Thesis MBA Strategic Innovation Management G. A. van der Grind s1735489
2013
Motives affecting crowdfunding
donations in The Netherlands
University of Groningen
Words: 16280
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Abstract
The aim of this study is to contribute to the knowledge of crowdfunding. Crowdfunding is a hardly studied and relative new phenomenon. To do so it is attempted to reveal motives for donating a higher amount of money to cultural reward based crowdfunding projects in The Netherlands. Based on crowdfunding literature, characteristics of crowdfunding projects and philanthropic literature ten motives are constructed. In collaboration with voordekunst, a leading cultural crowdfunding platform in The Netherlands with almost €3mln donated, a questionnaire has been launched. After donating money to a project donors could fill in the questionnaire.
Ten potential motives are examined by analyzing data retrieved with the questionnaire. T-tests and stepwise regression analyses are executed to test the hypotheses. Results show that age and gender are significantly influencing the amount of money that is donated. Furthermore, it seems that donors who have a strong feeling of personal connectedness with the entrepreneur donate a significant higher amount of money than donors who do not. Thereby, it is revealed that internet is important to crowdfunding as it eliminates all kinds of costs and barriers related to geographical distance. Many other variables do not seem to influence the amount of money donated, but do contribute to the knowledge about crowdfunding and donors’ motives. Results show that philanthropic literature is hardly applicable to reward based crowdfunding. Therefore this study adds insights to crowdfunding in The Netherlands, however there is still a lot to discover.
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Executive Summary
The aim of this study is to reveal motives from crowdfunding donors in The Netherlands. These are motives for donating a higher amount of money to reward based crowdfunding projects for cultural causes. Crowdfunding is a new and rapidly growing way of funding all kinds of projects. The aim of crowdfunding is to reach a broad public (the crowd) to fund a project with many donors who invest a relative small amount. The newness is that it is essentially over the internet. Reward based means that the donor receives a relative small reward in exchange for its donations.
To do so, several motives have been found in the literature and in crowdfunding projects themselves. First, it is examined if geographical or social proximity between entrepreneur and donor leads to donation of a higher amount of money. Second, it is studied if donors who have a strong feeling of personal connectedness with the entrepreneur donate a higher amount of money. Third, it is investigated if attractive information sources provided by crowdfunding projects positively influence the amount of money donated. These sources are text, video and image. Fourth, it is examined if personal motives influence the amount of money donated. These are the concreteness of the project, requests to donate, joy of giving and the reward that is received. Crowdfunding and philanthropic literature form the basis of these motives.
A questionnaire is launched at crowdfunding platform “voordekunst” to retrieve the required data to test the hypotheses. After donating money donors are requested to fill in the questionnaire. Voordekunst was chosen because it is such an illustrative case.
The geographical and social proximity variables are tested with T-tests. All other variables are analyzed with a stepwise regression model. First, the control variables are put into the model. Second, personal connectedness is added. Third, the information sources (text, video and image) are added and fourth the four personal motives are added.
Results show that only age, gender and personal connectedness do significantly positively influence the amount of money donated. Thereby is the role of internet also underlined by showing that internet connects entrepreneurs and donors from locations all over the country.
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Table of Contents
1. Introduction ... 5
1.1 Definition ... 5
1.2 Scope of the research ... 6
1.3 Research objective and research questions ... 6
1.4 Reading guide ... 7
2.Literature review ... 8
2.1 Philanthropy ... 8
2.2 Philanthropy in the Netherlands... 9
2.3 Philanthropy and crowdfunding ... 10
2.4 Crowdfunding ... 11
2.5 General motives for making donations ... 12
2.6 Motives for crowdfunding donations ... 13
3. Conceptual model and hypotheses ... 14
3.1 Geographical proximity... 14
3.2 Social proximity... 15
3.3 Connectedness... 15
3.4 Influence of provided information ... 16
3.5 Personal motivations to donate ... 17
3.6 Control Variables ... 19
3.7 Conceptual model ... 20
4. Methodology ... 21
4.1 Quantitative research ... 21
4.2 Case selection: voordekunst ... 21
4.3 Data collection ... 22 4.4 Statistical methods ... 24 4.5 Research quality... 25 4.6 Sample ... 25 4.7 Analyses ... 28 5. Results ... 28 5.1 Geographical proximity... 28 5.2 Social proximity... 29
5.3 Regression analysis and results ... 29
5.4 Short summary of results ... 30
5.5 Interactions ... 30
6. Discussion ... 32
6.1 Geographical and social proximity ... 32
6.2 Connectedness... 32
6.3 Information provided by projects ... 32
6.4 Personal motives ... 33
7. Conclusion and limitations ... 34
7.1 Conclusion... 34
7.2 Implications for theory en practice ... 35
7.3 Limitations ... 35
7.4 Future research ... 36
Bibliography ... 37
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1. Introduction
Nowadays lots of countries suffer from the economic recession and to lend money has become very difficult for small ventures or entrepreneurs (Griffin, 2012). Due to the crisis, financial institutions are forced to restructure. Strict rules and governmental regulations result in a decreasing interest of funding entrepreneurs and innovators by banks (Ministerie van Economische Zaken, 2011). These entrepreneurs and innovators are seen as far too risky. Therefore, these recent developments in the financial sector have inclined many finance seeking entrepreneurs to search for other ways of funding their projects.
These market developments give rise to a new way of funding: crowdfunding. Crowdfunding is an alternative way of raising capital for different types of projects (Griffin, 2012) (Schwienbacher & Larralde, 2010). It gives contributors the opportunity to fund small amounts of money to all kinds of projects through the use of Internet. Internet makes it possible to inform the crowd about the project without intermediaries or agents (Mollick, 2012). Contributors are in some cases philanthropists (for example social networks of friends and family) and in other cases donors who receive equity stakes (Mollick, 2012). By small contributions from many contributors entrepreneurs and innovators can still obtain capital for their venture.
There are several well-known examples of crowdfunding. The biggest success up to now is the campaign for the election of Barack Obama as President of the United States of America. He convinced the crowd to fund over $100 million in 2008 (Griffin, 2012) (Zhang, 2012). Many crowdfunding projects are launched on online platforms. Platforms are the intermediaries by helping transferring information from entrepreneur to the crowd. With their experience and knowledge in crowdfunding campaigns they help the entrepreneur and reduce complexity for entrepreneurs and the crowd (Martinez-Canas et al., 2012). Kickstarter and Sellaband are the most popular crowdfunding platforms based on their amount of projects and raised money. At Kickstarter 4.4 million donors have given $695 million to more than 44.000 projects since the platform was founded in 2009 (Kickstarter, 2013).
