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Crowdfunding Week 4, Fraud and Failure: Why the Crowd can be smart, Who…
Crowdfunding Week 4
Fraud and Failure: Why the Crowd can be smart
Failure is low
The failure rates
(7 - 13%)
Small project: little activity or not systematic
Big project: more complicated | more subjects
The Wisdom of Crowd
James Surowiecki (2004)
Why the Many Are Smarter Than the Few
Extraordinary Popular Delusions
and the Madness of Crowds
Charles Mackay (1841)
The psychology of crowds, mass mania,
and the Ponzi scheme
How do crowds do
in filling the job of experts
(120 projects - 4 groups)
30 experienced experts
vs.
Kickstarter Backers
Agreement ~ 60%
More successful, more agreement
75% in cases of disagreement
The crowd is willing to fund projects the experts are not
All of projects - both experts & crowd agreed were successful
experts are good at minimizing risk
crowd is good at picking high success projects
A few of projects - crowd liked
were not successful,
but more hits
Fraud rates are also low
Linus's Law
with enough eyes, all bugs are shallow
crowd can easily spot potential frauds
Problems
Enough eyeballs?
small equity crowdfunding platforms
Crowdfunding platforms
willing to shut down fraudulent projects?
Enough diversity?
Backer have enough time to evaluate a project before the creator get the money
Who succeeds at Crowdfunding
Who you are
is less important in Crowdfunding than
what your ideas/values are
Statistical Results
Kickstarter Funders
Age-39 | Married-50% | Minority-17%
Kickstarter Creators
Unemployed-4%
Fulltime-39% | Freelance-19% | Entrepreneur-12%
Self-employed-14% | Student 10%
Overall
Women more likely to create online crowfunding projects than man
Other researches
Women tend to do much worse
in raising funds than men
For Creators
Success or failure
does not depend on
demographics
About getting funding
2-6% of 35% women business invest
in venture projects
Same project - a women is 13% more likely to be funded than men.
Women are doing better in the categories where there are fewest women backing them
When activism works
The MaKey MaKey experiment
The creator is man
supported by non-activist groups
The creator is women
supported by activist groups
reaching groups with similar backgrounds
can be an important factor
