Financing social enterprise by crowdfunding

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Thesis Supervisor: Roel C.W.van der Voort

MSc Entrepreneurship

Dong Wang

Student Id: 11089016

Date: 16-08-2016

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Abstract

Using crowdfunding to financing social enterprise is the new trend for the social entrepreneur who struggle gain money from the traditional investment. This quantitative study analysis 72 social crowdfunding projects from three reward-based crowdfunding platforms, Kickstarter, Indiegogo and StartSomeGood from 2011 to 2016. This study will provide evidence of what factors that effects on social crowdfunding campaigns by running regression model analysis. This research paper found that team size, experience, non-social category and developed regions have significant positive influence on social crowdfunding outcomes. The variables of goals, duration, comment, updates are the lack of statistics evidence to prove influence on social crowdfunding projects. This paper is an additional research in existing academic literature about social entrepreneurship and crowdfunding. Aim to help investor and funder to understand the crowdfunding as a financing tool in social entrepreneurship fundraising.

Keywords:

Social, Crowdfunding, Reward-based Crowdfunding, Entrepreneurship,

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1. INTRODUCTION ... 4 1.1 BACKGROUND ... 4 2. LITERATURE REVIEW ... 5 3. METHODOLOGY ... 11 3.1 DATA COLLECTION ... 11 4. ANALYSIS ... 15 4.1 DESCRIPTIVE ANALYSIS ... 15 4.2 CORRELATIONS ... 17 4.3 REGRESSIONS ... 17 4.3.1 FUNDING RAISED ... 18 4.3.2 CAMPAIGN RATIO ... 19 4.3.3 LOGISTIC REGRESSION ... 21 5. RESULT ... 22 6. DISCUSSION ... 25 7. CONCLUSION... 29 8. REFERENCE ... 30 9. APPENDICES ... 35

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1. Introduction

1.1 Background

A social enterprise is a company that aims to create environmental returns as well as pursuing financial returns to maintain financial autonomy. However, funders are more likely concerned about the financial returns an investment. Crowdfunding is a new trend of social entrepreneurs to funding their venture in the early stage. Crowdfunding provide an innovative tool that lower the barriers to accessing finance for business and enable social entrepreneurs to gain support from the online community. However, according to Kickstarter and other platforms that less than a third of crowdfunding campaigns are failed to reach their goals. Gabison (2015) discover that entrepreneurs have limited knowledge for crowdfunding campaigns and may cause entrepreneur too focus on the campaign than innovation. (Elizabeth Gerber, 2013) explain that the importance of non-profit project in crowdfunding industry and donative community is important motivations for social crowdfunding. My thesis will focus on challenge and obstacle of social entrepreneur use crowdfunding as the financial tool to attract investment in their social venture. Also, I will discuss the factors could improve success rate in the crowdfunding campaign. Finally, I would like to propose a model for crowdfunding social venture.

1.2 Research question

The social entrepreneurship is new trend of entrepreneurship, require a decent of research to help entrepreneur and investor to understand. Base on the current gap of research, this paper will try to answer the following research question.

Q1: What are challenge or obstacles in social enterprise fundraising, how can crowdfunding solve this problem?

Q2: What factors may affect the social entrepreneur gain financial support in crowdfunding?

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1.3 Thesis structure

This thesis is structure as follow: Section 2 will be literature review include the definition of social entrepreneurship, social entrepreneurship finance and crowdfunding. Also, this section will review the relevant literature of social entrepreneurship and crowdfunding and propose the hypothesis. Section 3 is all about the data collection, variables and regression model. Section is the analysis the data by SPSS. Section 5 is the result of analysis and section 6 will present discussion. The last section is concluding of this study.

2. Literature Review

2.1 Definition of social entrepreneurship

In order to understand the difference between social and commercial entrepreneurship, it is important to give definition to social entrepreneurship. The term of social entrepreneurship has been rapidly growing in last two decades. Bomstein (1998) defined the social entrepreneur as a mission leader and path breaker with a new idea which combines visionary and real-world problem-solving creativity. Similar, Thompson et al. (2000) point out that social entrepreneurs are people who realise an opportunity to create social value. Brinckerhff (2009) and leadbeater (1997) described social entrepreneur as opinion leader and manager. Ashoka (2012) states that social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. (Gillian Sullivan Mort, 2003) said that social entrepreneurs look for creative ways to ensure that their ventures could access to resources as long as they are creating social value. Abu-Saifan (2012) proposed the following definition: “The social entrepreneur is a mission-driven individual who use a set of entrepreneurial behaviours to provide a social value to the less privileged, all through an entrepreneurially is financially independent, self- sufficient or sustainable.”

