[2024]Digital Global Overview Report 2024 Meltwater.pdf
Ohad Barzilay_Crowdfunding
1. Playing Both Sides of the Market:
Success and Reciprocity on
Crowdfunding Platforms
Dr. Ohad Barzilay
Recanati Business School
Tel Aviv University
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3. @ohadbr
Research interests:
Contemporary Software Development
Digital platforms, BIG DATA
Social and Crowd networks
Video Blogger:
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Agile and Lean
Software Management
4. Agenda
• Crash course on Information Systems and
Digital Platforms
• The Crowdfunding platform
• Success and Reciprocity on KickStarter
– Joint work with Dr. David Zvilichovsky
and Yael Inbar
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5. Information Systems Research
• The “physical world” is gradually being “projected”
into the computer
– We study the effect on business and society
• 15 years ago: Enterprise context (ERP, CRM)
• Later: Everyday life
– Shopping
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6. The Rise of Platforms
• The maturity of information systems create
platforms which brings into play new
mechanisms
– The platforms re-design the “physical” process
– They introduce new abstractions and terminology
– They create an ecosystem
– They are used in surprising ways
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8. Crowdfunding (המון )מימון
• Definition:
Crowd - Small investments from a large base of
contributors
Funding - In order to finance projects
Over the Internet
• Gaining momentum:
Crowdfunding Platforms
More Projects
Higher Sums
Legislation8
11. The Funding Challenge
Reaching the financing goal
within the allocated period
56% fundraising
campaigns fail
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44% fundraising
campaigns succeed
12. Research Question
• What makes a crowdfunding campaign
successful?
Successful = raising the goal within the funding
period
• In order to answer this question we go
back to the “physical world”
The business process that the platform
encodes
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18. Fundraising
Multidimensional Success Factors
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The entrepreneur:
- Experience
- Learning
- Reputation
- Social capital
Viral
Marketing
Online
Communities
The platforms:
- Digital platforms nurture
online communities
- Socially involved users are
more likely to pay
The importance of
community leaders: hubs,
salespersons, mavens
Crowd
funding
19. Success and Reciprocity in
Crowdfunding Networks
David Zvilichovsky, Yael Inbar, Ohad Barzilay
Recanati Business School
Tel Aviv University
20. Research Data Set
• After cleaning the data (March 2013):
68,057 projects
60,680 project owners
3,001,417 backers
5,647,547 pledges (covering more than 400M $)
• “Big data” analysis
Some of the backers had projects of their own
Direct reciprocity
Indirect reciprocity
Also in the “opposite direction”
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21. Results
• Owners’ backing history has a positive impact
on projects’ financing success
Has backing history
Number of backings
Playing both sides of the market pays off
OR = 1.84***
OR = 1.06***
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22. Results
• Owners prev. Backing
Impact on Num. of Backers Coefficient = 3.91***
***- significant at the 0.01 level
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1000
10000
100000
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14-20
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Average
Number
of Backers
Number of backing actions
Frequencies
Num. Backers
23. Results (cont.)
• Owners’ creating history has a negative
correlation with projects’ financing success
Has creating history
Num. of prev. created projects
• Depends on success history
OR = 0.88***
OR = 0.98***
Experience is not enough
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24. Results (cont.)
• Projects created by owners with a backing
history :
Have a higher chance to secure financing
Have more backers
Have higher goals
Raise more money
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25. Backer Owners
BOs create more projects and succeed more than Owners
BOs back more projects than Backers
BOs as “power users”, “community pivots”
Backers
3M
Owners
60K
BO
34K
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26. BOs Projects vs. O Projects
BO projects O projects
t-test
P Value
Success Rate 62% 49% 0.00***
Number of Backers 124.33 54.92 0.00***
Goal $16,968.4 $12,863.41 0.008**
Successful
Projects
Only
Goal $7953.36 $5140.93 0.00***
Money Raised $13,551.98 $6927.93 0.00***
**-Significant at the 0.01 level *** - Significant at the 0.001 level
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27. BOs Projects vs. O Projects
Average Values BO projects O projects
t-test
P Value
Success Rate 62% 49% 0.00***
Number of Backers 124.33 54.92 0.00***
Goal $16,968.4 $12,863.41 0.008**
Successful
Projects
Only
Goal $7953.36 $5140.93 0.00***
Money Raised $13,551.98 $6927.93 0.00***
**-Significant at the 0.01 level *** - Significant at the 0.001 level
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28. BOs Projects vs. O Projects
Average Values BO projects O projects
t-test
P Value
Success Rate 62% 49% 0.00***
Number of Backers 124.33 54.92 0.00***
Goal $16,968.4 $12,863.41 0.008**
Successful
Projects
Only
Goal $7953.36 $5140.93 0.00***
Money Raised $13,551.98 $6927.93 0.00***
**-Significant at the 0.01 level *** - Significant at the 0.001 level
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30. Summary
• Crowdfunding platforms
• Two-sided market: the dual role of the user
• Visibility of on-platform actions
• Long-term participation
• Strategic & Community Interactions on Platform
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31. Summary
• Backing others pays off:
Higher success chances
More backers
More money raised
• Sub-Community of Backer-Owners:
More engaged in platform
Potential long and short term strategic benefits
• Direct and indirect reciprocity:
Crowdfunding platforms as social networks
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