Crowdfunding and online social networks
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CROWDFUNDING & ONLINE SOCIAL NETWORKSErik Hekman & Rogier Brussee @ CARPE 2013
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AGENDATHIS IS WHAT WE WILL COVER
ERIK HEKMAN & ROGIER BRUSSEEFaculty of Communication and Journalism, University of Applied Sciences Utrecht, The Netherlands
SHORT INTRODUCTION
CROWDFUNDING & RELATED WORK
PROBLEM DEFINITION
METHODOLOGYDATA COLLECTION & ANALYSIS
RESULTS
CONCLUSION
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CROWDFUNDINGMoney makes the world go round
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
• 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
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CROWDFUNDINGSuccessful crowdfunded projects such as OUYA
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
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.
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CROWDFUNDINGDefining Crowdfunding
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
“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)
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RELATED WORKMany anecdotal success stories can be found
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
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
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PROBLEM DEFINITIONThe influence of the entrepreneurs social network
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
• 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?
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DATA COLLECTIONCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
• We retrieved all 8,234 Kickstarter projects started
between 01-01-2013 and ended before 01-06-2013
• For each project we retrieved
• Detailed information from Kickstarter.com
• Detailed information of the Bitly link statistics
• We retrieved the ego network on Facebook of 200
project initiators
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DATA ANALYSISCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
• 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
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NUMBER OF PROJECTS PER CATEGORYCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
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DISTRIBUTION OF GOAL AND PLEDGED AMOUNTCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
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DISTRIBUTION OF PERCENTAGE OF GOAL PLEDGED AND PLEDGED PER BACKER
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
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PLEDGES PER BACKER VS GOAL, PLEDGES PER BACKER VS CLICKS, BACKERS VS CLICKS
CROWDFUNDING &ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER
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SOCIAL NETWORK ANALYSISCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
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SOCIAL NETWORK ANALYSISCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
We calculated:
•Average degree
•Diameter
•Average path length
•Graph density
•Modularity
•Number of communities
•Number of weakly connected components
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CONCLUSIONSCROWDFUNDING &
ONLINE SOCIAL NETWORKSCARPE 2013 MANCHESTER
• 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