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To continuities, social entrepreneurship could be defining as the ventures that have a social or environmental impact as their primal goal, aim to be financially and legally independent and strive to become self-sustainable be means of the market (Lehner,2012).

2.2 Social Entrepreneurship Finance

According to Bank of England (2003) that social enterprise lack of appropriate finance to develop and SEs too rely on the grants and need multiple sources of funding. Also, Emerson et all (2008) claims that the earliest stage of social enterprises is suffer from accessing investment and financing. Most initial start-up gains finance support from friends and family.

Recent literature has reviewed the obstacles of funding the social enterprise. The social enterprise boundaries are not clear between social and commercial, which lead ambiguous of investors (Dacin 2010, Lehner 2011 and Moss 2011). Seconds, the rights, legal and organisational structures in SEs are difficult to understand for some traditional investors. (Agrawal 2011, Gundry 2011). Bauer-Leeb & Lundqvist (2012) argued that cultural difference and cognitive barriers hinder communication between entrepreneur and investors. Sunley & Pinch (2012) states that the financing of social enterprises is unlikely to develop because supply is limited, the social enterprise need other forms to gain financial support.

2.3 Crowdfunding and social entrepreneurship

Schwienbcher & Larralde (2010) describe crowdfunding:

“an open call essentially through the Internet, for the provision of financial resources either in the form of donation or exchange for reward and/or voting rights in order to support initiatives for specific purposes.

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On the other view of social entrepreneurship, Crowdfunding Guide (2015) states that crowdfunding provides alternative tools of financing for organisations and projects, which social enterprise struggle or unable to gain financing support from traditional sources.

Frydrych et al. (2014) observed four models of crowdfunding which are Rewards, equity, donation lending-based. All models are gain capital from the crowd in exchange for returns. Molick (2013) point out the difference between four models are goals of the entrepreneurs and supporters. In equity and lending- based models, the finance mostly relies on the traditional investment. Lending-based models create a debtor or lender relationship between founders and supporters. The equity models are more like a venture capital that an entrepreneur-investor relationship. Mollick (2014) states that equity and lending based crowdfunding are not appropriate for social processes. In donation-based models, the supporters serve as philanthropists. Lehner (2013) states that the donation-based crowdfunding is suitable for social entrepreneurship and others are more likely with traditional venture capital. In reward-based model, project supporters seen as potential customer or backer to help entrepreneurs to develop products or services.

Almerud et al. (2013) mention that crowdfunding platform is the third party which connects investors and entrepreneurs. Mollick (2013) explain that entrepreneurs upload their projects on the platform to seeking potential supporter. Moreover, Ingram & Teigland (2013) explain that crowdfunding platforms allow entrepreneurs to pitch their idea to all people beyond their network which consist of family and friends. Crowdfunding not just for rising financial value and also allowed the entrepreneur to test the market, to attract skills and experience as well as to create brand awareness.

World Bank (2011) field a report about crowdfunding, they point the key of building a crowdfunding ecosystem is to build the culture of trust. However, Gabison (2015) sates that the credibility of online crowdfunding, which the online platform reduce the personal interaction and supporters may not have the same chance to know the crowdfunding projects. The level of asymmetry of information is higher than

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traditional funding tools. He also mentions that the risk of fraud in crowdfunding platform, the traditional financing does more background check than crowdfunding. Schweinbacher et al. (2010) states that non-profit projects generally secure more funding than profits projects in crowdfunding.

2.4

Research Hypothesis

2.4.1 Storytelling

Mollick (2013) shows that crowdfunding projects mostly succeed by narrow margins and some fail by large amounts. Achleitner, Engel, Reiner’s (2013) and Sievers, Mokwa and Keienburg’s (2013) conclude that crowdfunding requires detailed, internally consistent and market-referencing business plans to achieve legitimacy. The high funding goals decrease organisational legitimacy without a convincing supporters use of funds. However, Kickstarter (2016) analysis that projects that smaller projects have the highest unsuccessful rate, which is funding goals less than $1000. Base on the current research, propose the following hypothesis:

Hypothesis 1: High Funding goals decrease organisational legitimacy and have negative influence on social crowdfunding campaigns.