Also in the Netherlands, crowdfunding has become increasingly popular. Most cultural projects in the Netherlands obtain their capital through crowdfunding (Wouters, 2011). Similarly, a Dutch professional soccer club tried to avoid bankruptcy by asking all inhabitants of The Netherlands to donate €1. Within a few days, over €200.000 was raised without the promise that the club could be rescued, but with the promise that all money would be returned in case the project fails (de Haan, 2013). Another well-known example is the movie “The Veronica Mars Movie Project” which raised €2 million within ten hours (Crowdfunding.nl, 2013).
Crowdfunding is such an interesting topic to study because it is an upcoming and innovative way of raising funds. Furthermore not many quantitative studies have examined motives behind crowdfunding. This research will try to reveal some in The Netherlands.
1.1 Definition
6 In order to provide a valuable definition of crowdfunding, the literature on crowdfunding has been examined. Only a few important empirical researches have been performed on crowdfunding and most of them use the same definition of crowdfunding.
“Crowdfunding involves an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes” (Lambert & Schwienbacher, 2010) (Schwienbacher & Larralde, 2010) (Bellaflame , Lambert, & Schwienbacher, 2012).
1.2 Scope of the research
Crowdfunding is not just giving money to a project. There are different ways of giving money to projects. Some donations can be seen as investments and others are more like philanthropic donations.
According to Griffin (2012) there are five categories of crowdfunding. The donation model, the reward model, pre-purchase model, the lending model and the equity model. The current research will focus on the reward-model and the pre-purchase model for crowdfunding creative projects; since these are the most commonly used models and are quite often used together. The reward model does not mean that a monetary reward can be expected in exchange for the donation but the reward is relatively small according to the contribution that is made. For a small contribution the reward is for example access to exclusive videos, just a “thank you” or the possibility to pre-purchase a CD.
Creative or artistic projects in The Netherlands have been chosen as research topic since creative projects represent almost 50% (262 out of 570) in 2012 and 45% (111 out of 250) in 2011 of all crowdfunding projects in The Netherlands in 2012. Articulated in money, creative projects represent €1.35mln out of €2.5mln (54%) in 2011 and €1.9 mln out of €14mln (14%) in 2012 of all funds raised with crowdfunding in The Netherlands (Douw & Koren, 2,5 Miljoen euro gecrwodfund in 2011, 2012) (Douw & Koren, 2013). The drop in percentages can be explained by a single project that raised €7mln in 2012 called “The Windcentrale”.
1.3 Research objective and research questions
Motives of donors are the main interest of this research, since they are not thoroughly studied in the crowdfunding literature or they are recognized in adjacent fields but not applied to crowdfunding yet. The motives that have been examined are based on crowdfunding literature, philanthropic literature and characteristics of the crowdfunding project itself.
The first two motives that have been examined are based on proximity. These are the geographical and social proximity of entrepreneurs and donors. It is tested if social and/or geographical proximity leads to the donation of a higher amount of money, based on the first quantitative examination of these factors on crowdfunding in the U.S.A. (Agrawal et al., 2011). The third motive is the donor’s feeling of connectedness with the entrepreneur or project (van Vliet, 2011).
7 Furthermore, the campaigns provide other information, for example images or videos. Especially videos seem to add value to the donors (Koetsier, 2013).
The last motives that will be examined are personal motivations of the donor. Based on literature about philanthropy, there are several personal motivations that influence the donating behavior of donors. Four of these motivations will be tested on their applicability to crowdfunding. Donors could experience a joy of giving or they could be influenced by the reward or others in order to donate a certain amount of money. Furthermore it is known that the more concrete a certain project is to the donor the higher the propensity to donate money to a project (Bekkers & Wiepking, 2011). All of these motives could have a positive influence on the amount of money that is donated to the project.
Therefore the following main research question is stated:
“To what extent do individual and geographical related motives of donors influence the amount of money donated on creative crowdfunding projects in The Netherlands in 2013?” To answer the research questions stated above, the following sub questions are used:
1. What does philanthropy mean? 2. What is the definition of philanthropy?
3. What are the characteristics of philanthropy in The Netherlands? 4. How is crowdfunding linked to philanthropy?
5. What does crowdfunding mean? 6. How is crowdfunding defined?
7. What does internet mean for crowdfunding? 8. What are motives for making donations in general?
9. Which variables may influence the amount of money donated?
10. Which variables are significantly influencing the amount of money donated?
1.4 Reading guide
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2. Literature review
This section will give a summary of the literature about crowdfunding combined with philanthropic literature which complements the underdeveloped field of crowdfunding.
2.1 Philanthropy
Reward based crowdfunding for creative projects, which is the focus of this research, is difficult to separate from philanthropy or sponsorship, since there are no financial incentives to contribute (van Vliet, 2011). Therefore insights in the mechanism of philanthropy in general will be provided first in order to give an overview of the mechanism behind crowdfunding. More specific, crowdfunding means donating money, but what means/is donating money. Donating money is part of philanthropy since “Donations can be made in terms of monetary contributions, voluntary work and other non-financial support like goods.” (Werkgroep Filantropische studies, 2013).
Philanthropy is defined in several ways. Some older definitions of philanthropy are more general. In 1988 the influential Bob Payton who is a researcher at “Center on Philanthropy in Indianapolis defined philanthropy as: “voluntary action for the public good” (Payton, 1988). Another quite old and brief definition is “philanthropy is love of mankind, especially as manifested in deeds of practical beneficence” (Sacks, 1960).
Over the years the definition is more refined. A more comprehensive definition is given by researchers at the VU Amsterdam: “Contributions in the form of money, goods and/or time (expertise), voluntary made available by individuals and organizations (funds, companies, churches) which primarily serve common charitable goals” (Schuyt & Gouwenberg, 2009).
According to the Dutch secretary of Safety and Justice, the Dutch secretary of Finance and the Dutch philanthropic industry association philanthropy involves “voluntary donation of money, goods or effort by individuals, companies and funds for charity” (Stichting Samenwerkende Brancheorganisaties Filant, 2012). Furthermore, according to Bekkers & Wiepking (2011) philanthropy charitable giving is defined as “the donation of money to an organization that benefits others beyond one’s own family” (Bekkers & Wiepking, 2011).
