Research On Factors Influencing The Success Of Crowdfunding

With the development of Internet and financing difficulty of small and medium-sized enterprises,crowdfunding,as one new funding way,is known as its low cost,high efficient,promoting enterprises development and providing convenient and effective funding channel for small enterprises and individuals comparing to traditional ones.Crowdfunding realized high speed development in recent years.But as the increase of crowdfunding platforms and projects,some platforms went out of business or transformed to other industry;many crowdfunding projects failed.The article aims to analyze why some crowdfunding projects can achieve great success but some fails and what factors attract investors to choose crowdfund projects.To potential investors,the products which are already succeed have more attraction compared with ones not succeed yet.It may motivate investors to buy the projects.Even more,investors may be influenced by other investors who already invest the projects,which is known as herd behavior.Under this behavior,investors could make decision irrationally.Thus,it is necessary to recognize different factors that may influence the crowdfunding success and analyze how these factors influence the crowdfunding success.This article is based on behavioral finance,Herd Behavior Theory and Investor's Expectation Theory.In order to analyze Commodity-based crowdfunding and Equity-based crowdfunding,this article c(?)rojects information from different platform as independent(including 7 from Commodity-based crowdfunding and 6 from Equity-based crowdfunding).To analyze the factors influencing product and Equity-based crowdfunding,we choose regression model.First,after literature collating and reviewing,rationale and research method are decided.Herd Behavior Theory and Investor's Expectation Theory are two basic theories to influence investors to choose projects.Based on these two theories,this article analyzes how different factors influence Commodity-based crowdfunding and Equity-based crowdfunding.For Commodity-based crowdfunding,the factors includes target amount,average amount invested,supporters number,followers number,comments number,advertisement quality and project progress.For Equity-based crowdfunding,the factors includes projects stage,projects valuation,business team number,leading investors number,following investors number and projects comments number.After collecting data from different crowdfunding platform,we summarized and classified data.Then we process data to fit the regression model.Second,as analyzing the factors that influence Commodity-based crowdfunding and Equity-based crowdfund,we build hypothesis and test hypothesis.To insure the significance of model,we test multicollinearity and correlation.We choose logit regression model for Commodity-based crowdfunding and multiple linear regression model for Equity-based crowdfunding.Through research and empirical analysis,we get how these factors influence two kind of crowdfunding.For Commodity-based crowdfunding,supporters,followers and comments number have significantly positive effect on the success of Commodity-based crowdfunding;advertisement quality and project progress have negative effect on the success of Commodity-based crowdfunding,but the effect is not significant.For Equity-based crowdfunding,project progress,leaders' number,followers' number and project comments number have significantly positive effect on the success of Equity-based crowdfunding;projects valuation has significantly negative effect on the success of Equity-based crowdfunding;business team number has positive effect on the success of Equity-based crowdfunding,but the effect is not significant.Last,after empirical analysis and theoretical research,the article analyzes the factors that influence two kind of crowdfunding from views of project,fund and society.We compare the differences of the factors from the two kind of crowdfunding and give suggestions.For crowdfunding platforms,it is necessary to improve supervision and information disclosure system,and give hands to crowdfunding projects.For Commodity-based fund raisers,promotion of project and reasonable target amount setting will leads the project to success.For equity-based fund raiser,human capital and leader investor's qualification play more important roles.To select crowdfunding platform properly is also needed to concern.