Clarke (2011) explore that visual communication is important, and the visual symbols could increase the legitimacy and develop support for early ventures. The visual pitches or video help entrepreneurs to gain support and funding for their projects. Also, allow entrepreneurs to create actively and manage emotions of stakeholders.

Hypothesis 2: Project founders adding video information on the interface has a positive impact of social crowdfunding campaigns.

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information about past project development, such as project background and funder’s experience. The main purpose of telling past stories is to increase the legitimacy of the project (Gioia and Chittipeddi, 1991; Weick, 1995; Weick et al., 2005). The rational reason behind past development process that entrepreneurs take the audiences back to the beginning and learn how the ideas came up, how people are participating in projects over time (Bejarano & Manning 2016). Kickstarter (2015) found that people are more likely to support to project creator, who had successful crowdfunding project before.

Hypothesis 3: Adding past story about entrepreneur themselves such as relevant experience and background has a positive impact on convincing audiences or

project value. 2.4.2 Social capital

Balboni et al. (2014) analysis that social enterprise’s network, choice of crowdfunding network and campaign design are main issues in social entrepreneurship crowdfunding. They also suggest that social media have a significant impact on crowdfunding.

Hypothesis 4: The number of founder’s updates has positively correlated with and the amount of financing.

Ibrahim (2015) point that funders close to an investor could reduce the risk of investment. Agrawal, Catalini and Goldfarb (2011) argue that distance still matter and offline social relationships could change crowdfunding interactivity, the crowdfunding may not completely overcome long-distance investment barriers. Molick (2013) states that regions play a major role even all crowdfunding projects happen online. Agrawal et al.(2011) state that crowdfunding can overcome long distance by compare between entrepreneur and backer’s location. However, Giudici (2012) point that geography has no influence on success rate of crowdfunding campaign in Italy.

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Hypothesis 5: Regions play a major role in communication between entrepreneur and supporters, and also the degree of economics develops have the negative

impact on social crowdfunding campaigns.

2.4.3 Other indicators

Kotha and George (2012) argue that composition and characteristics of the founding team relate to organisational legitimacy in entrepreneurship. Shepherd and Zacharakis (2003) mention that providing additional information of the organisation and management team will improve the legitimacy of the venture. Also, some research shows that information about the team represents a critical factor in decision-making processes (Zimmerman and Zeitz 2002; Baum und Silverman 2004).

Hypothesis 6: Team or Pairs in projects funding projects have the high successful rate on social crowdfunding campions.

Frydrych et al. (2014) observed that projects with higher funding targets tend to have longer funding durations. However, the longer fund-raising duration leads to lower funding ratio values. They assume that a longer period exposes an uncertain for the project, resulting in decreasing support for the project. Ward and Ramachandran (2010) suggest that short funding duration is more efficient and have a high successful rate. Mollick (2014) found that projects with a shorter duration are more successful by signifying the confidence of project. Kickstart (2014) suggest that duration should be 30 days because shorter duration set indicates the confidence of projects and motivate the backs.

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Hypothesis 7: The funding duration has the negative effect on funding-raising goal in social crowdfunding campaigns.

Harms (2007) found that economic rewards are strongest motivators for crowdfunding supporters. Potential backers need to feel like they are receiving a fair amount of value for their money. Steinberg (2012) point out that the rewards have to be suit all pricing tiers, target all supporters, unique rewards to catching public attention. Kuppuswamy and Bayus (2013) found that larger number of reward tiers had strong positive relation with successful projects by study all Kickstarter crowdfunding projects from 2009 to 2012. Tobias (2011) states that the people support social crowdfunding is encouraged by empathy, sympathy, guilt and social status. Specifically, the economic value of rewards may not have the strong influence in social venture crowdfunding. The non-profits rewards are another way to make supporters felt involved in the process, on another way the budget rewards systems are more suitable for the social venture. Choosing right category is critical to the secure success of campaign project. However, lack of social categories studies in the crowdfunding area. I would like to propose two following hypothesis.