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Author Definition
Payton, 1988 voluntary action for the public good
Sacks, 1960 love of mankind, especially as manifested in deeds of practical beneficence Schuyt &
Gouwenberg, 2009
Contributions in the form of money, goods and/or time (expertise), voluntary made available by individuals and organizations (funds, companies, churches) which primarily serve common charitable goals
Stichting
Samenwerkende Brancheorganisaties Filantropie,2012
voluntary donation of money, goods or effort by individuals, companies and funds for charity
Bekkers & Wiepking, 2011
the donation of money to an organization that benefits others beyond one’s own family
Comprehensive definition
voluntary contributions in the form of money, goods or time/effort to charitable causes by individuals or organizations
Working definition voluntary monetary contributions to charitable causes by individuals Table 1 Overview of definitions of philanthropy
2.2 Philanthropy in the Netherlands
The working definition of philanthropy contains two important terms which will be explored more in depth in this section. These terms are “contributions” and “causes”. They will be explored in the context of the Dutch philanthropic sector.
2.2.1 Causes of philanthropy in the Netherlands
Now philanthropy has been defined, it seems that the purpose of giving money is a charitable cause. This is yet a rather vague concept. This section will describe what charitable causes include and how they are served in the Netherlands.
Statistics and motives about donating in The Netherlands are studied and tracked since 1995 by the department Philanthropic Studies of the VU Amsterdam. This is the only West-European institute that tracks the donating behavior of its country. They distinguish eight categories of societal or charitable causes namely: 1. Church and religion 2. Health 3. International causes 4. Environment, nature and animal welfare 5. Education and research 6. Culture 7. Sports and recreation 8. Societal and charitable causes (Werkgroep Filantropische studies, 2013).
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2.2.2 Contributions in the philanthropic sector in the Netherlands
In order to imagine the size of monetary donations made in The Netherlands, underneath the objective facts of the “total market” are summarized.
Total spending on charitable causes is at least 4.3 billion euros in The Netherlands in 2011. Households spend about €1.8 billion and companies spend about €1.4 billion. The biggest share of total spending is for the churches and religious causes (19% of €4.3 billion). The amount of money spent on culture is ranked seventh out of eight with €287 million which is 7 percent of total spending (Werkgroep Filantropische studies, 2011). €4.3 billion is about 0.8 percent of the gross domestic product of The Netherlands and this percentage is quite stable over the last decade.
2.2.3 General characteristics of contributors
Stam and van Rooij (2011) have revealed some general characteristics of Dutch donors. Results show that the more a person visits the church the more she/he donates. Donors with a higher level of education and a higher income donate more money and it seems that there is no difference between men and women. Furthermore it seems that people of all ages donate an equal share of money and also the marital status is of influence. Citizens of Holland donate money through direct debit and cash on demand. In comparison with the U.S.A. the online donation is not well developed yet but online donations will grow explosively in the upcoming years. Furthermore donors like giving to small institutions rather than big ones (Stam & van Rooij, 2011).
2.3 Philanthropy and crowdfunding
The donating landscape in the Netherlands is outlined. The overlap between reward based crowdfunding for creative/cultural causes and philanthropy will be discussed here. More specific, the applicability of the philanthropic theories on crowdfunding is explained. As included in the definition philanthropy includes money, goods and time/effort. The focus is on monetary contributions.
Crowdfunding for creative causes is a part of philanthropy in several ways, therefore these theories are applicable and the motives for donations to philanthropy will be basis for this research on crowdfunding since crowdfunding is not fully explored yet.
An important distinction between crowdfunding and philanthropy lies in the fact that traditional giving to charitable causes is offline business, meanwhile crowdfunding is online business (van Vliet, 2011).
The most important characteristics of philanthropy to crowdfunding are explained here.
11 However since lots of crowdfunding projects run on a crowdfunding platform, which functions as intermediary and might be based on (non-) commercial purposes, there is discussion about whether the donation is to the project or the platform and if both imply a donation to a charitable or cultural cause (van Vliet, 2011).
2.4 Crowdfunding
Philanthropy, donating money in the Netherlands and the link with crowdfunding is explained. However crowdfunding itself is introduced in the introduction section, there still is more to explain about crowdfunding.
Crowdfunding is a way of financing all kinds of projects like business, new ventures, arts or anything you could imagine. The special thing about crowdfunding is that the donor contributes to the plan of a project. The outcome is described but not created yet. This will be done when the campaign is completed. Therefore crowdfunding is a kind of “pre-testing” (Harms, 2007). It is a solution to current economic developments and subsequent difficulties for entrepreneurs to finance their projects. Instead of a bank loan many investors contribute a small piece of the total amount of money required to finish a project (Mollick, 2012).
As described in the introduction a well-known definition of crowdfunding is “an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights in order to support initiatives for specific purposes” (Lambert & Schwienbacher, 2010)
At crowdsourcing.org this definition is underlined and crowdsourcing.org also provides a definition of crowdfunding: "Crowdfunding is a process of capital gathering and allocation, that is given to third party in order to realize, develop or implement defined activity, which engage vast virtual community and is characterized by using ICT, social media, lower entry barriers and better transaction conditions than given on the capital market" (Krol, 2011).
Besides Krol (2011), also Van Vliet (2011) uses the first definition in his research on crowdfunding. Griffin describes crowdfunding “is used to describe a form of capital raising whereby groups of people pool money, typically comprised of very small individual contributions, to support an effort by others to accomplish a specific goal” (Griffin, 2012).
Since the definition of Lambert and Schwienbacher (2010) is comprehensive and extensively used, this will also be used for this research. Besides that it is widely used it describes the essential element of crowdfunding: contributing through the internet. In the next section elaborates on the importance of internet for crowdfunding as it is the vital part of the definition just as has been done with the definition of philanthropy.
2.4.1 Implications of internet on crowdfunding
12 The application of internet is very important for crowdfunding and the role of internet makes an essential difference between crowdfunding and traditional fundraising. I will elaborate on the implications of internet for crowdfunding in this section.
Internet is essential for the current form of crowdfunding since it connects investors and entrepreneurs. The large impact of internet on crowdfunding is a very important difference between crowdfunding and traditional charitable donating (Bellaflame et al., 2012). The strength of crowdfunding in its current form lies in the fact that it involves an open call and thus may attract a very wide and diverse public (Kleemann et al., 2008).
