Crowdfunding is gaining popularity as a viable means to raise financial capital for good causes, cultural goods, new products, and ventures. Little empirical research has been done to understand crowdfunding and basic academic knowledge of its dynamics is still lacking. By data mining the crowdfunding platform Kickstarter.com and Facebook we collected a large dataset of crowdfunding projects and the ego networks of the entrepreneurs. We study the relation of the success of the Kickstarter project to his social network and to media activities and find a scaling law that predicts the number of clicks on the project website required for a successful project. Examining the results of the social network analysis we concluded that successful initiators on Kickstarter have more friends but a sparser network. Unsuccessful entrepreneurs on the other hand have a higher average degree suggesting a denser network. Our analyses suggest that sparse, and thus diverse networks are beneficial for the success of a project.

1. CROWDFUNDING & ONLINE SOCIAL NETWORKS
Erik Hekman & Rogier Brussee @ CARPE 2013

2. AGEND
A
THIS IS WHAT WE WILL
COVER
SHORT INTRODUCTION
CROWDFUNDING & RELATED WORK
PROBLEM DEFINITION
METHODOLOGY
DATA COLLECTION & ANALYSIS
RESULTS
CONCLUSION
ERIK HEKMAN & ROGIER BRUSSEE
Faculty of Communication and Journalism, University of Applied Sciences Utrecht, The Netherlands

3. •
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
CROWDFUNDING
Money makes the world go round
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

4. 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.
CROWDFUNDING
Successful crowdfunded projects such as OUYA
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

5. “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)
CROWDFUNDING
Defining Crowdfunding
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

6. 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
RELATED WORK
Many anecdotal success stories can be found
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

7. •
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?
PROBLEM DEFINITION
The influence of the entrepreneurs social network
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

8. •
•
For each project we retrieved
• Detailed information from Kickstarter.com
• Detailed information of the Bitly link statistics
•
DATA COLLECTION
We retrieved all 8,234 Kickstarter projects started
between 01-01-2013 and ended before 01-06-2013
We retrieved the ego network on Facebook of 200
project initiators
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

9. •
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
DATA ANALYSIS
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

10. NUMBER OF PROJECTS PER CATEGORY
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

11. DISTRIBUTION OF GOAL AND PLEDGED
AMOUNT
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

12. DISTRIBUTION OF PERCENTAGE OF GOAL
PLEDGED AND PLEDGED PER BACKER
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

13. PLEDGES PER BACKER VS GOAL, PLEDGES
PER BACKER VS CLICKS, BACKERS VS
CLICKS
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

14. SOCIAL NETWORK ANALYSIS
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

15. We calculated:
•Average degree
•Diameter
•Average path length
•Graph density
•Modularity
•Number of communities
•Number of weakly connected components
SOCIAL NETWORK ANALYSIS
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER

16. •
•
•
•
•
•
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
CONCLUSIONS
CROWDFUNDING &
ONLINE SOCIAL NETWORKS
CARPE 2013 MANCHESTER