Hypothesis 8: Reward level positively influences the outcome of social crowdfunding campaigns.

Hypothesis 9: Social category positively influences the outcome of social crowdfunding campaigns.

3. Methodology

3.1 Data collection

In this section, it will be explaining where the data come from and how data were operationalizing. All data was from different crowdfunding platforms, mainly from Kickstarter Indiegogo and StartSomeGood, which all three platforms are reward based. There is a reason that those platforms were chosen. First, Crowdfunding Industry Report (2012) found that most used crowdfunding models are rewards-based about

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43 % of whole crowdfunding industry. Kickstart are most used crowdfunding platforms and have high success rate on crowdfunding projects. StartSomgGood is crowdfunding platform that only for social good projects, also recommend for early-stage social enterprise and non-register 501(c) non-profit organisation. Indiegogo is another global crowdfunding platform, has 15 million people visit each month. However, all three platform have the different structure of fundraising model. Kickstarter’s all-or-nothing model which campaigns only receive funds if they have hit their goal. Indiegogo’s “keep what you raise” model (where campaigns receive all funds raised, regardless of goal). Startsomegood’s Tipping point model which have two fundraising goals: Total goals and Tipping point goal, the total goal is the dream amount of funder want to raise to the maximum amount of fund. The Tipping Point is the all-or-nothing model component of the campaign. To find what factors may influence the success of campaign project, both successful and failed projects should be considering in this research. The biggest problem is that both Indiegogo and Kickstarter hide their failure campaign on their platform. After some research, some crowdfunding analysis website found such as kickspy, kicktraq and crowdlogs. However, kickspy were shut down in 2015 and crowdlogs are only used on current crowdfunding projects. Kicktraq is the website that allowed people track all failed project on Kickstart and Indiegogo. Total 72 projects were selected and observed about 38 success projects and 34 failed projects which keep ratio close to 50:50.

3.2 Variables

In order to find the influence factors, there are a number of variables need to be define and explain. The overview of all variables will be show in Table 3.

The campaign’s outcomes are the depended variable, such as the amount of money that project creator receive in the end; the ration of funding goals and funding result; success rate, which if project reach its goals is 1, otherwise is 0. The number of backers can be seen as both dependent and independent variable, in this study will be consider as independent for the next stage testing.

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Table 3

Variables Descriptions

Goal

The amount of money that project creators seek to raise and currency is USD.

Duration The number of days that project stays on the platform.

Reward level

The number of reward level of projects that creators provide to supports

Team size The number of people in the campaign team

Video

The video provides by project creators that help to promote the campaign.

Updates

The number of updates information about project that creators provide during the campaign

Comments

The number of comments that people comment on campaign website

Backers The number of supporters that funding money in project

Experience

Dummy variable, if entrepreneur mention campaign experience in campaign website is 1, otherwise is 0.

Region

The geographic regions where the project created. There are 19 countries and group into six Regions which are Africa, Asia, Caribbean, Africa, Asia, Oceania, Europe, North American. The Regions are ordered by the Economic factors ,

4. Analysis

This part of the thesis will show the results of samples. In the First section, I will explain descriptive statistic include the summary of data and correlation of all variables. Then, the software SPSS 23.0 are used in this research to analysis all three regression models.

4.1 Descriptive analysis

In the following descriptive statistics table, it is divided variables in all project, successful projects and failed projects. The variables were categorizing into three group, which are Project characteristics, information and campaign outcomes. The regression model 1 and 2 represent all projects sample; regression model 3 indicate the successful and failed projects samples. Clearly, the mean of crowdfunding goal in success projects is lower than failed projects. The experience variables show that success projects have more experience than failed projects. Moreover, the variables in success projects like team size, reward levels, updates, comments and backers are bigger than failed projects.

In Table 4.2 is the summary statists by category and regions, the 72 projects were collect from 15 categories and 17 countries. The categories are merged into ten different categories; we can clearly found out that food, fashion had high success rate compare to another category. To social entrepreneurship category that the whole category divided into social and non-social. If project creators had mentioned their experience or background in their video or text de The social category represents social factors, include economic development, education, environment and health. The data show that project creator put their campaign in non-social category achieved high success rate in crowdfunding.

