t get to use influential members explained he did not have a celebrity in his network and couldn’t afford to ‘hire’ one.
For two out of ten participants, organising a kickoff event was a huge success for their campaign. P1 explained: “We did the kickoff event, at the beginning of the campaign. That was a really important thing. We made a big event of it, so we invited almost a 100 people, and we invited the press as well.” Also P8 organised an event to thank the community for helping out so far, as well as potential investors. P1 explained that the type of investors coming to these parties make the difference:
“We got some big investors out of that event. It was good, since we preferred some big ones who invested some substantial money. These are typically the people who come to
these events. They really want to meet the people behind the campaign, especially when they invest large amounts of money.”
So, these events insure some trust because of the face-to-face contact. Every participant explained that face-to-face contact was important to them as well. Some were looking for
face-to-face contact on networking events (P4 and P6), others were meeting their community in person to persuade them (P2, P3, P7, P9 and P10). Only P5 explained the company didn’t meet their community in person and all communication went through the internet.
To motivate commitment from their community with their campaign or to invest money, start-ups had different tactics. Most start-ups recognised that ‘pushing’ was the most successful way of motivating commitment. P1 explained: “Contacting people, calling them, social networks, calling the press, organising events..You cannot wait until the money comes in!”. Also P3, P4, P7, P8, P9 and P10 agreed upon this. P4 even explained: “The frequency of posting is really effective. The more you post, the more money you will raise. Even though it goes against your gut feeling and you think everyone thinks you are annoying, you should keep going on”. Other tactics for motivating commitment were personal messages (on Facebook and email), meetings face-to-face and an starting additional contest to win driving a Tesla car for a day.
When the participants were asked whether they knew about the motivation for people to invest in the campaign, opinions differed. Some explained that family and friends pledged for support and goodwill (P3, P4, P6, P7, P8, P9, P10), some investors invested for the favourable terms (P2, P7, P8) and some community members believed in the concept or product of the campaign (P1, P3, P5).
Overall it can be concluded that publishing the campaign is seen as a first official moment for the entrepreneur to communicate to his/her community. The start-ups mostly use emails, phone calls, social media and other media to get the word out there and pushing these media proved to be successful. Organising events and setting in influential members also proved to be successful, yet not many participants did organise any of these events. The main motivations for the community to invest in the campaigns were for support and goodwill, favourable terms and believing in the concept of the product or service.
Reaching campaign goals
During the crowdfunding campaign, the start-up is promising goals on how to spend the money and when to deliver the product or service when the campaign turns out to be
successful. With a new community and more money to spend, most investors feel the urge to participate and help the start-up. This was confirmed by eight out of ten participants. Most of the participants concluded they used their community to reach their campaign goals. Four participants noticed that investors were willing to participate as a board of advisors, supporting them and giving advise about certain issues. P1 explained: “We asked some people from the crowd whether they were interested in participating in the board, and there were about 20 people who applied for these voluntary roles, which shows there's a great interest to help us and to make us successful.” Other participants noticed that people were willing to help by giving sales training, helping out with practical issues, giving sporadic advice or giving feedback. Four participants admitted they did not get any help from their
community, and sometimes did not even want to. P3 says: “They all wanted to help me out, but I preferred them not to. I had some delay in the production and did not want them to worry.”, although she admitted later on transparency would only benefit the community.
Five participants also wanted to show their appreciation for the investors helping out and gave some extra rewards beside their ‘paid rewards’. P5 explained that the start-up organised a ‘thank you’ event to thank all the investors for investing and for them to meet. P8 explained she gave all the investors a little present and was thinking about doing a event. Meeting the investors in person would make the community more loyal and more committed.
Reciprocating resources
According to Hui et al. (2014) the last stage of the campaign, reciprocating resources, is the phase where entrepreneurs feel the need to reciprocate to the community (by giving advice or funding the community) to maintain a sustainable ecosystem that supports collaboration rather than competition. From the ten participants in this research, all participants felt the responsibility to contribute to their community and backers were kept in touch by sending updates, newsletters, emails and meetings. P3 explained that investors were excited about this: “They kept telling me ‘oh it’s so great you’re updating us’, ‘good to hear’, ‘keep going’. People really feel connected and involved because of it.” Thereby, five participants are also writing blogs about their experience with crowdfunding. P8 reveals:
“I’m trying to make more blogs for entrepreneurs, so I can share my information. We are really open and I think that a lot of things can be learned from each other. We were interviewed a lot and I also gave presentations. I'm always open about the problems we faced and had to solve, and most of the people like that story because they really see that
you are working on your company, and that you have a goal. And that's really good.”
Others are just sharing information as advice to people who ask. One of the participants (P2) is also giving workshops about his experience with the crowdfunding platform he used (Leapfunder) and thinks it is important to share this information: “It is really important to give back. You want everyone else to succeed as well. So we do really help each other.” All participants admit they did, or at least have the intention to, help others more often. P7 explains: “I am being inclined to help out more now, after I experienced it myself and got some help.” About half of the participants funded another campaign after their own campaign because of this. P8 explains: “It’s worth it to invest in entrepreneurs. You can really see people are following their passion and they are really focussed to succeed.” P1 also explains it is something natural to do: “Giving back is the key to success, and that has probably to do with believing in karma. If you give to others it will come back to you at one point.”