2.4.2 Web 2.0
Crowdfunding is essentially through the internet .The Internet has evolved over time and the openness of communication brought to consumers nowadays is called Web 2.0. Web 2.0 is a very important application for enabling crowdfunding (Kleemann et al., 2008). Web 2.0 offers online platforms for all kinds of organizations and individuals to collaborate and share knowledge by overcoming economic and geographic distances as well (Zhang, 2012) (Agrawal et al., 2011). The importance of Web 2.0 is underscored by Schwienbacher and Larralde mentioning that Web 2.0 opens up new markets and creates networks throughout a very wide public. Thereby Lee et al. argue that the Web 2.0 has three main characterictics. The first one involves the opportunity to share knowledge and other resources, the second characteristic emphasizes on the oppenness of Web 2.0 and the third is that Web 2.0 give billions of people (almost) free access to the knowledge and resources through Internet (Lee et al., 2008). Lambert and Schwienbacher (2010) also highlight the importance of Web 2.0 and its contribution to crowdfunding (Lambert & Schwienbacher, 2010). These characteristics are very important for crowdfunding projects in order to gain attention from the crowd.
2.5 General motives for making donations
The facts about donating money to several causes are obvious but the motives to give money are more difficult to understand. Now the market of making donations and some characteristics of Dutch donors are clearer the motives behind spending billions of euros each year will be outlined. Several researches have been done on the motives for donating money.
Several authors have tried to group these motives. A distinction could be made based on the fact that the motives are external or internal motivations (van Vliet, 2011). Another distinction is made by A. Day and P. Molloy who have found twenty motives to donate money and they make a distinction between emotional and rational motives and motives that lie in between them (Day & Molloy, 2005). A literature review of over 500 articles has been done by R. Bekkers en P. Wiepking and has revealed eight mechanisms behind donations in the philanthropic sector. “1.Awareness of need; 2. Solicitation; 3. Costs and benefits; 4. Altruism; 5. Reputation; 6. Psychological benefits; 7. Values; 8. Efficacy” (Bekkers & Wiepking, 2011). These eight mechanisms may be considered as very useful as they summarize lots of on philanthropy adjacent fields like psychology, anthropology and economics and sociology.
13 the donor (Bekkers & Boonstoppel, 2011). Socioeconomic characteristics consist of level of education, labor, income and private capital. Demographical characteristics include age, gender, residence, marital status. The philanthropically values are influenced by requests to donate, trust, social pressure and altruistic values. All these could be motives for (possible) donors to donate.
2.6 Motives for crowdfunding donations
The focus of this article is to address several motives that could influence the amount of money that a donor donates to a crowdfunding project in The Netherlands. Ten independent variables will be examined and they could be grouped into three categories or groups. The first group of variables involves personal characteristics and personal experiences with crowdfunding of the donors in general. The second group of independent variables involves the attractiveness of the information that is provided by the entrepreneur on the website. Each project has one image, a video and an accompanying text. The attractiveness of these could convince donors to donate a higher amount of money. The third and last group of independent variables is about the personal motivations to donate
2.6.1 Social and geographical proximity
2.6.1.1 Role of internet and geographical proximity
Even though crowdfunding projects are worldwide accessible due to the internet which might imply that the geographic location of the project and donor do not matter since from everywhere in the world the information can be retrieved, there is evidence that there the geographical proximity between project and donor does matter (Mollick, 2012) (Agrawal et al., 2011). In short it could thus be argued that location of entrepreneur and donor does not matter but it seems that when the geographical proximity is higher the donor is inclined to donate a higher amount of money (Agrawal et al., 2011).
2.6.1.2 Social proximity
Besides the fact that a person who is located nearby the project could be inclined to donate a higher amount of money, it is also argued that a person who has a strong social relationship with the entrepreneur donates more often soon after the launch of the project and a higher amount of money than others and is the offline basis for successfully completing a crowdfunding campaign (Agrawal et al., 2011).
2.6.2 Connectedness
When running a crowdfunding campaign it is shown researchers have shown that a connection between donor and entrepreneur is essential. Results suggests that people show higher levels of motivation to donate money when there are certain feelings of connectedness with people with interest in the same topic and with the entrepreneur (Gerber et al., 2012).
2.6.3 Attractiveness of information of the project
14 certain amount of money. It will be tested if a higher attractiveness of these information sources leads to higher amount of money donated.
2.6.4 Motivations to donate
Based on the discussed motives and interviews with Dutch donors and crowdfunding experts there might be several internal and external motives that influence the amount of money that is donated. Therefore this research will test whether they are also applicable to crowdfunding projects in the creative sector. The concreteness of the project, the joy of giving a person experiences and the reward a person receives in exchange for the donation are three possible motivations to donate a higher amount of money (Bekkers & Wiepking, 2011) (van Vliet, 2011)
These briefly mentioned factors will be elaborated on in the next section. Based on discussions and evidence out of the literature ten hypotheses will be stated in the next section.
3. Conceptual model and hypotheses
This section will elaborate on the issues mentioned in the Literature review. Each factor is described more in-depth and this will lead to a hypothesis at the end of the theoretical examination of each motive.
3.1 Geographical proximity
On the one hand it seems that Web 2.0 connects us all, lots of articles have proven that Internet eliminates geographical distance for digitally distributed goods (Freund & Weinhold, 2004) (Blum & Goldfarb, 2005). By showing that Internet eliminates almost all costs related to geographical distance like transportation, search and communication costs (Cairncross, 1997) (Bakos, 1997). These findings are also supported by an investigation in the U.S., (Goolsbee, 2000).
These researches imply that the role of geographical distance is fairly reduced and location is not of importance for crowdfunding. However there are several authors who claim that geographical proximity between donor and entrepreneur is a motive to donate money.
On the other hand an important research is done by (Hortacsu et al., 2006). They examined the influence of geographical proximity on online trade in the U.S.A. It is argued that even though Internet solves almost every problem associated with trade over distance, consumers still tend to prefer goods that are geographically proximate over goods that are more distant. This is also true when online search costs, costs and time associated with transport and distribution are almost zero when buying goods over the Internet.
Just eliminating search costs is not enough to create a huge network of buyers and sellers. All these findings only count for so called ´taste-dependent’ products, crowdfunding creative arts surely belong to that category. All in all they conclude that geographical proximity strongly influences the willingness to pay (Blum & Goldfarb, 2005).
15 matters where the project is located relative to where the donor is located. Based on Agrawal et al. (2011) a distinction will be made between local and distant donors. Local donors are situated within a range 50 kilometers of the entrepreneur and distant donors are located outside that range.
H1: Donors located within a range of 50 kilometers of the entrepreneur invest a higher amount of money.
3.2 Social proximity
Another potential motive for donating money to crowdfunding for donors is that they belong to the group Family and Friends of the entrepreneur. This group is also known as the offline support for the entrepreneur.
