Crowdfunding : material incentives and performance

• Author(s): Matos, Henrique Nuno Ferreira da Cruz
• Date: 2012
• Persistent ID: http://hdl.handle.net/10400.14/10202
• Origin: Veritati - Repositório Institucional da Universidade Católica Portuguesa
• Subject(s): Crowdfunding; Incentives; Web 2.0; Bootstrap Finance
• Document Type: Master Thesis
• Language: English
• Advisor(s): Villarroel Fernández, Juan Andrei

Description

This study addresses a new way to pool financial resources through an open call on the internet – crowdfunding. As this new industry continues to grow and develop, it is important to evaluate its current status and recent developments to try to find clues about the future. The analysis conducted focused on the types of material incentives that crowdfunding platforms use to entice their users to invest and, more specifically, on the relationship between the types of incentives (equity, revenue shares, prizes, interests and donations - no incentives) and the total money raised by the platforms. Findings indicate that the type of incentive used by a crowdfunding platform has a significant impact on the amount of money it raises. Additionally, the most used type of incentive, prizes, is outperformed by other types of incentive in terms of total money raised. Consequently, and also considering recent developments such as the passing of legislation in the United States regarding crowdfunding, evidence suggests that crowdfunding could become an important alternative source of financing for startups and small companies. It is important for both investors and capital seekers to learn about the viability of crowdfunding as an alternative that allows both parts to generate significant income – or “for-profit crowdfunding”.