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The 17 countries will recode base on their geographic location; the data divided into six regions in Caribbean, Africa, Asia, Oceania, Europe and North American. The data was recoding from 1 to 6 by regions and ordered by economic development index, which 1 is least economic development, 6 is highest economic development. In Table 4.2, the developed countries had more projects and achieved high campaign ratio and funding result.

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4.2 Correlations

Table 4.3 provide a correlation between each variable. In SPSS 23.0, the Pearson correlation coefficient was used in this analysis, which measures the relation between two variables. In the table, the backers have the strong relationship with campaign ratio and funding result. The backers link to comments and updates. The reason behind this phenomenon that all these crowdfunding platforms are only allowed supports to comment. The video variable shows a negative correlation and not significant result with campaign outcome’s variables.

4.3 Regressions

In this section, to find what factors are affecting the social entrepreneurship crowdfunding fundraising outcome on funding result, campaign ratio and success rate. Three regression model will be analyzed by SPSS 23.0. Model 1 and Model 2 will be used in liner regression, and because success factor is a binary variable, the logistic regression is suitable for this analysis.

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4.3.1 Funding Raised

Funding raised model will use the whole sample to figure the relation between factors and money raised. The result was described in Table 4.4. Clearly, the result shows that variable of duration, the video has significant and positive influence with the amount money raised. However, reward level, updates and social categories have the negative impact on funding result. The dummy variable of experience shows the positive result that means social entrepreneur had expertise in the past will increase the funding level result. The result of the region shows that crowdfunding in the developed country will have high funding result. The R-square is equal to 0.949 that means this model explain the 94% of the variance in the financing raised variable. The funding result regression model is :

Funding result = -26900.842 + 0.07* goal + 237.1*duration – 421.874*reward level

+4733.142 *team-size + 22372.7*video – 686.2* updates +30.272* comments +50

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4.3.2 Campaign Ratio

In this regression model, the depended variable is campaign ratio, which was calculated by funding result dividing by funding rise goal.

In Table 4.5 shows what factors will determine the campaign ratio, the data sample will be same as model 1. Higher team size and reward level have the positive effect on campaign ratio. Social project creators with experience also will help to achieve higher campaign ratio. The social category has negative effects on the funding result, would decrease the final campaign ratio. The projects with longer video may cause lower the final campaign ratio. Some variables like updates are not significant in this model. The region still has high significant but the negative effect on campaign ratio. The R-square is 0.739 that mean over seventy percent variable fit in this

model. Overall, the team size, reward level, video, social category and region are significant. The regression model is :

Campaign Ratio = -0.877– 5.810e-06* goal + 0.03 duration + 0,043 reward level +

0.015 * team-size – 1.046*video + 0.016*updates + 0.001*comments +

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4.3.3 Logistic Regression

The reason that used logistic regression in this regression model, because the dependent variable is a binary that successful project is 1 and failed project is 0. The table shows that reward level and updates are significant. However, there has negative effect on the rate of success. The variable of team size is significant with positivity impact on projects. The social entrepreneur with experience have high chance to become successful, but the table shows barely significant in this model. The social category variable again has significant negative influence on success. This model explains more than sixty percent of the variance in success rate variables, and R square is about 0.636. The logistic regression model is:

Logit (Psuccess= 1 ) = -9.7+ 0.14*duration -0.15*reward level + 0.06*team-size –

8.972* video – 0.113*updates + 0.157*Comments + 0.018*backers + 7.696*

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5. Result

This section will be the evaluation of hypotheses. The hypothesis 1 is only proven to be true in the regression on campaign ratio and nearly no effect on money raised. The logistic regression shows funding goal have no effect on success rate. However, the result display hypothesis has significant in model 1, but nearly have no influence on funding result. Overall, the hypothesis 1 is not proven to be true. The next hypothesis 2 is about video information variable is shown itself to be true in regression model 1 about funding result. The Longer video has a positive impact on projects. However, the video has a negative relation with campaign ratio in regression model 2. Also, the video had the negative impact on success rate in regression model 3. The t-test result is weak and shows no significant. To sum all three model, the hypothesis 2 is to be considered not true.

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H1: High Funding goals decrease organizational legitimacy of social crowdfunding campaigns.

