CrowdfundingSmall Business

Predicting success of small business crowdfunding campaigns

The ability to forecast success of a proposed crowdfunding campaign is becoming more important in the practice of advising small businesses today in both the for-profit and nonprofit sectors. I spend an increasing portion of my available reading time on this topic, including a book on my iPad right now “Social Startup Success” by Kathleen Kelly Janus. A growing number of blog posts here on this web site and my other outside article contributions are devoted to the topic.

This well documented study of 1370 companies in UK from 2012 to 2017 confirms many popularly held beliefs about crowdfunding success. The common factors: previous financing, peers, legal protections, etc. are discussed. The authors suggest that it offers additional new insights but I suppose that depends on whether you accept the premise that past results are predictive of future performance. That’s a big ‘if’ in the rapidly evolving field of crowdfunding.

It makes sense, IMO, to use this report in conjunction with other available data when advising a small business on proposed crowd-sourced financing. Particularly notable in my current real estate based project in conjunction with Baysave: “the amount of equity offered by the entrepreneurs is negatively associated with equity crowdfunding success”. When combining for-profit with nonprofit stakeholder projects like ours, this seems like a valuable bit of information to convey to investors.

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