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CROWDFUNDING & ONLINE SOCIAL NETWORKS
Erik Hekman & Rogier Brussee @ CARPE 2013
AGEND
A

THIS IS WHAT WE WILL
COVER

SHORT INTRODUCTION

CROWDFUNDING & RELATED WORK

PROBLEM DEFINITION

METHODOLOGY
DATA...
•

Raising financial capital is an obstacle encountered by many
entrepreneurs starting up a new venture

•

Crowdfunding i...
Crowdfunding is used to raise capital for:

•New venture and products development
•The creation and production of cultural...
“an open call, essentially through the Internet, to provide financial
resources either in the form of donation or in excha...
Agrawal et al., Belleflamme et al., Hemer, Lambert &
Schwienbacher and Mollick focus on:
• Geography
• Price discriminatio...
•

Social capital is defined are the resources that can be accessed or
mobilized through ties in the networks

•

Informat...
•
•

For each project we retrieved
• Detailed information from Kickstarter.com
• Detailed information of the Bitly link st...
•

We tested if correlations exist between:
• The number of Facebook friends (size)
• Bitly referrals
• Amount backers/ple...
NUMBER OF PROJECTS PER CATEGORY

CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
DISTRIBUTION OF GOAL AND PLEDGED
AMOUNT

CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
DISTRIBUTION OF PERCENTAGE OF GOAL
PLEDGED AND PLEDGED PER BACKER

CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHE...
PLEDGES PER BACKER VS GOAL, PLEDGES
PER BACKER VS CLICKS, BACKERS VS
CLICKS

CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2...
SOCIAL NETWORK ANALYSIS

CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
We calculated:
•Average degree
•Diameter
•Average path length
•Graph density
•Modularity
•Number of communities
•Number of...
•
•
•
•
•
•

Success is strongly dependent on the number of backers
External exposure on e.g., Facebook and Twitter is cru...
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Crowdfunding and online social networks

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Crowdfunding is gaining popularity as a viable means to raise financial capital for good causes, cultural goods, new products, and ventures. Little empirical research has been done to understand crowdfunding and basic academic knowledge of its dynamics is still lacking. By data mining the crowdfunding platform Kickstarter.com and Facebook we collected a large dataset of crowdfunding projects and the ego networks of the entrepreneurs. We study the relation of the success of the Kickstarter project to his social network and to media activities and find a scaling law that predicts the number of clicks on the project website required for a successful project. Examining the results of the social network analysis we concluded that successful initiators on Kickstarter have more friends but a sparser network. Unsuccessful entrepreneurs on the other hand have a higher average degree suggesting a denser network. Our analyses suggest that sparse, and thus diverse networks are beneficial for the success of a project.

Published in: Social Media, Technology, Business
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  • Pledge per backer increases only slightly with goal, and not with more backers, therefore you need more clicks to get more backers.
  • Examining the results of the social network analysis we could conclude:
    Successful initiators on Kickstarter have more friends
    Unsuccessful initiators on the other hand have a higher average degree suggesting a denser network
  • Transcript of "Crowdfunding and online social networks"

    1. 1. CROWDFUNDING & ONLINE SOCIAL NETWORKS Erik Hekman & Rogier Brussee @ CARPE 2013
    2. 2. AGEND A THIS IS WHAT WE WILL COVER SHORT INTRODUCTION CROWDFUNDING & RELATED WORK PROBLEM DEFINITION METHODOLOGY DATA COLLECTION & ANALYSIS RESULTS CONCLUSION ERIK HEKMAN & ROGIER BRUSSEE Faculty of Communication and Journalism, University of Applied Sciences Utrecht, The Netherlands
    3. 3. • 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 CROWDFUNDING Money makes the world go round CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    4. 4. 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. CROWDFUNDING Successful crowdfunded projects such as OUYA CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    5. 5. “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) CROWDFUNDING Defining Crowdfunding CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    6. 6. 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 RELATED WORK Many anecdotal success stories can be found CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    7. 7. • 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? PROBLEM DEFINITION The influence of the entrepreneurs social network CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    8. 8. • • For each project we retrieved • Detailed information from Kickstarter.com • Detailed information of the Bitly link statistics • DATA COLLECTION We retrieved all 8,234 Kickstarter projects started between 01-01-2013 and ended before 01-06-2013 We retrieved the ego network on Facebook of 200 project initiators CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    9. 9. • 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 DATA ANALYSIS CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    10. 10. NUMBER OF PROJECTS PER CATEGORY CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    11. 11. DISTRIBUTION OF GOAL AND PLEDGED AMOUNT CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    12. 12. DISTRIBUTION OF PERCENTAGE OF GOAL PLEDGED AND PLEDGED PER BACKER CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    13. 13. PLEDGES PER BACKER VS GOAL, PLEDGES PER BACKER VS CLICKS, BACKERS VS CLICKS CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    14. 14. SOCIAL NETWORK ANALYSIS CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    15. 15. We calculated: •Average degree •Diameter •Average path length •Graph density •Modularity •Number of communities •Number of weakly connected components SOCIAL NETWORK ANALYSIS CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
    16. 16. • • • • • • 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 CONCLUSIONS CROWDFUNDING & ONLINE SOCIAL NETWORKS CARPE 2013 MANCHESTER
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