H2: Project founders adding Longer video information on the interface has a positive impact on projects.

Moreover, hypothesis 3 is proven to be true, the evidence from all three model show that if project funder mentions their experience on the campaign website, this will increase the funding result and success.

H3: Adding past story about entrepreneur themselves such as relevant experience and background has a positive impact on convincing audiences or project value.

The next hypothesis is about social entrepreneur updates information during the campaign. The regression model 1 and 3 shows negative influence on the project and the high significant result, the model 2 not able to considered because the result shows not significant. Overall, the hypothesis four is not proven to be true.

H4: The number of founder’s updates has positively correlated with and the amount of financing.

The hypothesis 5 and 6 are proving to be true. The evidence was found in all three regression model with the significant result. Both region and team size showed high correlations with crowdfunding outcomes.

H5: Regions play a major role in communication between entrepreneur and supporters, low economics develop area have the negative impact on social crowdfunding campaigns. H6: Team or Pairs in projects funding projects have the high successful rate on social crowdfunding campions.

Hypothesis 7 is a factor of duration in the campaign, the evidence show duration has a positive effect on funding-raising goal. However, the crowdfunding platform like Indiegogo and Kickstarter had the rule about regulation that maximum length is about 30days. So the sample may be biased. We cannot prove that longer funding duration is helped entrepreneur reach their goals.

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H7: The funding duration has the negative effect on funding-raising goal in social crowdfunding campaigns.

Hypothesis 8 about rewards shows have negative influence on outcomes with high

significant. The hypothesis cannot be proving to be true. However, the social category also showing the negative result that project in social category have lower crowdfunding

outcomes.

H8: Reward level positively influences the outcome of social crowdfunding campaigns. H9: Social category positively influences the outcome of social crowdfunding

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6. Discussion

In this chapter, the result of analysis, implication, limitations and the further search will be discussed. Base on the data from social entrepreneurship crowdfunding projects, the results of the analysis were not all match that the hypothesis, however, there are interesting finding that could help us to understand the crowd raising for the social entrepreneur.

The first part of financing social enterprise that being testing is storytelling, all fundraising is about telling a story that inspires potential supporters to pledge money to the campaign. So, gaining story’s legitimacy is necessary for every project creator. Basic on the literature review that adding video could increase the legitimacy of the project. However, it is surprising to find that video information and longer video information had adverse effects on crowdfunding in the result. If we look at the sample, could help us to understand that only five projects are without video on their campaign site. The mean of successful and failed projects is similar about two mins thirty seconds. Kickstart (2014) highly recommend every project include videos that much higher succeed rate. In my point of view, since most project creator realize video is necessary for the crowdfunding project. The video plays major role, and the quality the quality of content influences the legitimacy, not the length of the video. The quality of video should be considering in the future research. The next variable is the experienced dummy; the result shows it have the positive effect that proves the project funder mention their background or experiences, which adding value on social projects by increase the legitimacy. The potential supporter will have more chance to buy their story. The comments have the high correlation with comments because crowdfunding platform only allowed backer to comment. However, the positive comment cloud reaches new supporter to fund project during the campaign. The hypothesis 4 cannot prove to be true, the updates on the web site is a way that project creator to communicate with backers. However, the social media seem to like are more efficiently to communicate by using Facebook, Instagram, Twitter, etc. The backers or potential backers can easily notice or access project process, the crowdfunding platform lack of commutation tool between backs and creator. Base on that social projects is willing to post their updates on their social media account rather than the crowdfunding

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website. The results confirm literature theory that social project creates by the team have higher success rate than individual. The people believe that more people involve in the project would increase legitimacy.

Once the story made, the next thing is about the setting of crowdfunding project, the first step is to setup fundraising goals that result cannot prove the higher funding goals cause project failure. Steinberg (2012) suggest that funding targets set to minimum to achieve the project mission. The funders have to estimate an extra fund for the risk of uncertainty. The goals have to depend on three factors that 1) the number of people can reach story 2) the number of people willing to fund project 3) the amount of money these people want to pledge. Once funder is realistic about these factors and does the match, will have the better chance of success.