Success of the campaign
After walking through all the stages of the crowdfunding campaign, the participants were asked to look back at their campaign and define the reasons for success.
Community ambassadors
Most participants see the involvement of their community as a large success factor for their crowdfunding campaign. P4 explains this by saying: “The most important thing is to get a group of people around you actively promoting your campaign. In this way you can double the networks. You have to make sure to reach as many people as possible and you do this by activating people close by.” Also P5 recognises the successful role of the community “It was the commitment and involvement of the community that created such a huge success for us. We truly believe this.” P8 agreed with this: “They will tell each other (or other people) that they invested and about the success, about the product and about how we are doing it. That was helping to spread to word and created a buzz.”
Community goodwill and trust
Also goodwill and trust are important reasons for the community to participate in the campaign. P7 and P8 say that the goodwill of the community was part of their success. P8 explains: “They wanted to personally help me, because they know me and know how much effort I put into this.” Also trust in the entrepreneur is one of the reasons for success. P3 reveals: “Trust is extremely important, trusting the entrepreneur. They trust and believe me because I believe in its success and are working on it full-time.”
Community board of advisors
P1, P2, P8 and P10 say that the community was a reason for the success since a board of advisors emanated from the community and helped (or is still helping) the start-up to reach their goals. P8 explains: “The board of advisors really helped me with advice and called upon their network for help, I didn’t know what to do without them.” Also P10 agrees upon this: “The board of advisors really tipped the scale for me. They helped me tremendously by giving feedback and advice throughout the process.”
Community investment
As mentioned earlier in the section about the type of investors, most investment came from the community. For the companies that raised less than €100,000, a fair share of 25-75% of the investment came from the community. As for the larger campaign that raised more than €100,000 the share of investment from the community (people known before investing) was lower. As for these larger campaigns, the definition of community was interpreted different as well. As the smaller campaigns defined community as their network, the larger campaigns defined community broader and defined it as all the people involved with their company (also
the unknown people). Therefore it can be concluded that all investors could be considered community.
Creating a buzz: community
A buzz, also referred to as anything that creates excitement or stimulus, is a moment during the crowdfunding campaign that the word about the campaign is reaching people outside the community and even people outside the community are influencing others to participate in the campaign. For crowdfunding campaigns it is important to create this buzz, an
engagement moment, where the campaign expands and grows, beyond the point where only friends and family invest. Most of the respondents saw this as the most important reason for the success of the campaign. Participants concluded that the only way to create a buzz was by constantly communicating and pushing messages to the community, who have to send these messages through to others. Pushing messages to the community was mentioned as the prime reason for the success by four out of ten participants, others said it was one of the important reasons. P7 explained: “We emailed people up to the point of stalking. We even approached people from the past and this really helped.” Participants explained that messages were pushed with the help of different communication tools, like email, social media, events, face-to-face meetings and phone calls.
Creating a buzz: media
To support the buzz, crying out to media is also seen as one of the most helpful tools for this. The most important factor for creating a buzz for P5 was the combination of pushing
messages to the community and the media. “We sent out press releases every time we hit a great amount. This triggered the community and then the media was triggered even more!”. Also P8 explained that her video interview created a buzz and people invested outside of her own network. For P3 and P4, entering the award and competition - with all the additional media - was a reason for success. P4 says: “I wanted to win the competition and this pushed me to push others more. Also the press really helped to build trust an reach more people.” The community was in some cases helpful by using it’s network for press and by investing substantial amounts. P9 explains: “Some people of my network used their network to get into the press, I am truly grateful for that.”
Trust through amount invested
For the outside world is the amount of money already pledged one of the main indicators for the quality of the product. Therefore, most of the participants needed their family and friends to invest the first - in most cases - 20%. P4 mentioned: “Make sure to have some money pledged as soon as possible. People are keeping an eye on these crowdfunding platforms and are more interested to invest than ever: the interest rates for banks are really low, and
investing in crowdfunding could reap more benefits.” The more money already pledged (and as soon as possible) the larger the change new people will invest as well.
Trust through transparency
Creating trust with your community is seen as one of the most important goals for
entrepreneurs. P10 says: “I really want my community to trust me; me as a person, but also my company. I believe that trust is creating a serene atmosphere within the community and is making people to contribute faster.” P3 says she believes this trust comes through
transparency: “You have to be transparent and show yourself, even when you have a hitch. Telling your community about the downfalls is making it personal and is making them trust you more I believe.” Trust is a two-way relationship that needs to be maintained between entrepreneur and the community. For the entrepreneur, one needs to show trust, but must also dare to trust the community in feedback and responses.
