In crowdfunded markets, anyone can propose an idea and bring it to life by harnessing funding and wisdom from a community of backers. Breakaway successes on platforms such as Kickstarter and Indiegogo have demonstrated how powerful crowdfunding can be, and the scale of impact it can have on traditional media. Anindya Ghose, NYU professor and Director of the NYU Center for Business Analytics, shared his insights from his analysis of a massive dataset of more than 1 trillion observations that map both investor and entrepreneur behavior during NYC Media Lab's Research Summit 2013. This presentation was made at NYC Media Lab's Research Summit 2013 on September 19, 2013 at the Joseph Urban Theater at Hearst Tower. The Summit was a half-day deep dive into the Lab, featuring presentations and discussion on technologies and trends that are changing the industry. Corporate members also unveiled the results of NYC Media Lab's first round of seed research projects. Learn more about NYC Media Lab: www.nycmedialab.org Follow us on Twitter: @nycmedialab

1. Professor, NYU Stern
ANINDYA GHOSE

2. TAPPING INTO THE CROWDVIA
CROWDFUNDING
Anindya Ghose
Professor of IOMS and Professor of Marketing
Co-Director, NYU Stern Center for Business Analytics
Twitter @ aghose

3. A CROWDFUNDING
EXAMPLE:
REVOLIGHTS
Kent & Adam Supported by 1,442 People
Raised: $215,621Required Budget: $43,500
1
2
3

4. BACKGROUND: Why Do Individuals Offer Funds?
Rewards
(e.g., Early Game Release, Interest on Loan, Discount)
Social Identity and Image
(Associating Oneself With the Project)
Altruism Equity (Coming Soon)

5. PROS & CONS
Gauge Market Interest Early
Refine Ideas /w Customer Input
Build Word-of-Mouth
Can Retain Ownership
Pros.
COMPARED TOVC FINANCING
Reveal Idea Early
Crowd May be Fickle
Crowd May Lack Expertise
Cons.
Managing Diverse Expectations
CONCEPTUALIZATION
PLANNING
PROTOTYPING
REFINING
MANUFACTURING
SHIPPING
THE CROWD FUNDS
AN IDEA
CUSTOMERS/VCs
SUPPORT/PURCHASE A PRODUCT
A Comparison.
No Guidance/Mentoring
+
+
%

6. OPPORTUNITIES
SCANNING
• GET NEW IDEAS
• STAY ABREAST OF COMPETITION
• MANY NICHE PLATFORMS…
SOLAR POWER, MUSIC, MEDICAL DEVICES
MONETIZE
CROWDSOURCING
• OPEN INNOVATION (CUSTOMER IDEATION)
• INTERNAL INNOVATION (EMPLOYEE IDEATION)
• REVENUE SHARING /w CUSTOMERS

7. GROWING INDUSTRY:
$2.7B, NEARLY 600 PLATFORMS (+81% YoY)
4 TYPES: DONATION, REWARD, LENDING, EQUITY

8. SOME OF OUR RESEARCH (with Gordon
Burtch and SunilWattal)
How later contributors react
to prior others’ contributions.
Preference for campaigns by
similar, local others.
When, why contributors
conceal information and
impact on other contributors.
Impact of crowdfunded
medical expenses on
bankruptcy rates (social
impact)
PEER INFLUENCE
GEOGRAPHY &
CULTURE
PRIVACY &
INFORMATION HIDING
SOCIAL IMPACTS

9. Summary of Results (Forbes and WSJ Interview)
• Individuals are chiefly motivated by altruism and contributions are subject
to crowding out.
• Partial crowding out (rather than complete), and thus impure altruism
(warm glow)
• Longer funding durations lead to greater levels of pre-publication
exposure and market awareness, which in turn leads to greater future
demand.
• Projects that take twice as long to meet their fundraising target
experience, on average, a 22% increase in demand after the project
is completed

10. CONTACT
Anindya
Ghose
Professor
of
IOMS
and
Professor
of
Marke5ng
Co-­‐Director,
NYU
Stern
Center
for
Business
Analy5cs
TwiEer
@
aghose

11. LEARN MORE ABOUT
NYC MEDIA LAB:
www.nycmedialab.org
@nycmedialab