crowdfunding and co-creation. what are fruitful interconnections?

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?

Outside-in perspective

Crowdinvesting-Conference | Crowdfunding and Co-Creation | © D. Brüntje, A. Solf

Image: Thinkstock.com

Crowdfunding

Co-Creation

Interconnections


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


Empirical research

Consulting Starters/ start-ups Platforms

Scientific support Platforms

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)


Different actors


Crowdfunding

Platforms

Starters / start-ups

Supporters / investors

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


Harzer (2013)

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


Beck (2012), 48ff.; Alvarez & Barney (2007)

What leads to success in crowdfunding?


It‘s all about communication Image: http://www.qllective.com

Different actors


Crowdfunding

Platforms



What motivates supporters? (n=89)

•  Entertainment •  Curiosity •  Affiliation •  Empathy •  Idealism

•  Less important: Rewards, appreciation and responsibility, feeling of guilt, subjective norm


Helm (2011), 67

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


Beck (2012), 52; Collins & Pierrakis (2012), 3, 25; Klöhn & Hornuf (2012), 239

Different actors


Crowdfunding

Platforms



Role of crowdfunding platforms

•  Take role of an intermediate

•  Enable financing, communication & information

•  Create network effects


e.g. Klöhn & Hornuf (2012)

Challenges in crowdfunding


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

Crowdfunding

Co-Creation

Interconnections


Co-Creation Research


What the Crowd wants …

•  Reward

•  Recognition

•  More knowledge & better skills

•  Interest

•  Fun


e.g. Brabham (2008); Archak (2010); Missling (2011); Blitzer, Schrettl & Schröder (2004)

What the Crowd gets …


“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)

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)


Flow and Sense

Profit vs. Sense and Flow (in Microworking)


(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)

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!


More sense in idea-creation


Market places

•  Problems vs. search fields

•  Rewarded solutions

Harness the crowds creative potential! Grant autonomy, give advise, make innovation radical!

Creative Crowds need Autonomy

”Creativity is asking the question for which there is no

answer. And innovation is answering that question.“


Idea vs. Solution ? !

(Gene Frantz, Texas Instruments, in: Stern 2012)

Creative Crowds need creative settings

•  Expertise

•  Skills

•  Personality

•  Money

•  …


Res

ourc

es

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)


Crowdfunding

Co-Creation

Interconnections


Funding Creative Processes


Creative Process Prototype …

Platforms as innovation drivers


Crowdfunding & Co-Creation

Platforms



Intermediates

Teams & individuals

Financing & human capital

What do you think?


Image: http://www.omnioptics.de

Coming soon?


InnoFund.me

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.


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.


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
