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Crowdfunding Or …. 'Tell Me a Good Story Crowdfunding Platforms as Super-Catalysts in an Entrepreneurial Ecosystem Prof. Dr. Othmar M Lehner [email protected] based on current research by Othmar Lehner and Theresia Harrer 2016-2017 1 Three Recent Inquiries into CF • Crowdfunding Platforms as Super-Catalysts in an Entrepreneurial Ecosystem – Lehner & Harrer (2017), British Academy of Management - forthcoming • Entrepreneurial Implications of Crowdfunding – Lehner, Ennsgraber & Grabman (2015), Venture Capital - Journal of Entrepreneurial Finance • Formation and Interplay of Social Capital in CF – Lehner (2014), Entrepreneurship & Regional Development 2 3 Types and Platforms, Source: Lehner An entrepreneurial ecosystem refers to the social and economic environment affecting the local/regional entrepreneurship. … it can also be a group of companies, including start-ups, and one or more coordination (focal) entities, which share similar goals and decide to form a network or organization in order to explore economies of scale combined with flexibility and entrepreneurial "drive". Pitelis, Christos (2012) "Clusters, entrepreneurial ecosystem co-creation, and appropriability: a conceptual framework." Industrial and Corporate Change: Oxford University Press 4 Research Design: 23 crowdfunding cases which were successfully funded on 11 different platforms with a total funded sum of 77,210,781 USD. The selection being based upon the criteria of being either exemplary as identified in the literature or exceptional (Uy et al., 2009). Inductive coding with inter-coder reliability and theme building (Denzin et al. 2012). • What are the value propositions of CF Platforms? • What is the influence of CF Platforms as focal actors on the whole field from a neo-institutionalist perspective? • What can be derived from the specific context for broader entrepreneurship research on focal actors in ecosystems? Following Cornelissen’s (2017) AMR styles of theorizing, we aim to: “explain the fuzzy nature of many subjects by logically and causally combining different constructs into a coherent and explanatory set of types” 5 Statistics on Platforms, Cases and Documents Platform Main Type of CF Geographic Scope Number Cases/ Cases Total Funding Volumes Documents (USD) 03 Crowdcube Equity, Debt UK, US 3 / 35 2,357,156 01 Kickstarter Reward US, worldwide 6 / 57 52,887,966 02 Indiegogo Reward, Equity, Donation US, worldwide 7 / 63 17,456,597 (12,810,000*) 04 Australian Small Scale Equity, Debt AUS, worldwide 2 / 29 799,156 Offerings Board 05 1000x1000 Reward/Debt AT 2 / 26 2,142,969 06 Symbid Equity US, Europe 1 / 24 1,263,146 07 Kiva Lending US, worldwide 0 / 16 Platform only 08 RocketHub Equity US 0 / 9 Platform only 09 Fundly Donations US, worldwide 1 / 7 3,790 10 GoFundMe Lending, Social/ Personal US 0 / 5 Platform only Fundraising 11 MicroVentures Equity, Venture Capital, US, worldwide 1 / 3 300,000 Business Angels General Documents Non-specific worldwide 34 Aggregated Info Types of Cases: Industry of Cases: Total: Total funds: Reward 9 High Tech 8 11 platforms, 77,210,781 USD Equity 8 Hygiene 1 23 cases and Donation 3 Tourism 3 308 documents * has not been transferred because In-Demand 1 threshold was not reached, not Social 2 included in total Reward / Lending Software 4 2 Consumer 4 Personal 1 6 Roles: Financial Intermediary Accelerator Information Broker Expert Advocator Catalyst 7 Financial The platform acts as an Seen in all cases, Financial intermediary between the building the Intermediation Intermediary ventures and the crowd, foundation of CF (Haas et al., complies and enforces Original Value 2014) compliance with a complex Proposition set of regulations. It offers various types of capital and uses some form of commission as a revenue stream. 8 Financial Intermediary Role 9 Accelerator The platform actively Indiegogo Signalling and acknowledges and supports InDemand, Legitimacy growth and scaling strategies Microventures, (Ryu and Kim, 2016; through active promotion and ASSOB Kromidha and collaboration with other Robson, 2016; providers. Ahlers et al., 2015), Often several stages of CF with different types of capital in Social Capital, combination with traditional Networking Theory forms and market-channels (Skirnevskiy et al., are targeted. 