Agrawal, et al. (2011) have found that there are differences in propensity to contribute to projects. They argue that Family and Friends invest in a very early stage of the project and their propensity to invest is much higher since they have more offline information and where other donors are interested in the track record of an entrepreneur Family and Friends already have a history with the entrepreneur. The Family and Friends category is defined as everyone who has a personal connection with the entrepreneur. This off-line basis of Family and Friends is a vital start for entrepreneurs to retrieve enough funds from the crowd; these investments are a sign to other donors to also contribute to the project (Conti et al., 2010). This implies that distant donors rely on investment decisions by others (Friends and Family of the entrepreneur). Agrawal, et al.further suggest that this creates a kind of path dependency for entrepreneurs to convince distant donors to invest in the project. They also highlight that modern communication technologies are able to eliminate distance and make people interact globally, however entrepreneurs strongly rely on their offline Friends and Family to reach their goals with their crowdfunding projects. Family and Friends fund start-ups for 31%. (Parker, 2009). Since Family & Friends do have such an important stake at funding projects, especially in the first period after the launch. Friends & Family are “disproportional co-located with the entrepreneur” (Agrawal et al., 2011).
H2: When the donor belongs to the Family and Friends of the entrepreneur, the donor invests a higher amount of money.
3.3 Connectedness
16 In conclusion it seems that people who feel connected in some way with the entrepreneur are likely to invest in money in a certain project.
H3: Donors who feel connected with the entrepreneur donate a higher amount of money?
3.4 Influence of provided information
In most crowdfunding platforms like Kickstarter, Indiegogo and Flintwave a project is presented with a video, text and picture. This section will discuss their influence on the attractiveness of the project and the influence on the amount of money donated.
3.4.1 Text
Each crowdfunding project has to tell the crowd about their ideas and goals. The story must be appealing and convincing to the crowd (Douw & Koren, Douw en Koren, 2011). In general, the text describes the project and attracts potential donors is the main part of the message (Evers, 2012). So an attractive text will probably lead to empathic feelings for the project and therefore people might donate a certain amount of money. Also Steinberg highlights the importance of the pitch/text of the campaign by mentioning a very extensive list of guidelines for the text. The text must be appealing to the crowd (Steinberg & DeMaria, 2012)
H4: Donors who find the text of the crowdfunding project attractive donate a higher amount of money?
3.4.2 Video
Research on promotion videos by Indiegogo revealed that projects with a video have twice as much chance for reaching their goal than projects without a video (Koetsier, 2013). The most famous crowdfunding platforms Kickstarter shows that the success rate is 50 percent for campaigns with a video and 30 percent for campaigns without a video (Kickstarter, 2013) (Moisseyev, 2013). Also research by external researchers on Kickstarter has shown that the probability of reaching the project goal is significantly higher when a video is added at the campaign website (Marom & Sade , 2013). About 82% of the projects have a video on their page at Kickstarter. Besides a higher chance of success, projects with a video also have a higher number of donors (Kuppuswamy & Bayus, 2013). Another advantage of adding a video to a campaign is that video and text are processed in different parts of the brain (Petersen, Fox, Posner, Mintun, & Raichle , 1989). The video and text are integrated by the brain and the combination is processed in a better way than just one of them (Tavassoli, 1998).
H5: Donors who find the video of the crowdfunding project attractive donate a higher amount of money?
3.4.3 Image
Each project also has a picture. A picture is shown on the front page and when a visitor clicks on the image the project page will be shown. Pictures are widely used in crowdfunding. Almost every crowdfunding platform in the Netherland uses pictures (Douw & Koren, Douw&Koren, 2013).
17 are processed in a more integrative and holistic manner. People tend to see the picture wholly and different than text (Holbrook & Moore, 1981).
In conclusion, it seems that providing information about a project to the potential donors through text, images and videos is beneficial for the understanding of the project. The information may lead to ‘empathic feelings’ to the project. The addition of a video gives more variety in the information and this has additional effects to the processing of the project (Evers, 2012).
H6: Donors who find the image of the crowdfunding project attractive donate a higher amount of money?
3.5 Personal motivations to donate
Since this study focuses on the type of crowdfunding where donors do not receive any kind of shares or ownerships in exchange for their donation, the donation can be seen as a gift (Evers, 2012). Crowdfunding has connections with many other businesses but is very closely linked to charity (Ordanini et al., 2011). Therefore literature on philanthropy will be used to explain personal motivations to donate money to crowdfunding projects. Also Moisseyev (2013) states that crowdfunding has close connections with charity (Moisseyev, 2013). There have identified eight mechanisms as forces to do such donations. Besides these mechanisms they have also identified other reasons to donate (Bekkers & Wiepking, 2011). Out of all these motives to donate some will be tested whether they are also applicable to the field of crowdfunding and lead to a larger donation.
3.5.1 Concreteness of the project
A qualitative research by van Vliet shows that also the level of concreteness of a crowdfunding project might positively influence the amount of money donated to a certain project. Interviews with experts and donors in the Dutch crowdfunding field have revealed that a more clear the goal of the project also contributes. Also concrete and clear stories about the project have a positive effect. Concreteness of the project is also articulated by the participants in terms of the period in which the donation must be made and amount of money (van Vliet, 2011). However, the concreteness of the project is just mentioned by some of the participants, therefore, I will test whether the concreteness of the project and the goal of the project significantly contribute to the amount of money that is donated.
H7: Donors who find the level of concreteness of the crowdfunding project high donate a higher amount of money.
3.5.2 Joy of giving
18 sample of the Dutch people 57 percent says that “feeling good” is a reason for donating (Wunderink, 2000).
H8: Donors who experience a Joy of giving from donating to crowdfunding project donate a higher amount of money.
3.5.3 Requestor solicitation
Most donations (85 percent) are made after the donor has been requested or solicited to donate. (Bryant et al., 2003) This is underlined by Bekkers in 2005 stating that 86 percent of the donations are preceded by a request (Bekkers, 2005). There are different kinds of solicitations but due to the limited amount of time the scope of this research will be not as wide as the several dimensions of solicitations a potential donor could be confronted with (tangible, intangible, interactions between people, target potential donors). However, it is clear that a potential donor who is requested to donate shows a higher propensity to donate money rather than a donor who is shown that there is an opportunity to make a donation (Lindskold et al., 1977). Nevertheless, entrepreneurs should keep in mind that contributions do not keep on raising when they increase the number of requests. There is a limit to which a higher contribution is made in relation to the solicitations (Wiepking , 2008). H9: Donors who feel that they are requested by others to make a donation donate a higher amount of money
3.5.4 Reward
Even though the donation is regarded as a gift, still donors can be influenced by the relative small reward they get in exchange for their donation. The reward offered in exchange for the donation is dependent on the amount of money donated. For example when €10 is donated the donor receives a digital LP, for €50 a signed album, a spot on the website and a few press photos are offered and in exchange for €800 a private concert of one hour besides all the aforementioned stuff (Silver, 2013). Several papers have described the influence of rewards on donors and the amount of money they donate. There is no consensus about the positive or negative influence of rewards.
