Using data from crowdfunding, the authors empirically examine whether higher proportions of female funders lead to higher success rates in capital-raising for women. They find that women outperform men, and are more likely to succeed at a crowdfunding campaign, all other things being equal. Surprisingly, this effect primarily holds for female founders proposing technological projects, a category that is largely dominated by male founders and funders. This finding stands in stark contrast to expectations concerning homophily. A laboratory experiment helps explain how this pattern might emerge and allows us to theorize about the types of choice homophily driving results. They find that a small proportion of female backers disproportionately support women-led projects in areas where women are historically underrepresented. This suggests an activist variant of choice homophily, and implies that mere representation of female funders without activism may not always be enough to overcome the barriers faced by female founders.
The authors are building a tool for novice project creators to get feedback on their project designs. One component of this tool is a comparison to existing projects. As such, they have applied a variety of machine learning classifiers to learn the concept of a successful online crowdfunding project at the time of project launch. Currently their classifier can predict with roughly 68% accuracy, whether a project will be successful or not. The classification results will eventually power a prediction segment of the proposed feedback tool. Future work involves turning the results of the machine learning algorithms into human-readable content and integrating this content into the feedback tool.
Online crowdfunding has gained attention among novice entrepreneurs as an effective platform for funding their ventures. However, a focus on the financial nature of the relationship has obscured the complex interpersonal interactions involving the exchange of non-financial resources. Drawing from resource exchange theory in the marketing literature, the report looks at the exchange of resources and the mechanisms that facilitate this exchange in online crowdfunding. It analyses 81 popular online crowdfunding platforms to reveal the exchange of various resources including: money, love, information, status, goods, and services through mediated, unmediated, and hybrid structures. Using resource exchange theory as a lens, it examines crowdfunding as a new type of crowdwork platform and explains how resource exchange theory can help the HCI community understand new, crowdwork platforms.
This article discusses why securities offerings using crowdfunding should not be exempted from the registration requirements of the federal securities laws in USA. First, it introduces the concept of crowdfunding and the five different categories of crowdfunding. Then it discusses the registration requirements under the Securities Act of 1933, why registration is not feasible for most crowdfunded ventures, and the conflicts between crowdfunding and the current registration exemptions. Finally, the article discusses why crowdfunding should not be exempted from the registration requirements, specifically focusing on how such an exemption would severely weaken investor protections and open the door for fraud to permeate the market.
We understand little about how crowdfunding users build ad hoc online communities to undertake this new way of performing entrepreneurial work. To better understand this phenomenon, it has been performed a qualitative study of 47 entrepreneurs who use crowdfunding platforms to raise funds for their projects. It has been identified community efforts to support crowdfunding work, such as providing mentorship to novices, giving feedback on campaign presentation, and building a repository of example projects to serve as models. It has been also identified where community efforts and technologies succeed and fail at supporting the work in order to inform the design of crowdfunding support tools and systems.
Based on an ethnographic study of crowdfunding work through interviews with project creators and participant observation, this study describes the work required of running a crowdfunding project, examining what they do, who is involved, and how they do it. It finds that the work consumes more time and requires a greater skill variety than what novice crowdfunders expect. Crowdfunding work involves understanding the opportunities and responsibilities, preparing the campaign material, testing the campaign material and initial project prototypes, marketing the project, executing the project goals, and contributing knowledge back to the crowdfunding community.
In this paper, it has been examined how geography affects the formation of crowdfunded projects. It has been collected data on housing prices and local credit markets that are known to determine the cost of accessing traditional sources of credit and matched these data to a novel data set from a leading crowdfunding market. It has been found that small cities appear to get a disproportionate benefit from crowdfunding. Findings also show that difficult access to credit from local banks induces entrepreneurs to rely more on crowdfunding. Moreover, tighter credit constraints due to a drop in housing prices have a stronger effect on entrepreneurs who initiate large projects and live in high income areas. The impact of a local credit market structure is almost entirely via ‘location-independent’ projects that attract less funding from local people. Overall, it has been provided evidence that web-enabled crowdfunding has the potential to democratize access to capital in that it can be a viable option for entrepreneurs having difficulty accessing traditional offline channels of credit.
This paper examines the role of experts in an online crowdfunding market. We find that while early investors have a significant influence on later investors, not all early investors are equally influential. Specifically, we find that among the early investors, two categories of experts have a significant influence on the later investors - the crowd. Our findings show that the majority of investors in this market — the crowd — although inexperienced, are rather sophisticated in their ability to identify and exploit nuanced differences in the informational content of the investments made by these different experts. In examining the ex-post performance of apps, we find that successful funding in the market is positively associated with ex-post app sales and that the quality signals provided by the experts’ investment choices are indeed credible. Contrary to popular perceptions of crowdfunding markets as means for democratizing expertise and as substitutes for traditional expert-dominated mechanisms, our findings indicate that despite the freedom of choice provided by these crowd-based markets, the crowd’s decisions are highly influenced by experts participating in these markets.
Until crowdfunding phenomena emerged, our funding mechanisms scarcely recognized the social power of crowds which form affinities around any kind of mission. Crowdfunding is a natural systemic response to fill this gap, and an expression of our collective human will. It is changing not only the way that we fund efforts, but the way we interact and support them. Never before has there been such potential to bridge the collective creative and productive capacity with capital and other resources which are required to translate that capacity into social and economic activities. This is a deep and broad look at the history of finance that got us here, the zeitgeist of crowdfunding and its associated social networking & group dynamics, and a visionary look into the future and greater empowerment of crowdfunding.
Social networks and the law: crowdfunding or fraudfunding? Social networks and the Securities Laws—Why the specially tailored exemption must be conditioned on meaningful disclosure
Crowdfunding can be used to finance small business enterprises, which, in contrast to other crowdfunding efforts, is a highly regulated activity by virtue of the securities laws. Securities laws are designed to provide investor protection. This article provides an overview of the applicable securities laws and evaluates the various proposals and the enacted JOBS Act which purportedly provides a workable exemption for crowdfunding that would not unduly compromise investor protection. The article examines the proposals and ensuing legislation and concludes that the only appropriate exemption for crowdfunding is one conditioned on meaningful disclosures about the company and the terms of the offering.
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