2017; Colombo et Signals are actively created to al., 2015) attract economic capital. 10 Accelerator Role Cultural Capital Symbolic Capital engage Economic Social Capital Entrepreneur(s) Capital Opportunity enables exploitation Bourdieu’s Social Capital in Crowdfunding, Source: Lehner 2014 11 Information The platform provides Crowdcube, Information investor-relations relevant ASSOB, Symbid, Economics Broker tools, checklists and RocketHub, (Belleflamme et al., communication channels GoFundMe 2015), in a standardized way. Transaction Cost Through this the Theory (Scholes et transaction costs are al., 1976), reduced and a functioning market is enabled. Human Computer Interaction (Prpic and Shukla, 2016) 12 Information Broker Role 13 Expert The platform offers value Kickstarter, Configuration through its expert role, for 1000x1000, Theory example through consulting Kiva (Miller, 1986), services and expert rounds. Symbid Neo- Often specifically tailored to Institutionalism, niche positions. From a (Chaney et al., critical perspective, 2016), platforms can limit and lead to uniform configurations Power and through a restrictive and in- Discourse transparent selection (Beaulieu et al., process. 2015) 14 Expert Role 15 Expert Role – (Reflexive) Isomorphism 16 Advocator The platform acts as powerful ECN, Power and contributor to the CF Symbid, Discourse, discourse, for example by Indiegogo, Legislation (Coke, influencing policy makers and 1000x1000, 2017), legislation. RocketHub National CF Advocacy, Social Besides the common ground Association of Movement with the ventures there is also Canada (NCFA) (Steinberg, 2017) a considerable power-play involved. 17 Advocator/ Lobbyist Role 18 Catalyst The platform uses its public Microventures, Innovation (Lehner outreach to target new Kiva, et al., 2015; markets and introduce new Fundly, Partanen et al., and innovative services and GoFundMe, 2014), products. Generosity Indiegogo, Social Through this, ventures which Entrepreneurship, are seen as relevant from a Impact Investing societal perspective but are (Lehner, 2013), underfunded by traditional sources gain traction and can Legitimacy (Fisher exploit their opportunities. et al., 2017; Frydrych et al., 2014) 19 Catalyst Role 20 Catalyst Role Most Frequent Themes Most Frequent Tropes Empowerment (15) Community (11) Self Determination (9) Entrepreneurship (11) Health (6) Strong Woman (9) Body Image (6) Natural Woman (8) Sharing Economy (5) Sexuality (7) Ongoing Research on 42 CF cases: Feminist Perspectives in CF: A Discourse Analysis – Harrer/Lehner Forthcoming in 2017 21 Roles: Financial Intermediary Accelerator Information Broker Expert Advocator Catalyst 22 Concluding • Crowdfunding can indeed be understood as an ecosystem with actors, links and positions, and with CF Platforms as focal, coordinating actors. • CF Platforms claim several value propositions through their roles, from intermediaries to advocators, accelerators, information brokers, catalysts and experts. • From a neo-institutionalist perspective, this brings with the danger of a reflexive isomorphism and an unnatural narrowing of the field. • For entrepreneurship research in general, CF displays the necessity for interdisciplinary approaches, and the potential need for a revised epistemology, as we need to cater for both, a socially constructed nature (see e.g. feminist themes) as well as a pragmatic view on contextualized generalizations. 23 July 2016: 780pp, 95 illustrations Hb: 978-1-138-77754-5 | £125.00 eBook: 978-1-315-77257-8 Ongoing Research Future Perspectives & Outlook Invitation to Collaborate! 25 Current Research: C-FIT • Feminist Perspectives in CF • The Role of Platforms as Intermediaries • Signaling and Trust in CF • Rules & Regulations: International Comparison • Behavioural Finance and CF • Matchmaking: Textual and Visual (Re)Presentation • The building of Legitimacy: Ventures and CF • Transaction Cost Theory to explain CF 26 Crowdfunding Platforms as Super-Catalysts in an Entrepreneurial Ecosystem Prof. Dr. Othmar M Lehner [email protected] based on current research by Othmar Lehner and Theresia Harrer 2016-2017 27 28.
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