crowdfunding and online social networks

CROWDFUNDING & ONLINE SOCIAL NETWORKSErik Hekman & Rogier Brussee @ CARPE 2013

AGENDATHIS IS WHAT WE WILL COVER

ERIK HEKMAN & ROGIER BRUSSEEFaculty of Communication and Journalism, University of Applied Sciences Utrecht, The Netherlands

SHORT INTRODUCTION

CROWDFUNDING & RELATED WORK

PROBLEM DEFINITION

METHODOLOGYDATA COLLECTION & ANALYSIS

RESULTS

CONCLUSION

CROWDFUNDINGMoney makes the world go round

CROWDFUNDING &ONLINE SOCIAL NETWORKS

CARPE 2013 MANCHESTER

• Raising financial capital is an obstacle encountered by many

entrepreneurs starting up a new venture

• Crowdfunding is a novel and increasingly popular alternative

method to raise financial capital

CROWDFUNDINGSuccessful crowdfunded projects such as OUYA



Crowdfunding is used to raise capital for:

•New venture and products development

•The creation and production of cultural goods

•Good causes such as humanitarian, charity

and local government projects.

CROWDFUNDINGDefining Crowdfunding



“an open call, essentially through the Internet, to provide financial

resources either in the 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)

RELATED WORKMany anecdotal success stories can be found



Agrawal et al., Belleflamme et al., Hemer, Lambert &

Schwienbacher and Mollick focus on:

• Geography

• Price discrimination & pre-ordering

• Success determinants

• Motivation

• Network size

Methodologies we could distinct:

• Case studies

• Surveys

• Data mining & analysis

PROBLEM DEFINITIONThe influence of the entrepreneurs social network



• Social capital is defined are the resources that can be accessed or

mobilized through ties in the networks • Information, knowledge, finance, skills, advice and social legitimacy

• Social networks are important in business development

• To booststrap, entrepreneurs draw especially on their weak tie

networks (De Carolis et al., 2009)

• What is the influence of social networks on crowdfunding?

DATA COLLECTIONCROWDFUNDING &

ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER

• We retrieved all 8,234 Kickstarter projects started

between 01-01-2013 and ended before 01-06-2013

• For each project we retrieved

• Detailed information from Kickstarter.com

• Detailed information of the Bitly link statistics

• We retrieved the ego network on Facebook of 200

project initiators

DATA ANALYSISCROWDFUNDING &


• We tested if correlations exist between:

• The number of Facebook friends (size)

• Bitly referrals

• Amount backers/pledged

• Various internal correlations

• Social network analysis

• Undirected graph visualizations

• From each network we calculated various

network metrics

NUMBER OF PROJECTS PER CATEGORYCROWDFUNDING &


DISTRIBUTION OF GOAL AND PLEDGED AMOUNTCROWDFUNDING &


DISTRIBUTION OF PERCENTAGE OF GOAL PLEDGED AND PLEDGED PER BACKER



PLEDGES PER BACKER VS GOAL, PLEDGES PER BACKER VS CLICKS, BACKERS VS CLICKS



SOCIAL NETWORK ANALYSISCROWDFUNDING &


SOCIAL NETWORK ANALYSISCROWDFUNDING &


We calculated:

•Average degree

•Diameter

•Average path length

•Graph density

•Modularity

•Number of communities

•Number of weakly connected components

CONCLUSIONSCROWDFUNDING &


• Success is strongly dependent on the number of backers

• External exposure on e.g., Facebook and Twitter is crucial

• The median amount invested is $50

• Enormous variability between projects

• ~8% projects have 1 or few backers, seem to use Kickstarter for publicity

• Very difficult to raise more than ~1 M$ nearly impossible to raise more than

10M$.

Examining the results of the social network analysis we could conclude:

•Successful and unsuccessful initiators have mostly the same network metrics

•Unsuccessful initiators have a higher average degree• Suggesting a denser network

crowdfunding and online social networks

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