This document summarizes research being conducted on crowdfunding in Sweden. The researchers are investigating why crowdfunding has not taken off in Sweden despite its success in other parts of the world. They interviewed entrepreneurs and institutional actors in Sweden who expressed that traditional sources of funding like venture capital are seen as more legitimate than crowdfunding. The researchers analyzed how crowdfunding platforms in Sweden attempted to position crowdfunding as either a substitute or complement to traditional funding to make it a more viable option, but that the institutional logics of actors in Sweden were slow to change. The researchers are continuing to study how crowdfunding platforms can better address and change prevailing institutional logics in Sweden.

1. Is Crowdfunding
doomed in Sweden?
When institutional logics and
affordances collide, (re-)design
matters
RESEARCH-IN-PROGRESS PAPER
ICIS, MILAN 2013

2. Project Researchers
Claire Ingram
◦ Research Assistant /PhD Student
◦ Stockholm School of Economics, Sweden
Robin Teigland
◦ Associate Professor
◦ Stockholm School of Economics, Sweden
Emmanuelle Vaast
◦ Associate Professor
◦ McGill University, Canada

3. Worldwide:
800+ platforms,
Approx $2.6bn
raised
(Massolution, 2012)
Europe:
Approx $945m
raised
(Massolution, 2012
)
Sweden:
Approx $1m
raised
Image: Adapted from growvc.com, numbers in May 2013

4. The Puzzle
“We haven’t had that many
projects, and the projects
we’ve had haven’t really
held the kind of quality that
we had hoped for... And we
don’t know why.”
- Institutional
Actor, Stockholm
“I don’t get the feeling that
crowdfunding is the new
thing and we can forget
everything else. That’s not
the feeling I have and that’s
not the talk I hear.”
- IT entrepreneur, Stockholm

5. Literature : Technology Affordances
Affordances Institutional Logics
Material Social
Features
created
by
designers

6. Literature: Institutional Theory
Actors embedded in environment
defined by cognitive, normative and
structural considerations
Pressure towards stasis
Limited human agency
(Battilana et al. 2009)
Focus here specifically on Institutional
logics, which are part of a
broader, accepted belief system about
what constitute legitimate
expectations and goals within a shared
field.
(Thornton, 2002)

7. Role of Institutional Entrepreneur
“Social contexts present entrepreneurs with many constraints, yet they also
set the conditions that create windows of opportunity.”
(Aldrich and Fiol, 1994: 649)
Change agent/
Institutional
Entrepreneur
Actors in
institutional
field being
changed
Actor must fulfill two conditions: 1) initiate divergent changes and 2) actively
participate in the implementation of these changes. (Battilana et al., 2009)

8. Theoretical Integration
Actors [Crowdfunding platforms] behave not only as the designers of the
technological system that promote technical features, but also as institutional
entrepreneurs who actively try to affect institutional logics to encourage the
emergence of new affordances of a system.
Integration of technology affordance with institutional entrepreneurship as a
promising angle to develop a more fine-grained understanding of an
institutional change process, and in particular account for both agency and
institutional embeddedness in assessing what is required for crowdfunding to
become perceived as a viable funding model.

9. Methodology
• Chose 10 initial entrepreneurs from
database from Internetdagarna based on:
• Number of FB friends
• Size of LinkedIn network
• 80% response rate
• Asked them to refer us to others – mostly
other entrepreneurs
• Also looked up 2 repeat funders based on
public data on FundedByMe
• Also interviewed two crowdfunding platform
creators
Investigating not just the entrepreneur
but also the geographic communities
and organizational fields within which
the entrepreneur is embedded
(Marquis and Battilana, 2007).
This will enable us to analyze the
interplay between the existing
institutional logic and the
nascent, developing institutional logic
(DiMaggio, 1988; Garud, Hardy, and
Maguire, 2007; Maguire, Hardy, and
Lawrence, 2004).

10. First round of Interviews
(January 2013)
1. Entrepreneur Mobile questionnaire
2. Entrepreneur Co-working space
3. Entrepreneur Crowdsourced food data
4. Entrepreneur Online education
5. Entrepreneur Digital design agency
6. Entrepreneur Online storyboard
7. Entrepreneur Co-working space
8. Entrepreneur Digital storytelling
Second round of Interviews
(April-May 2013)
9. Entrepreneur Blog aggregation tool
10. Repeat funder
11. Institutional Actor Business coach
12. Repeat funder
13. Institutional Actor Not-for-profit agency
14. Entrepreneur Travel experience app
15. Entrepreneur Clothing size simulator
16. Entrepreneur Wifi-sharing app
17. Entrepreneur Student competition site
18. Entrepreneur Crowdfunded advertising
19. Institutional Entrepreneur? Equity crowdfunding site
20. Institutional Entrepreneur? Mixed crowdfunding site

11. Initial findings
Prevalent institutional logic:
“We were kind of in the mindset of getting like a good investor in;
someone who could add something. And that’s still our perspective.
The kind of guys who invested in us are really good
investors, impressive investors and they add a lot to the company
other than money. I wouldn’t say it was easy to raise money, but we
had a really good case.” - Entrepreneur

12. First attempt at Institutional
Entrepreneurship
Focus on crowdfunding as disruptive in funding – as a substitute for existing
sources of funding.
Physical design of site emphasises this narrative – money raised in large
font, emphasis on giving money and tracking how much has already been
received.
The prominence with which both the amount of money raised and the progress
bar were displayed would indicate that the primary feature of the platform is on
funding the project above all else.

13. Features and Logics collide
Interviewees mentioned venture capital, angel investment, state grants and so-
called “soft loans” provided by state institutions as the primary sources of start-
up funding. Although two entrepreneurs had actually tried crowdfunding, few
volunteered it as a viable source of funding and when pressed expressed
hesitancy to use the platforms.
One entrepreneur explained his reluctance to go for crowdfunding as he viewed
the funding options as a kind of hierarchy, with VC investment as the “cream of
the crop” investment and crowdfunding at the bottom.
Similarly, another entrepreneur noted that taking grants and soft loans did not
give a business as much credibility as obtaining equity funding although she was
not sure where crowdfunding fit into that assessment.

14. Second attempt at Institutional
Entrepreneurship
Little change in the physical appearance of the sites
Narrative around crowdfunding as complementary to other forms of financing introduced. One
platform argued that crowdfunding, rather than being a funding tool, could be used for publicity
as well as to test the market: “…so it’s not always about the money, but I think for certain your
money is a positive side effect, but there are certain other things that crowdfunding brings to the
table, it could be crowdsourcing, it could be connecting with other people, it could be simple
information – it’s basically feedback at an early stage that could make or break your idea.”
Other platform outlined that their strategy as a crowdfunding platform was to involve large
investors in crowdfunding, not just “ordinary people”: [So you are seeing business angels with
large amounts coming in and investing through crowdfunding platforms?] “Yes, you have
innovative and early stage Business Angels who … want to invest 1 million in an early stage of
this company, but [say] ‘if I do this, I want also to have a position at the table’, to have influence
in the company.”

15. Ongoing research – comments
welcome!
Theoretical integration?
Holes in logic?
Anything else?

16. Thank you!
Image via NewYorker.com