Crowdfunding and Co-Creation. What are fruitful interconnections?
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Dennis Brüntje, Anja Solf Institute of Media and Communication Science,
Department of Media Management
Crowdinvesting-Conference – April 17, 2013 – Berlin
Crowdfunding and Co-Creation
What are fruitful interconnections?
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Outside-in perspective
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Image: Thinkstock.com
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Crowdfunding
Co-Creation
Interconnections
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Crowdfunding
Co-Creation
Interconnections
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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 science
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Empirical research
Consulting Starters/ start-ups Platforms
Scientific support Platforms
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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)
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Different actors
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Crowdfunding
Platforms
Starters / start-ups
Supporters / investors
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Different actors
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Crowdfunding
Platforms
Starters / start-ups
Supporters / investors
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What leads to success in reward-based crowdfunding? (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 budget
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Harzer (2013)
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What leads to success in equity-based crowdfunding?
• 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 project
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Beck (2012), 48ff.; Alvarez & Barney (2007)
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What leads to success in crowdfunding?
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It‘s all about communication Image: http://www.qllective.com
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Different actors
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Crowdfunding
Platforms
Starters / start-ups
Supporters / investors
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What motivates supporters? (n=89)
• Entertainment • Curiosity • Affiliation • Empathy • Idealism
• Less important: Rewards, appreciation and responsibility, feeling of guilt, subjective norm
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Helm (2011), 67
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What motivates investors?
Financial factors Non-financial factors Social factors • High ROI
assumption • Minimal
administration effort
• Information & controlling rights
• Voting rights
• Direct investments in start-ups
• Aspiration supporting local start-ups
• Being involved with exciting start-up technology
• Supporting self-expression
• Prestige of investing in young businesses
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Beck (2012), 52; Collins & Pierrakis (2012), 3, 25; Klöhn & Hornuf (2012), 239
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Different actors
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Crowdfunding
Platforms
Starters / start-ups
Supporters / investors
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Role of crowdfunding platforms
• Take role of an intermediate
• Enable financing, communication & information
• Create network effects
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e.g. Klöhn & Hornuf (2012)
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Challenges in crowdfunding
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e.g. Beck (2012); Collins & Perrakis (2012); Hofmann (2012); Klöhn & Hornuf (2012)
communication Regulation
information asymmetries
fraud detection fraud protection follow-on financing
ROI risk reduction
transparency crowd vetting
post-investment support
due diligence
business valuation Co-Creation
Consulting
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Crowdfunding
Co-Creation
Interconnections
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Co-Creation Research
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What the Crowd wants …
• Reward
• Recognition
• More knowledge & better skills
• Interest
• Fun
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e.g. Brabham (2008); Archak (2010); Missling (2011); Blitzer, Schrettl & Schröder (2004)
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What the Crowd gets …
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“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 and
be really motivated money is not
sufficient. What you need is recognition.“ Solf & Schultheiss (2013)
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What creative crowds really need …
”iStockers find creating content fun and enjoyable, and
it gives them the chance to do the jobs they feel they
do best.“ (Brabham 2008)
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Flow and Sense
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Profit vs. Sense and Flow (in Microworking)
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(Image: www.mturk.com)
• Challenge meets skills
• Task autonomy enhances creativity
• Profit competes against non-profit
• Meaningfulness increases participation Kaufmann, Veit & Schulze (2011); Rogstadius et al. (2011); Chandler & Kapelner (2012)
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More fun in idea-creation
Gamification by competition
• Tools: ratings, rankings, awards
• Collaboration vs. competition
• Contest causes pressure Foster the flow!
Support skills, increase interest, inspire!
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More sense in idea-creation
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Market places
• Problems vs. search fields
• Rewarded solutions
Harness the crowds creative potential! Grant autonomy, give advise, make innovation radical!
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Creative Crowds need Autonomy
”Creativity is asking the question for which there is no
answer. And innovation is answering that question.“
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Idea vs. Solution ? !
(Gene Frantz, Texas Instruments, in: Stern 2012)
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Creative Crowds need creative settings
• Expertise
• Skills
• Personality
• Money
• …
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Res
ourc
es
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Support means more than money …
“I told them, ‘No, I‘m not going to start Apple because I
just want to design neat computers. I don‘t want to run a
company because that‘s not my thing in life‘.“ (Steve Wozniak, in: Brown 1988)
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Crowdfunding
Co-Creation
Interconnections
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Funding Creative Processes
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Creative Process Prototype …
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Platforms as innovation drivers
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Crowdfunding & Co-Creation
Platforms
Starters / start-ups
Supporters / investors
Intermediates
Teams & individuals
Financing & human capital
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What do you think?
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Image: http://www.omnioptics.de
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Coming soon?
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InnoFund.me
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References • Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: Alternative theories of entrepreneurial action. Organizações em
context, 3(6), 123-152. • Archak, N. (2010). Money, Glory and Cheap Talk: Analyzing Strategic Behavior of Contestants in Simultaneous Crowdsourcing
Contests 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 of
Business & 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 a crowdsourcing 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 Economic
Behavior & 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 Projektunterstützung auf deutschsprachigen Crowdfunding-Plattformen [Financing dreams 2.0: A quantitative survey about the motivations of financial project 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 on Mechanical Turk. Proceedings of the Seventeenth Americas Conference on Information Systems, August 4th-7th 2011, Detroit.
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References • Klöhn, L. & Hornuf, L. (2012). Crowdinvesting in Deutschland. Markt, Rechtslage und Regulierungsperspektiven [Equity
crowdfunding in Germany. Market, legal situation, regulation perspectives]. ZBB – Zeitschrift für Bankrecht und Finanzwirtschaft 24(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 Extrinsic Motivation 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.
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Contact Information Dipl.-Medienwiss. Dennis Brüntje Dipl.-Medienwiss. Anja Solf Department of Media Management Institute for Media and Communication Science – Ilmenau University of Technology Ernst-Abbe-Zentrum – Ehrenbergstraße 29 – D-98693 Ilmenau – Germany T: +49-3677-69-4680 [Brüntje], -4629 [Solf] F: +49-3677-69-4650 E: [email protected], [email protected] www.tu-ilmenau.de/mm www.facebook.com/FG.Medienmanagement www.twitter.com/fg_mm
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