| Nowadays, China’s economy has stepped into the new normal state. In this period of strategic importance, some policies are released to encourage people to start their own business and make innovations. On the one hand this is a good news for entrepreneurs, and we see that many people get the access to start their own business. On the other hand problems subsequently arise for small and medium-sized enterprise finding it difficult and costly in funding. With the rapid development of Internet finance, network financing has become a new financing channels for small and medium-sized enterprise when they financing for the innovation project. Under such circumstance, crowdfunding, as an internet funding mode, emerges and develops rapidly.To be specific, the crowdfunding mode could be divided into four forms, which are donate-based crowdfunding, lending-based crowdfunding, reward-based crowdfunding and equity-based crowdfunding. For small and medium-sized enterprises, the most common ways are reward-based crowdfunding and equity-based crowdfunding. Therefore in this study, we discuss the mechanism that determines a small or medium-sized enterprise’s choice of the above two crowdfunding forms. Besides, based on the Game Theory, we propose the pricing mechanism for specific crowdfunding form respectively and analyze the equilibrium, which offers insight into what makes a crowdfunding project succeed and how to raise the success rate.In this paper, we first discuss the mechanism that determines a small or medium-sized enterprise’s choice between the reward-based crowdfunding and equity-based crowdfunding. Based on the Coleman’s Rational Choice Theory, we model the expected returns on the part of financing enterprise and investors under these two crowdfunding forms. As a result, we find that the project success rate is directly associated with the orientation of financing enterprise and investors for crowdfunding modes. Hence, in order to raise the success rate of crowdfunding, we suggest that financing enterprises should capture the characteristics of the crowdfunding projects and estimate the success rate first, and then choose the proper crowdfunding mode.Later, we analyzed the pricing mechanism of reward-based crowdfunding and equity-based crowdfunding. For reward-based crowdfunding, we consider three kinds of pricing modes and discuss the optimal pricing strategy respectively. For equity-based crowdfunding, we consider the most common one that is "lead-investor & co-investor" mode and analyzes the corresponding optimal equity construct. The key findings are as follows.1. As to the reward-based crowdfunding where the products are diverse and quality-differentiated, we propose that there are four kinds of product portfolio strategy, which are the good quality & high price product for both investors in the crowdfunding market and consumers in the product market, the poor quality & low price product for both, the good quality & high price product for investors while the poor quality & low price product for consumers, and the poor quality & low price product for investors while the good quality & high price product for consumers. A model is set up for analyzing the equilibrium of the price to the investors, sales price and the total benefits of enterprise under different product strategies, in turn discussing the optimal product strategy based on the numerical simulation method. The findings suggest that financing enterprise has its own optimal pricing solution in terms of each product portfolio strategy. Besides, the orientation of financing enterprise for product strategy is closely related to the differences in product quality. If the products are quite similar in terms of quality, the optimal strategy is to provide the premium product for both investors and consumers. Otherwise, the beneficial one is the strategy of poor quality & low price product for investors and premium product for consumers. According to the extent of product quality differences, the later circumstance we discussed above also has two aspects. If there are huge quality differences among the products, the optimal solution is premium product for investors and poor quality & low price product for consumers. Otherwise, the optimal one is poor quality & low price product for investors and premium product for consumers.2. As to the reward-based crowdfunding where the products are of same quality and enjoy the quantity discount, we propose that the quantity discount ratio reflects the price-set of financing enterprise. In addition, we consider the characteristics of information flows as an important factor. Therefore, a model is set up for analyzing the equilibrium under the different circumstance, that is, the traditional circumstance, the circumstance of asymmetric information and the one of complete information, in turn getting the optimal quantity discount when we maximum the profits of investors and financing enterprises. The findings suggest that although investors could take advantage of joint purchase under the complete information, the benefits for both in such way are still possible to fail the optimum.3. As to the reward-based crowdfunding of two-stage pricing, we propose that there are four pricing strategy in this funding period, which are the high pricing strategy, skimming pricing strategy, penetration pricing strategy and low pricing strategy. In such situation, the pricing strategy of financing enterprise is associated with the perceived value construct of investors. Based on the different investor perceived value construct, we model the optimal pricing strategy and find that the perceived value construct of investors could influence the optimal pricing strategy directly. In other words, if the perceived value construct only includes the functional value and experience value, there is no pricing strategy that is particularly inferior or superior to the other and to some extent optimal expected return could be achieved via any of the four pricing strategies. Otherwise, if the perceived value construct includes the functional value, experience value and the sentimental value, the optimal pricing strategy for financing enterprise could be the penetration pricing, that is, lower price at the beginning and higher price later.4. As to the equity-based crowdfunding where the pricing mode is "Mead-investor & co-investor", we propose that the pricing is equal to the settled equity construct of financing enterprise, lead-investor and co-investor. Under such circumstance, there are four kinds of strategic portfolio between the financing enterprise and lead-investor. The first one is that financing enterprise transfers the enterprise’s value and lead-investor supervises such process. The second is that financing enterprise transfers the enterprise’s value and lead-investor does not supervise such process. The third is that financing enterprise does not transfer the enterprise’s value and lead-investor supervises such process. The last is that financing enterprise does not transfer the enterprise’s value and lead-investor does not supervise such process. Based on the above four portfolio, a model is set up for analyzing the optimal equity construct for each portfolio. As a result, we find that the optimum could be reached except the last portfolio. The findings suggest that the financing enterprises have the tendency of abusing the control rights to seek its maximum gains, which acquires the lead-investor’s supervision. Only in such portfolio, can financing enterprise and investors achieve the target of win-win.To be concluded, our conclusions enrich the research of Internet Finance and Crowdfunding, especially filling in the gaps in the equity-based crowdfunding. Besides, the study offers further insights into the funding decision and pricing mechanism for financing enterprise and in so doing sheds light on the reality of fundraising difficulties. |
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