The rewards of donating money for charitable causes are characterized as benefits in exchange for the donation. When exclusive products are offered the donation is more purchasing alike (Olson, 1965). It has been found out that when operas give small benefit donors give more money to the opera and university alumni donate more money when the university has invested more money on in them (Harrison et al., 1995) (Buraschi & Cornelli, 2002). Some people also justify the donation for themselves when a material benefit is offered if it was not in their self-interest to donate (Miller, 1999). However, there is also a stream that says that when the donor receives a benefit in exchange for his donation the donor’s mindset changes from doing well to buying. This might reduce his feelings associated with donating to charitable causes in the future (Zuckerman et al., 1979). The change mindset is expressed by the fact that the donor asks himself “Do I get value for my money?” rather than that they contribute because of a feeling of urgency or involvement (Wiggins et al., 2011) (Sansone & Harackiewicz, 2000). It also known that donations diminish when products are offered with discount by charitable causes (Desmet, 1998).
19 In conclusion it is yet not examined whether these personal motives to donate money to charitable goals do also count for crowdfunding. There is evidence that making a donation to the donation or reward form of crowdfunding and charitable causes are interpreted similar by the crowd. Also qualitative research has shown that these motives are applicable to crowdfunding. Furthermore there is consensus yet about the influence of some of the motives on donating behavior. Therefore it will be tested with a quantitative analysis whether these motives also count for crowdfunding since this kind of analysis has not been done yet.
H10: Donors who appreciate that they get a reward in exchange for their donation donate a higher amount of money
3.6 Control Variables
20
3.7 Conceptual model
H1: Geographical proximity
Amount of money donated
21
4. Methodology
The purpose of this research is to examine which factors might influence the amount of money donated by crowdfunding donors in the Netherlands. Based on theories, the yet underexplored field of crowdfunding, several hypotheses will be tested. Collaboration with crowdfunding platform voordekunst is chosen to test the hypotheses through a questionnaire for donors. The data out of the questionnaire will be analyzed in a quantitative manner.
4.1 Quantitative research
Since there is an extensive basis for the motives behind donating money in adjacent literature fields, it will be tested whether these motives, which have been proven in other researches, are also applicable to crowdfunding in the Netherlands. The motives are already known but not yet tested in a quantitative manner. Quantitative research is about building and testing theories. Furthermore it is useful for measuring consumer behavior and attitudes/opinions which have been described in the literature review (Cooper & Schindler, 2006).
4.2 Case selection: voordekunst
Since crowdfunding in The Netherlands is still an upcoming phenomenon there are not that much crowdfunding platforms which are available and suitable for testing these hypotheses (Douw & Koren, 2013). The selection of a case when there is a small number available could result in an unrepresentative case (Seawright & Gerring, 2008). Therefore the case is selected purposively. Voordekunst is selected as case due to its representativeness for Dutch crowdfunding.
First of all voordekunst is in the chosen category of platforms who offer a (very) small reward in exchange for a donation. Furthermore as explained in the introduction about 50% of all crowdfunding money goes to creative projects. Voordekunst is a crowdfunding platform for crowdfunding projects with creative purposes.
Voordekunst is chosen because of its extensive list of projects and donors. It is running crowdfunding campaigns for four years already and has successfully completed 354 projects and over €2.3 million has been donated. Voordekunst is available at www.voordekunst.nl. It is a Dutch crowdfunding platform where all kinds of creative arts can launch a project for a broad public. Every project has a minimum level of investment it needs to reach to start the project; however the goal is to collect as much money as possible from the crowd.
Everyone who meets the conditions of voordekunst (plausible idea, a well-defined business plan and specification of spending of the required money) can launch a campaign.
As shown in figure 1, the video is on top and underneath the project is described. Right are the facts and the donation button. Furthermore, there is explained what the donor receives in exchange for a donation (van der Zanden, 2013).
22 VU University will collaborate with voordekunst to reveal the motives and mechanisms of donors to crowdfunding in the Netherlands (voordekunst, 2013).
Figure 1. Example of a project page at voordekunst.
4.3 Data collection
In order to test these hypotheses crowdfunding donors and not just a random public should be questioned about their motives and experiences with crowdfunding. In collaboration with Roy Cremers, owner at voordekunst, all donors are provided a survey with questions that will measure the variables mentioned above. The survey will be designed in such a way that the data is appropriate for a regression analysis. The influence of the several factors on the amount of money donated will be tested by translating each factor into one or more research questions that will measure the variable.
23 Dependent on the amount of variables included a satisfying number of participants is required to complete the analysis.
Variable Author Definition Operationalisation
Geographical proximity Agrawal et al., 2011 The geographical distance between donor and entrepreneur
Donors within a range of 50km of the entrepreneur donate significantly more money than donors outside that range do. Family and friends Agrawal et al., 2011 Everyone who has a
personal connection with the entrepreneur
Donors who do belong to the Family and friends of the
entrepreneur donate more money than donors who do not Connectedness Gerber, 2012 A feeling of
connectedness with the entrepreneur experienced by the (potential) donor Donors who experience a feeling of connectedness with the entrepreneur donate a higher amount of money.
Text Voordekunst Text describes the
project and attracts potential donors is the main part of the message
An attractive introducing text of a crowdfunding project leads to the donation of a higher amount of money
Video Voordekunst The video in which the
crowdfunding project is presented
An attractive video of a crowdfunding project leads to the donation of a higher amount of money
Image Voordekunst A picture added that
represents the project
An attractive image of a crowdfunding project leads to the donation of a higher amount of money
Concreteness of the project
Van Vliet, 2011 The level of clearness of the project/ the level of clearness of the goal of the project
When a project is presented and interpreted as very concrete donors will donate a higher amount of money Joy of giving Bekkers et al., 2011 pleasurable
psychological
experiences on giving
24 the mere act of being
solicited to donate.
requested to donate, the donor will donate a higher amount of money
Reward Olson, 1965 benefits in exchange
for the donation
When a reward is offered in exchange for the donation, the donor will donate a higher amount of money
Table 2 Operationalization of each variable.
4.4 Statistical methods
There are two kinds of data that will be retrieved out of the questionnaire. The first type is the postal code of each donor. The first type is not ready for analysis straight away. The distance between the donor and the project has to be calculated first. This has been done with a formula in Excel which calculates distances between places based on the coordinates (Agrawal et al., 2011).
