While considering motivations of crowdfunding projects’ supporters there are many thoughts and ideas of how to predict the future popularity of a project among the crowd. However, there is little academical proof in that area, there are some concepts worth penetrating.
Lessons from Ethan Mollick’s “The Dynamics of Crowdfunding: Determinants of Success and Failure” give a significant insights on some key factors to crowdfunding success. There is a but – it’s more the project initiator perspective, than the supporter’s.
The important thing is, that professor Mollic take into consideration donation-based projects only, and all of them were available on kickstarter.com. There are some insights of how to plan and formulate the project to increase the probability of success, but one thing is to assume why people support projects, the other one is trying to measure it up.
While discussing this topic, I’m often reffering to emotional rate of return.
r(V)=P(e) + EV
r – emotional rate of return
V – investment asset
P(e) – probability of realising expected rate of return
EV – emotional value of investment taken
The question is, how tomeasure or at least estimate the EV. Big achievements made in behavioral finance didn’t give me the answer yet. While preparing to my bachelor thesis on equity crowdfunding and writing my crowdfunded book on… crowdfunding, I kindly ask for comments, opinions, counterarguments and please feel invited to a discussion.
How would you measure the emotional factor of expected results of equity crowdfunding investment?
Do you consider it possible?
What are your thoughts on that topic?
Author: Karol Król is a chief editor on crowdfunding.pl – polish informational platform on crowdfunding, Baltics Regions Ambassadeur of European Crowdfunding Network, Co-founder and vicepresident of Polish Crowdfunding Society, and crowdfunding researcher at the Poznan University of Economics. Follow: @crowdfunding_pl.