Crowdfunding and Co-Creation. What are fruitful interconnections?

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Invited talk at Future of Crowdfunding Conference 2013 (http://www.future-crowdfunding.de) in Berlin (Germany), April 17, 2013.

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Crowdfunding and Co-Creation. What are fruitful interconnections?

  1. 1. Dennis Brüntje, Anja SolfInstitute of Media and Communication Science,Department of Media ManagementCrowdinvesting-Conference – April 17, 2013 – BerlinCrowdfunding andCo-CreationWhat are fruitful interconnections?
  2. 2. Outside-in perspectiveCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 2Image: Thinkstock.com
  3. 3. CrowdfundingCo-CreationInterconnectionsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 3
  4. 4. CrowdfundingCo-CreationInterconnectionsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 4
  5. 5. Our crowdfunding research•  What we do•  Recent projects–  Analysis of communication in equity-based crowdfunding–  Analysis of success factors and motivation criteria–  Crowdfunding as Social Media Tool for SMEs (Cofunding)–  Crowdfunding in various media markets–  Crowdfunding in scienceCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 5EmpiricalresearchConsultingStarters/ start-upsPlatformsScientificsupportPlatforms
  6. 6. How we see crowdfunding ...•  Established partial financing for projects & start-ups•  Leads to cultural diversity & enriches start-up-scene•  Requires strategic communication•  Main principles: Reputation, transparency & trust•  Marketing tool•  Allows crowd involvement (crowdsourcing)Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 6
  7. 7. Different actorsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 7CrowdfundingPlatformsStarters /start-upsSupporters /investors
  8. 8. Different actorsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 8CrowdfundingPlatformsStarters /start-upsSupporters /investors
  9. 9. What leads to success in reward-basedcrowdfunding?(n=85)•  Campaign planning•  Project description•  Design of project page•  Pitch video•  Information about project status (blog)•  Financial goal•  plus: short project duration, number of supporters,pledged budgetCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 9Harzer (2013)
  10. 10. What leads to success in equity-basedcrowdfunding?•  External communication:–  Same factors expected as above (+ business plan)–  Start-ups profit by platform publicity•  Probability of success:–  Opportunity recognition–  Intellectual Property–  Start-up team (entrepreneurial skills, motivation,flexibility, market knowledge)–  Feasibility of the projectCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 10Beck (2012), 48ff.; Alvarez & Barney (2007)
  11. 11. What leads to success in crowdfunding?Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 11 It‘s all about communicationImage: http://www.qllective.com
  12. 12. Different actorsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 12CrowdfundingPlatformsStarters /start-upsSupporters /investors
  13. 13. What motivates supporters?(n=89)•  Entertainment•  Curiosity•  Affiliation•  Empathy•  Idealism•  Less important: Rewards, appreciation andresponsibility, feeling of guilt, subjective normPage 13Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. SolfHelm (2011), 67
  14. 14. What motivates investors?Financial factors Non-financial factors Social factors•  High ROIassumption•  Minimaladministrationeffort•  Information &controlling rights•  Voting rights•  Direct investments instart-ups•  Aspiration supportinglocal start-ups•  Being involved withexciting start-uptechnology•  Supporting self-expression•  Prestige ofinvesting inyoungbusinessesCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 14Beck (2012), 52; Collins & Pierrakis (2012), 3, 25; Klöhn & Hornuf (2012), 239
  15. 15. Different actorsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 15CrowdfundingPlatformsStarters /start-upsSupporters /investors
  16. 16. Role of crowdfunding platforms•  Take role of an intermediate•  Enable financing, communication & information•  Create network effectsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 16e.g. Klöhn & Hornuf (2012)
  17. 17. Challenges in crowdfundingCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 17e.g. Beck (2012); Collins & Perrakis (2012); Hofmann (2012); Klöhn & Hornuf (2012)communicationRegulationinformation asymmetriesfraud detection fraud protectionfollow-on financingROIrisk reductiontransparencycrowd vettingpost-investment supportdue diligencebusiness valuationCo-CreationConsulting
  18. 18. CrowdfundingCo-CreationInterconnectionsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 18
  19. 19. Co-Creation ResearchCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 19
  20. 20. What the Crowd wants …•  Reward•  Recognition•  More knowledge & better skills•  Interest•  FunCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 20e.g. Brabham (2008); Archak (2010);Missling (2011); Blitzer, Schrettl & Schröder (2004)
  21. 21. What the Crowd gets …Page 21Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf“I think, if there was no monetary reward,probably no one would participate.““Everyone‘s efforts do have its price.”“To make people join for a long time andbe really motivated money is notsufficient. What you need is recognition.“Solf & Schultheiss (2013)
  22. 22. What creative crowds really need …”iStockers find creating content fun and enjoyable, andit gives them the chance to do the jobs they feel theydo best.“ (Brabham 2008)Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 22Flow and Sense
  23. 23. Profit vs. Sense and Flow (in Microworking)Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 23(Image: www.mturk.com)•  Challenge meets skills•  Task autonomy enhances creativity•  Profit competes against non-profit•  Meaningfulness increases participationKaufmann, Veit & Schulze (2011); Rogstadius et al. (2011); Chandler & Kapelner (2012)