The other kind of data is the scores out of the Likert-scale answers. They are ranked from 1-5. The possible relationship of each independent variable and the dependent variable will be tested with a regression analysis in SPSS. The result will be whether these relationships are significant or not and the amount of explained variance.
4.4.1 T-tests
With respect to H1: “Donors located within a range of 50 kilometers of the entrepreneur invest a higher amount of money” a t-test is executed. At first the data is made ready for analysis. Some respondents or projects are left out of the analysis. Some respondents did not fill in the right name of the project and some projects were left out since the location was difficult to determine or the project was running throughout the whole country (like theater performances or a band tour). In most cases when the project runs throughout the whole country the location of the founder of the project is chosen. According to Agrawal et al. (2011) the distances are split into two groups.
The calculation of the distances has been done with a formula in Excel which calculates distances between places based on the coordinates (Agrawal et al., 2011).
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4.4.2 Linear regressions
At first the variable “concreteness” was measured with 2 questions. These 2 independent variables are highly inter-correlated with a Cronbach’s alpha of .812. Since .812 is above the .7 the 2 items can be combined into one new variable: overall concreteness of the project (SPSS Handboek, 2013). The independent variables put into the analysis are as mentioned in the conceptual model: “connectedness between donor and entrepreneur”, “attractiveness of video”, “attractiveness of text”, “attractiveness of image”, “overall concreteness of project”, “joy of giving”, “request to donate”, “importance of reward”. The dependent variable is the amount of money donated.
A linear regression model is built with SPSS.
4.5 Research quality
With respect to the questions in the survey much effort has been put into the formulation. The questions should be very easy to understand, unambiguously and interpreted in just one way. Some variables are measured with several questions.
Filling in the questionnaire is completely voluntary and the donors are well briefed about the intentions of the questionnaire. Furthermore the answers are handled with care and processed anonymously.
4.5.1 Generalizability
Besides the fact that voordekunst is a prominent platform, the external validity or generalizability is secured for this form of crowdfunding since crowdfunding for creative causes represent almost 50% of total crowdfunding sector in The Netherlands. So others could apply the results to their platform or crowdfunding campaign or project.
4.6 Sample
In this section the characteristics of the sample are described. Some general characteristics of the donors are described and the amount of money donated. 89 donors have filled in the survey after they have donated money. Some have not filled in every question or stated that some of the variables are not applicable to them, for example because they have not seen the video which implies that they could not judge it. Missing values and the answer “inapplicable” are left out of the analyses.
4.6.1 Characteristics of donors
The dataset is characterized by the fact that 64.4% of the respondents are female, 33.1% are male and 2 are missing. This is not matching with the general donor in The Netherlands since in general women and men provide an equal share. However a former survey by Voordekunst was also filled in for 55% by woman and 45% by men. That former survey was filled in by 781 respondents (Voordekunst, 2012).
26 The level of education of the donors is also high and this is also consistent with the overall population in the Netherlands. 46.8% of the respondents have a HBO grade and 35.1% have a university grade. In short 81.9% of the respondents have a high level of education.
The respondents are also very interested in the Dutch cultural sector. 43.2% is very interested and even 25.3% is very much interested. Every respondent is visiting a cultural happening at least a few times each year and 35.8% of the respondents visit several times each month.
Besides the fact that more women than men have filled in the survey there are also differences in the amount of money donated between the gender types. As shown in table 3 it is clear that men are less inclined to fill in the survey but do donate a substantial higher amount of money than women. The average donation from a man is €51.17 while a woman donates €34.31 on average.
Gender N Mean Std.
Deviation
Female 58 €34,31 €21,96
Male 30 €51,17 €34,81
Table 3. Analysis of amount of money donated per gender.
4.6.2 Descriptive statistics of the amount of money donated
The characteristics of the dependent variable (amount of money donated) are described in this section.
The average amount of money donated is €39.72 with a standard deviation of €28. The smallest amount is €10 and the largest is €150. €25 is the most common amount of money that is donated with 24 times. Also €50 is quite often donated with 20 times. Notable is also the fact that there are three donations with an amount in between €50 en €100 and thereby €100 is donated 9 times. The maximum of €150 is the only amount above €100 and can thus be seen as an extreme value. The descriptive statistics are summarized in table 4.
Category Facts
Respondents 89
Percentage Men-Women 33.1%-64.4%
Age From 19-81 Average: 50
Level of education 81.9% highly educated Interest in Dutch cultural sector 68.5% deeply interested Average donation Men-Women €51.17 - €34.31
Average donation €39.72 ( SD €28)
Range of donations €10-€150
Correlations Mean Std. Deviation 1 2 3 4 5 6 7 8 9 10 11 Age 50,205 14,026 x Gender x x -0,018 x Amount of money 39,719 28,026 ,303** ,217* x Personal connectedness 2,632 1,221 -0,033 0,032 0,179 x Video 3,940 0,736 -0,147 -,243* -0,151 -0,092 x Text 3,888 0,595 -0,125 -0,156 0,167 0,088 ,485** x Image 3,743 0,755 -0,041 -0,023 0,163 0,001 ,354** 0,170 x Requested to donate 2,212 1,166 -0,066 0,086 0,050 0,197 -0,107 0,022 -,239* x Joy of giving 3,188 0,893 0,100 0,080 0,150 0,036 0,212 ,296** 0,106 -0,046 x Reward 1,776 0,864 -,286* 0,032 -0,035 -0,016 -0,149 -0,198 -0,096 0,015 0,109 x Concreteness 3,707 0,906 -0,105 -0,173 0,005 0,018 ,362** ,447** 0,207 -0,106 ,277* -0,088 x
**. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).
4.7 Analyses
In this section the way the analyses are executed is discussed. The first two hypotheses are tested with a T-test and the last eight are tested with a regression analysis.
4.7.1 Stepwise regression analyses
The way the regression models are built is described and explained in this section.
In order to test the hypotheses stepwise regression analyses have been executed. This method is chosen because it is appropriate for examining the various influences of each variable in different settings. In each model consisting of different variables the explained variance and significances could be different. However with two control variables and eight independent variables an almost unlimited amount of different models could be generated. Therefore a stepwise building of the total model with all variables in it is chosen. Four models are constructed, starting with the first model with just the control variables in it and ending with the model with all variables in it.
