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Research sets out to reveal the truth about crowdfunding

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Research sets out to reveal the truth about crowdfunding

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As crowdfunding has taken off over the past few years, there have been a number of studies that have attempted to understand the whole process.  For instance, a recent paper looked at the various kinds of backer for your typical crowdfunding project.

A second, by researchers from Georgia Tech, looked at the kind of characteristics that underpin a successful crowdfunding campaign, with a particular focus given to the kind of language used in the pitch.

So it’s interesting to come across a third study that suggests that a lot of what has come before is bunkem, and indeed the number of myths surrounding crowdfunding was the underlying motivation for their own research.

“There’s this myth about how crowdfunding is supposed to work,” the researchers say. “The myth is that going viral is the only way to have a successful crowdfunding campaign. So scientists don’t think that they can use it for their research. And that’s just wrong.”

The researchers set about discovering what it was that made scientific crowdfunding projects work (or not).  The research uncovered two core findings:

  1. success depends on having an audience built before the crowdfunding begins
  2. engagement with that audience throughout the campaign is also crucial

The study saw over 150 crowdfunding projects initiated, with detailed data on each project collected by the researchers.  The data included things such as the patterns of donations and the various web metrics provided by the platforms.

The analysis looked at things such as the overall size of the community founders had created on social media, plus the number of stakeholders had been contacted pre-launch of each campaign.  It emerged that the most important factor about each network was that it was scalable.

“Twitter and email, which get passed on to other people or organizations, had a huge impact on bringing people in to look at projects,” the researchers say. “We found that if people looked at a project, a certain percentage of that translated into people donating money to those projects.”

Crowdfunding is a marathon, not a sprint

The researchers likened crowdfunding to a bit like running a marathon.  If you’ve done lots of training building up to it (ie done the work in building up your network beforehand), then running the event itself isn’t so bad.  Running a marathon without the training however is no kind of fun at all.

The study also revealed that a passion for the topic from the founders was crucial in engaging potential backers in the project.  They quote a campaign that was hoping to study error counts in surveys of underwater organisms, ie a pretty dull topic, that nevertheless managed to reach its funding goal.

“Measurement error—could there be anything more boring?” the founders said. “I had to dig really deep and find my interest in this work, where my passion was and what the nugget was that would interest people in something as esoteric sounding as measurement error. The answer was telling people that in order to understand the ocean we need to know if we can actually measure it with accuracy.

“And so, I did really well. I crowdfunded a full research cruise to study measurement error in Channel Islands kelp forest surveys. It was a shocking success for me. It really proved to me that if you put in the effort, if you build an audience and engage them, then you’ll be able to crowdfund your work.”

It underlines the value inherent in scientists and researchers using social media to engage more frequently with their audience.  This is especially so as it appears likely that crowdfunding will be an increasingly fertile ground for scientific funding in the coming years.

Sadly, thus far at least, the number of academics using social media appears to be rather minimal.  Studies have suggested that there is little desire to clamor to social media amongst the academic community.

They suggest that a big hurdle to greater social media usage is how their institutions perceive social media.  As long as institutions perceive it as a platform with little real academic merit, it will be a challenge to get academics using it to engage more with their stakeholders.

Will this research be the prod they require?  I suspect not, but it probably can’t do any harm.

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