The duration testing result that longer period has positive effect on funding outcomes. However, Kickstart’s regulation in duration is between 1 and 60 days; they recommend 30 days for funding projects, same as Indiegogo. The average of duration is about 33 days, and StartSomeGood’s project have longer funding period than Kickstart. We cannot prove that longer duration has positive effect, but clearly, the best set up for the duration is around 30 days.

In this research, all three crowdfunding platform are reward-based; a great rewards system could help founder connect to the supporter. There are many types of reward, tangible or intangible. In this analysis, I choose to focus on the level of rewards and regression result show that have the negative outcome in funding money and success rate with strong significant. The reasonable explain this situation are the supporter have less motivation from reward in social entrepreneurship project, they are more like act as donors who not want receive extrinsic rewards. The backers are more concerned with the social problem instead of the return of investment. Next, founder need chooses one category to fit with the project. The result explains that the category related to social have the negative influence on a campaign and with high significant. The non-social category could reach more people on crowdfunding platform who do not have intention support social projects. The most social funding projects are from fashion, technology and Food category. In the previous discussion, explain that the funding goal depends on some people can reach story. Clearly, the social project fit in

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the non-social category is the best option for Kickstarter and Indiegogo. However, the social enterprise crowdfunding platform has a highest successful rate for social projects in all of three platforms.

The last result is about region that high developed region will achieve high funding result, which proved by the regression result. The World Bank (2013) point that crowdfunding is a new trend in financing, and mostly in developed country. Latin America, South Asia and Caribbean has hyper growth since 2010. The developing world still in the early stage of crowdfunding. The successful crowdfunding requires learning experience from developed country.

Base on the literature, we could conclude that the social entrepreneurs are lack of initial investment and to relay on grants, friend and family. Some social enterprises are hardly to define in between social and commercial. Also, the tradition investor unable to understand the organizational structures. The discussion above suggest that social project achieved a high success rate in commercial category. The people use crowdfunding platform could avoid the communication, they make decision based on the information in websites. Indeed, Crowdfunding provide a different form financial tool for social entrepreneur. In practically, every crowdfunding will provide a guide and help to set up a crowdfunding project. In this research, the result show not strong evidence that

In practically, every crowdfunding will provide a guide and help to set up a crowdfunding project. In the guide, the platform recommends basic setting for crowdfunding campaign such as duration, goals, video. The most recent projects were followed by the guideline that cause the setting of project are similar and lead the lack evidence to prove the hypothesis. However, there are some interesting founding that suggest team size, experience are significant factors affect the legitimacy of story. The people are more willing to support high degree of legitimacy projects, especially in social enterprise. There many factors could relative to legitimacy of project, such as video content, explanation, updates and social media followers. Also, region cannot be ignoring, some literature claim that crowdfunding could overcome the distance, but

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result shows creating and lunching project in developed area would achieve high success rate. The social attention is key factor in social crowdfunding, the projects sit in non-social category in order to gain maxim attention form crowd.

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7. Conclusion

To conclude this study that first to study the social entrepreneurship and point out the obstacle of funding social enterprise. Then, reviewed theoretical research that crowdfunding could help social entrepreneur start their venture in the early stage. Followed by empirical research, the study shows the different factors that social entrepreneur faced during crowdfunding campaign. This study presents what factors that influence the social enterprise crowdfunding. This study has looked both micro and macro perspective such as individual experience, team structure and region. According to this research, the most notable things that team size, experience and non-social category are most effectively factors on social crowdfunding outcomes. This study also shows that developed region receive high level of fundraising result and success rate.

Be aware, due to the time and budget limited that the data are only come from three main reward-based platforms, totally 72 social campaign. This study requires collect more project in multiple platforms. Also, future investigation should distinguish the difference in different platforms. The future research need to focusing on the quality of campaign in term of video, description words. Moreover, the new micro-level variable should be considering in future research, such as the gender difference, which female funder gain more sympathy than male in social projects. On the support sides, the supporters distribute need to more research, like distance, age. According to Mollick (2015) that 9% of Kickstarter projects fail to deliver rewards, the future study need pay attention to what happened after failed and successful campaigns.

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8. Reference

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Balboni, B., Kocollari, U. and Pais, I., (2014), ‘How Can Social Enterprises Develop Successful Crowdfunding Campaigns: An Empirical Analysis on Italian Context,

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9. Appendices

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