Concept and strategy campaign
Some of the participants saw the concept of the company and the strategy of the campaign as the reason for their successful campaign. P1 elaborated on this: “The uniqueness of the company made the campaign a success. If the concept is not unique, the press won’t pick it up as easy and people will not believe in it”. Other reasons mentioned were the successful pitch on the platform (P5) and having a well made up strategy for the campaign (P3). In all of these cases, the community did not have any involvement in the success and therefore the success could all be granted to the start-up itself.
Events and face-to-face contact
As last reason for success of the crowdfunding campaign, participants mentioned to use of face-to-face contact and events. Although only three participants organised events before or after the campaign, more participants wished to have organised them. P9 explains: “I think face-to-face contact is really important, also for the future when I might be doing another crowdfunding round perhaps. The personal contact will give them trust and perhaps invest later on.” P3 regretted her lack of face-to-face contact and mentioned this as a lesson learned. The actual events all turned out the be great successes; P1 even called it ‘what made the big difference’. Also P8 mentioned the kickoff event as one of the most impactful reasons for success of the crowdfunding campaign: “Because of inviting people to your event, people feel included in your community. Entrepreneurs often forget how valuable giving back to the community can be. Making them feel like a part of the community and thanking them in person, persuaded more people to actually invest.”
Conclusion
The main goal of this research was to provide insight in why crowdfunding campaigns fail or succeed. Out of the ten given reasons the participants gave for the success of their
crowdfunding campaign, nine reasons were directly linked to their communities. Only one reason (the concept and strategy of the campaign) was directly linked to the company itself and the efforts of its employees. It can therefore be concluded that communities do have a determining influence on the success of crowdfunding campaigns. Members of the
communities function as ambassadors promoting the campaign to others, create a buzz around a campaign, give advise and feedback about the product, and raise money among themselves and encourage others to do so. The key for community commitment and
community trust proved to be communicating regularly between entrepreneur and community members and the media. Only then the crowdfunding campaigns were able to succeed.
In this conclusion, the main reasons for successful campaigns are turned into
practical considerations for entrepreneurs and communication managers, who are starting a crowdfunding campaign in the future. These practical considerations will help the
entrepreneur or manager to motivate commitment in the community and show actions to take into consideration before starting the campaign. The considerations are ranked based on the number of times mentioned by the participants as a successful driver, where as number 1 is most mentioned and number 7 is mentioned less often.
1. Create a buzz around your campaign
Although creating a buzz around your campaign is seen as one of the most difficult actions in crowdfunding, all start-ups concluded that creating a buzz was merely a result
communication and ‘pushing’ messages. Regularly pushing messages to the personal network (up till the point of annoying them) to promote or share, and pushing messages to the media are recommendations given by the start-ups. Only then people will start talking about the campaign, media will pick up the message and the campaign will be promoted to others. It is therefore extremely important to constantly communicate with the community, with any communication tool available and as many times as possible, to create this buzz. This consideration can be seen as a new facet in the literature of crowdfunding, since there is no literature available informing about the frequency of sending messages; only about the effectiveness of social media during crowdfunding campaign (Burtch, 2013). Furthermore, there is neither literature about how to create a buzz around a crowdfunding campaign and the importance of that.
2. Create trust through investment
The creation of a buzz inside and outside your community needs to result in more investments. For unknown people to trust and invest in a campaign, and to trigger the
engagement moment Ordanini et al. (2011) explained, a sufficient amount of backers need to have already invested. A large amount of money invested is guaranteeing trust for unknown investors and makes an engagement moment possible. Recent research supports this and says that early investments are closely associated with the final success of a crowdfunding campaign (Colombo et al., 2015). Without a sufficient amount of money invested by the personal network the campaign is less likely to succeed. It is therefore important for the community to invest as soon as possible to ensure the campaign’s legitimacy. Nevertheless, analysis showed that the results shown by Ordanini et al. (2011) - Figure 1 in this research - do not correspond with the results of this research. The results from this research imply there is a different time for the engagement moment to appear, and that the timing of the
engagement moment depends on the target amount of the campaign. Smaller campaigns (campaigns with a target amount smaller than €100,000) are more depending on
investments from their own network and have a relatively small gap loss, as can be seen in Figure 3. Thereby, for smaller campaigns this is often the first crowdfunding campaign and injection of money, and therefore the target of the campaign is often set lower. Smaller campaigns are more depending on the funds of their own network since they have less money to spend on promotion materials and have less likability to be covered by the press.
Larger campaigns (campaigns with a target amount larger than €100,000) are less dependent on funds from their own network as these investments only count for
approximately 20% of the total amount invested. The target amount is simply too high to be depending mostly on friends and family, whereby a outreach to press, events and larger investors is required at an earlier stage in the campaign, as can be seen in Figure 4. Thereby, the larger campaigns mostly have the means to combine the efforts from staff workers, money for promotions and an already larger existing ‘unknown’ community of users or supporters to invest, to decrease the larger gap loss. As a conclusion can be said that it is important for entrepreneurs to take the target amount into consideration when starting the campaign.