  24. 24. More fun in idea-creationGamification by competition•  Tools: ratings, rankings, awards•  Collaboration vs. competition•  Contest causes pressureFoster the flow!Support skills, increase interest, inspire!Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 24
  25. 25. More sense in idea-creationCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 25Market places•  Problems vs. search fields•  Rewarded solutionsHarness the crowds creative potential!Grant autonomy, give advise, make innovation radical!
  26. 26. Creative Crowds need Autonomy”Creativity is asking the question for which there is noanswer. And innovation is answering that question.“Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 26Idea vs. Solution?!(Gene Frantz, Texas Instruments, in: Stern 2012)
  27. 27. Creative Crowds need creative settings•  Expertise•  Skills•  Personality•  Money•  …Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 27Resources
  28. 28. Support means more than money …“I told them, ‘No, I‘m not going to start Apple because Ijust want to design neat computers. I don‘t want to run acompany because that‘s not my thing in life‘.“(Steve Wozniak, in: Brown 1988)Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 28
  29. 29. CrowdfundingCo-CreationInterconnectionsCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 29
  30. 30. Funding Creative ProcessesCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 30Creative Process Prototype …
  31. 31. Platforms as innovation driversCrowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 31Crowdfunding& Co-CreationPlatformsStarters /start-upsSupporters /investorsIntermediatesTeams &individualsFinancing &human capital
  32. 32. What do you think?Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 32Image: http://www.omnioptics.de
  33. 33. Coming soon?Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf Page 33InnoFund.me
  34. 34. References•  Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: Alternative theories of entrepreneurial action. Organizações emcontext, 3(6), 123-152.•  Archak, N. (2010). Money, Glory and Cheap Talk: Analyzing Strategic Behavior of Contestants in Simultaneous CrowdsourcingContests on TopCoder.com. Proceedings of the 19th International Conference on World Wide Web, April 2010.•  Beck, R. (2012). Crowdinvesting – Die Investition der Vielen [Equity Crowdfunding – Investments by the crowd]. Leipzig: amazon.•  Bitzer, J., Schrettl, W. & Schroeder, P. J. H. (2004). Intrinsic motivation in open source software development, School ofBusiness & Economics. Discussion Paper: Economics, No. 2004/19. Retrieved February 15, 2013, from: http://hdl.handle.net/10419/49926•  Brabham, D. C. (2008). Moving the crowd at iStockphoto: The composition of the crowd at motivations for participation in acrowdsourcing application. First Monday, 13(6). Retrieved June 14, 2012, from: http://journals.uic.edu/fm/article/view/2159/1969•  Brown, K. A. (1988). Inventors at Work: Interviews with 16 notable American inventors. Washington: Tempus Books.•  Chandler, D. & Kapelner, A. (2012). Breaking Monotony with Meaning: Motivation in Crowdsourcing Markets. Journal of EconomicBehavior & Organization. Preprint retrieved April 4, 2013, from http://arxiv.org/pdf/1210.0962.pdf•  Collins, L. & Perrakis, Y. (2012). The Venture Crowd. Crowdfunding equity investments into business. Retrieved April 15, 2013,from http://www.nesta.org.uk/library/documents/TheVentureCrowd.pdf•  Harzer, A. (2013). Erfolgsfaktoren im Crowdfunding [Success factors in Crowdfunding]. In Will, A./ Brüntje, D. (Eds.): Menschen –Märkte – Medien – Management: Schriftenreihe; 7. Ilmenau: ilmedia. Also available from http://www.db-thueringen.de/servlets/DocumentServlet?id=20873 [April 16, 2013].•  Helm, M. (2011). Träume finanzieren 2.0: Eine quantitative Befragung zu den Motivationen der finanziellen Projektunterstützungauf deutschsprachigen Crowdfunding-Plattformen [Financing dreams 2.0: A quantitative survey about the motivations of financialproject supporting on German crowdfunding platforms]. Unpublished master thesis (other publication in progress).•  Hofmann, A. (2012): Crowdfunding: Revolution der Startup-Finanzierung? [Crowdfunding: Revolution of start-up financing?].Retrieved April 15, 2013, from http://www.gruenderszene.de/allgemein/crowdfunding-revolution-der-startupfinanzierung•  Kaufmann N., Veit, D. & Schulze, T. (2011). More than fun and money. Worker Motivation in Crowdsourcing – A Study onMechanical Turk. Proceedings of the Seventeenth Americas Conference on Information Systems, August 4th-7th 2011, Detroit.Page 34Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf
  35. 35. References•  Klöhn, L. & Hornuf, L. (2012). Crowdinvesting in Deutschland. Markt, Rechtslage und Regulierungsperspektiven [Equitycrowdfunding in Germany. Market, legal situation, regulation perspectives]. ZBB – Zeitschrift für Bankrecht und Finanzwirtschaft24(4), 237-266.•  Missling, E. (2011). Was motiviert die Crowd [What motivates the crowd?]. Retrieved February 12, 2013, from http://www.crowdsourcingblog.de/blog/2011/07/02/was-motiviert-die-crowd/•  Rogstadius J., Kostakos, V., Kittur, A., Smus, B., Laredo, J. & Vukovic, M. (2011). An Assessment of Intrinsic and ExtrinsicMotivation on Task Performance in Crowdsourcing Markets. Proceedings of ICWSM. 2011, Aug 17-21 2011, Barcelona.•  Solf, A. & Schultheiss, D. (2013): Motivate the Crowd. General Online Research Conference (GOR), March 4-6 2013, Mannheim.•  Stern, B. (2012). Inventors at Work: The Minds and Motivation Behind Modern Invention. New York: Apress.Page 35Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf
  36. 36. Contact InformationDipl.-Medienwiss. Dennis BrüntjeDipl.-Medienwiss. Anja SolfDepartment of Media ManagementInstitute for Media and Communication Science – Ilmenau University of TechnologyErnst-Abbe-Zentrum – Ehrenbergstraße 29 – D-98693 Ilmenau – GermanyT: +49-3677-69-4680 [Brüntje], -4629 [Solf]F: +49-3677-69-4650E: dennis.bruentje@tu-ilmenau.de, anja.solf@tu-ilmenau.dewww.tu-ilmenau.de/mmwww.facebook.com/FG.Medienmanagementwww.twitter.com/fg_mmPage 36Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf

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