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Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
Ohad Barzilay_Crowdfunding
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Ohad Barzilay_Crowdfunding

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Crowdfunding and the Entrepernuer 22.7.2013

Crowdfunding and the Entrepernuer 22.7.2013

Published in: Technology, Business
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  • 1. Playing Both Sides of the Market: Success and Reciprocity on Crowdfunding Platforms Dr. Ohad Barzilay Recanati Business School Tel Aviv University 1
  • 2. @ohadbr  I started as a software engineer  Software Engineering Lecturer 2
  • 3. @ohadbr  Research interests:  Contemporary Software Development  Digital platforms, BIG DATA  Social and Crowd networks  Video Blogger: 3 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 4
  • 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 5
  • 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 6
  • 7. The Crowdfunding Platform 7
  • 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
  • 9. KickStarter Stats 9 http://www.kickstarter.com/help/stats,2013,10July
  • 10. The Funding Challenge Reaching the financing goal within the allocated period 56% fundraising campaigns fail 11 44% fundraising campaigns succeed
  • 11. 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 12
  • 12. Fundraising => Crowdfunding => Crowdfunding Platforms • What affects success? • Any disadvantages? 13
  • 13. 14 Fundraising => Crowdfunding => Crowdfunding Platforms
  • 14. 15
  • 15. The Crowdfunding Platform KickStarter 16
  • 16. The Crowdfunding Platform Kickstarter
  • 17. Fundraising Multidimensional Success Factors 18 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
  • 18. Success and Reciprocity in Crowdfunding Networks David Zvilichovsky, Yael Inbar, Ohad Barzilay Recanati Business School Tel Aviv University
  • 19. 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” 20
  • 20. 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*** 21
  • 21. Results • Owners prev. Backing  Impact on Num. of Backers  Coefficient = 3.91*** ***- significant at the 0.01 level 1 10 100 1000 10000 100000 0 50 100 150 200 250 300 350 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14-20 21+ Average Number of Backers Number of backing actions Frequencies Num. Backers
  • 22. 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 23
  • 23. 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 24
  • 24. 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 25
  • 25. 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 26
  • 26. 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 27
  • 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 28
  • 28. It is not a “crowd” - it is a network 29
  • 29. 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 30
  • 30. 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 31
  • 31. Thank You Questions? ohadbr@tau.ac.ilEmail me: Full paper will be uploaded soon to the SSRN digital library – check it out

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