The models are not randomly constructed but based on distinctions that have already been made in the literature review. As shown in literature section, the variable “personal connectedness” is a standalone variable. The variables “text, video and image” are analyzed together since these are the information sources provided by the crowdfunding project. Thereby it is assumed that these variables should be grouped since they correlate according to the correlation table. At last the variables “Request to donate”, “Concreteness of project”, “Joy of giving” and “Reward” are added to the model. This selection is because these are the personal motives that could be of influence to the donor. These are based on crowdfunding and philanthropic literature.
Model 1 contains the control variables age and gender. In model 2 the standalone variable “personal connectedness is added to the model. In model 3 the information sources of crowdfunding projects are added, these are text, video and image. And to the fourth last model the category “personal motives” are added, which implies that the last model contains all variables.
5. Results
The results of the analysis and the implications of the model on the hypotheses (accept or reject) is described in this section. Hypotheses 1 and 2 are analyzed with a t-test. Hypotheses 3 up to 10 are analyzed with a regression analysis.
5.1 Geographical proximity
In total 69 distances between donor and project are compared with the amount of money donated. The first group is 50km (nearby located) or less and the second group contains all distances over 50km (distant).
29 N Mean Std. Deviation Distant (>50km) 29 €43,97 €25,37 Close (<50km 40 €39,5 €32,78
Table 6. Results of T-test with data for H1.
5.2 Social proximity
As described in the Methodology section, there are two groups. Group 1 does have a personal relationship with the entrepreneur and group 2 does not have a relationship with the entrepreneur. An Independent samples T-test has been executed to compare the amount of money donated between the two groups. The results are as follows. Hypothesis 2: “When the donor belongs to the Family and Friends of the entrepreneur, the donor invests a higher amount of money” is rejected. Family and Friends donate around €4 more but this is not significantly more (p is .489).
Relationship? N Mean Std.
Deviation
Yes 47 € 41,28 € 29,68
No 40 € 37,13 € 24,65
Table 7. Results of t-test with data for H2.
5.3 Regression analysis and results
This section will present the results of the regression analyses.
5.3.1 Control variables
As the generated models show the variables age and gender, which are put into the model as control variables, are in almost every significant. This means that these are of influence on the amount of money donated and are of influence on the total models. In fact the results are thus that older people donate significantly more money than younger ones and men donate more money than women as is shown in the descriptive statistics.
5.3.2 Independent variables
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Results of Regression Analysis
Variable Model 1 Model 2 Model 3 Model 4
Age .286** .269** .263* .225 Gender .279** .292** .35** .386** Connectedness .205* .369** .384** Text .121 .162 Video .01 .07 Image .145 .205 Joy of Giving .147 Request to donate -.066 Concreteness .004 Reward -0.1 Incremental R² .044 .168 -.044 R² .155 .199 .367 .323 Adjusted R² .134 .168 .325 .293 F 7.321** 6.465** 8.873** 10.742** n 83 82 50 48 ** p < 0.01 * P < 0.05
Table 8. Results of regression analysis
5.4 Short summary of results
All in all the results show that one out of the ten hypotheses is accepted and nine are not. It is not revealed that people who are located nearby the entrepreneur or do have a relationship with the entrepreneur donate more money. Furthermore results show that attractive texts, images and videos do not result in larger donations. Thereby emotional feelings that come with making donations, like joy of giving and reward, do not result in a higher donation. At last it is shown that a higher perceived concreteness of the project does not result in the donation of a higher amount of money and it is not revealed that donors who feel that they have been requested to donate give more money.
5.5 Interactions
31 Variable Model 1 Model 2 Model 3
Age .286** .269** (-0,629)* Gender .279** .292** .214* Connectedness .205* (-.915**) Connectedness*Gender 1.503** Incremental R² .044 .147 R² .155 .199 .346 Adjusted R² .134 .168 .312 F 7.321** 6.465** 10.185** n 83 82 81 ** P < 0.01 * P < 0.05
Table 9. Results of interaction Connectedness*gender
The Beta is over 1, which implies that there is a very strong correlation. However the explained variance is 14.7% higher with the interaction variable and still significant at the 0.01 level.
Variable/Hypothesis Type of analysis Accepted/Rejected Geographical proximity T-test Rejected
Social proximity T-test Rejected
Personal connectedness
Regression model 2 Accepted
Text Regression model 3 Rejected
Video Regression model 3 Rejected
Image Regression model 3 Rejected
Concreteness Regression model 4 Rejected Request to donate Regression model 4 Rejected Joy of giving Regression model 4 Rejected
Reward Regression model 4 Rejected
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6. Discussion
This section will provide interpretations of the results of the statistical analyses. The results will be discussed in relation to the literature.
6.1 Geographical and social proximity
As discussed above there is no consensus about the role of Internet on diminishing the effects of geographical proximity. Some say that people located nearby a crowdfunding project are more likely to invest and thus that geographical proximity might influence the amount of money donated (Mollick, 2012; Agrawal et al., 2011). While the same research (Agrawal et al., 2011) also states that the average distance between donor and project is 3000 miles. Others state that Internet eliminates the influence of geographical proximity because everybody is connected (Freund & Weinhold, 2004) (Blum & Goldfarb, 2005). This research rejects the hypothesis that donors who are located more closely to the entrepreneur donate more money than donors who are located more distant for crowdfunding in The Netherlands. Therefore this research provides evidence for the suggestion that internet connects many users according to the findings of Blum & Goldfarb (2005) and Freund & Weinhold (2004).
Several authors have stated that donors who belong to the group of Family and Friends of the entrepreneur are more likely to donate early and a high amount of money (Agrawal et al., 2011) (Parker, 2009). Therefore it has been tested if this also counts for crowdfunding projects in the Netherlands. Results show that Family and Friends invest €4.15 more than others but this is not significantly more. An explanation could be that the extra value of the investment of Family and Friends is not that they invest more money but invest in a very early stage. This gives a signal that the project is of high quality to others who are more likely to invest by these signals (Agrawal et al., 2011).
6.2 Connectedness
As was assumed, it is emphasized by the results that entrepreneurs who succeed to appeal to the donors and make sure that the donors have a feeling of connectedness with the project will get a higher amount of money from their donors (Schwienbacher & Larralde, 2010) (van Vliet, 2011). Results also show that emotions do play a certain role in crowdfunding as was shown by SYNC (2013).
6.3 Information provided by projects
Several other researches have been done on the value of the various sources of information which are provided by the entrepreneur at the project webpage. This research has examined the influence of the attractiveness of the text, image and video of crowdfunding projects. Results suggest that donors who find these information sources attractive do not donate more money.
At first, as was described by others the text tells the story of the project and attracts the attention of (potential) donors (Evers, 2012) (Steinberg & DeMaria, 2012).
