Accréditée  EQUIS  et  AACSB. MSc Entrepreneurship & Innovation Thesis

Promotion 2015

How  to  succeed  a  Crowdfunding  Campaign  on  KissKissBankBank  

                 Name  and  Surname  of  the  Student:  Julien  CARBONI  Student  Number:  140536  Supervisor:  Mrs  Renata  KAMINSKA  

 I   hereby   certify   that   this   is   my   own   original   work,   that   all   citations   are   correctly  identified   with   speech   marks,   that   all   sources   are   correctly   referenced   and   that   my  master  thesis  is  completely  free  of  plagiarism.    Signature:  Julien  CARBONI    

 

 

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«  Les  propos  tenus  dans  ce  document  n’engagent  que  leur  auteur  ».  

KEY WORDS

Key Success Factors,

Reason of Failure,

Crowdfunding,

KissKissBankBank,

Mollick,

Reward-based/Pre-Purchased Crowdfunding Model,

Investor’s quality perception,

Entrepreneur Implication,

Crowdfunding Campaign,

Sense of Community

 

 

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ACKNOLEDGMENTS

Before presenting my research, we would like to thanks my research supervisor, Renata

Kaminska, for all the advice I received for the conception and the research question.

I would like to thanks every person who were concerned in this subject for their support and

recommendations.

 

 

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TABLE OF CONTENTS:

KEY  WORDS   3  

ACKNOLEDGMENTS   4  

EXECUTIVE  SUMMARY   7  

INTRODUCTION   9  

LITERATURE  REVIEW   10  

A.   Financial  Solutions  to  Launch  a  Company:   10  

B.   From  Internet  and  Crowdsourcing  to  Crowdfunding:   12  

C.   Crowdfunding  Literature  Findings:   14  1.   Definition:   14  2.   Why  using  crowdfunding?   15  i.   For  the  Entrepreneurs:   15  ii.   For  the  Investors:   15  iii.   For  the  Platforms:   16  

3.   Choosing  the  right  model:   16  i.   Models:   16  ii.   Choosing  equity  crowdfunding  or  reward-­‐based  crowdfunding?   17  

4.   Role  of  Crowdfunding  Platform:   18  5.   Agrawal  et  al.  Findings:   19  6.   Factors  of  Success:   20  7.   Risks  and  Opportunities  in  the  Crowdfunding  Field:   20  i.   Risks:   20  ii.   Opportunities:   22  

8.   Regulation:   23  9.   Market  Retrospective:   23  

RESARCH  QUESTION   26  

A.   Introduction:   26  

B.   Data  Base:   27  1.   Platform:   27  2.   Data:   30  i.   Variables:   31  

A  QUALITATIVE  ANALYSIS  OF  KISSKISSBANKBANK  PROJECTS   32  

A.   Success  Projects:   32  1.   ti’Be:   32  2.   PiouPiou:   34  3.   Hydrao:   35  4.   Ween:   37  5.   Weecame:   38  

B.   Failed  Project:   40  

 

 

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1.   Just  The  Bell:   40  2.   Taxihub:   42  3.   The  Shoppers:   43  4.   Freedom:   44  5.   1001boxers.com:   45  

FINDINGS   47  

CONCLUSION   49  

REFERENCES   50  

APPENDIX   53  

Appendix  1:  Crowdfunding  guide  book   53    

EXECUTIVE SUMMARY

The dissertation aims to identify the key success factors for an entrepreneur to reach his

funding goals in a crowdfunding campaign. As a result, we will try to answer to the question

bellow:

“What are the key success factors and reason of failure in a crowdfunding campaign?”

We performed a qualitative analysis of 10 projects on KissKissBankBank platform. The

projects belong to the category “web and technology” category because it is one of the lowest

success rates on the platform (29%). They are divide in two groups: Groups 1 represent 5

projects that reached or went beyond their funding goal; Group 2 are 5 projects that failed

their funding goal.

We choose variables based on Mollick’s study (2013) link to the crowdfunding campaign and

final result, the effective participation, the entrepreneur’s implication in the crowdfunding

campaign and the investor’s quality perception of the project. Then, we propose

recommendations to entrepreneurs to increase their chance of reaching their founding goal.

Our recommendations confirm Ethan Mollick’s (2013) funding relating to the investor’s

perception to the quality signals.

We show that carefulness of the presentation is not the only variables that send quality to

potential bakers. Then, that the entrepreneur implication in the crowdfunding campaign is a

key driver to prove the quality of the project and help to attract potential bakers. Moreover,

the sense of community is another key driver for success. Finally, bakers play a key role in

the success of the campaign with their network by sharing the project.

 

 

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LIST OF TABLES & FIGURES:  

CHART  1:  CROWDFUNDING  MARKET  IN  2015   24  

CHART  2:  CROWDFUNDING  INDUSTRY  DYNAMIC  2011  -­‐2015   24  

TABLE  1:  KEY  FIGURES  IN  2015  FROM  CROWDFUNDING  PLATFORMS   25  

TABLE  2:  STAKISSTICS  ON  KISSKISSBANKBANK  PLATFORM  IN  AUGUST  2015   27  

TABLE  3:  KISSKISSBANKBANK  ACTION  PLAN   29  

FIGURE  1:  TI’BE  SCREENSHOT  FRONT  PAGE   32  

FIGURE  2:  PIOUPIOU  SCREENSHOT  FRONT  PAGE   34  

FIGURE  3:  HYDRAO  SCREENSHOP  FRONT  PAGE   36  

FIGURE  4:  WEEN  SCREENSHOT  FRONT  PAGE   37  

FIGURE  5:  WEECAME  SCREENSHOT  FRONT  PAGE   38  

TABLE  4:  KEY  VARIABLES  WITH  PROJECTS  THAT  REACH  THEIR  FUNDING  GOALS   39  

FIGURE  6:  JUST  THE  BELL  FACEBOOK  PAGE   41  

FIGURE  7:  JUST  THE  BELL  SCREENSHOT  FRONT  PAGE   41  

FIGURE  8:  TAXIHUB  SCREENSHOT  FRONT  PAGE   42  

FIGURE  9:  THE  SHOPPERS  SCREENSHOT  FRONT  PAGE   43  

FIGURE  10:  FREEDOM  SCREENSHOT  FRONT  PAGE   44  

FIGURE  11:  1001BOXERS.FR  SCREENSHOT  FRONT  PAGE   45  

TABLE5:  KEY  VARIABLES  WITH  PROJECTS  THAT  DID  NOT  REACH  THEIR  FUNDING  GOALS   46        

INTRODUCTION

From the past few years, we observe the emergence of a new type of economy based on

collaboration between people: the collaborative economy. Sharing knowledge, material and

financial resources lead to create new models. It has the advantage to reduce inequality due to

the implication of the crowd and encourage solidarity.

This collaborative economy has emerged thanks to innovation like Internet facilitating

interaction between individuals.

In this dissertation, written for the graduation of the M.S.c Entrepreneurship and Innovation,

we would like to talk about crowdfunding.

The crowdfunding propose a financial collaboration between people and potential investors.

Especially for an entrepreneur that faces a lack of resources to finance his project, he can get

access to a crowd instead of traditional finance.

For us, the crowdfunding democratizes the access to investment to a large population.

Because it encourages the creation of projects valued by the crowd, it breaks the monopole of

Venture Capitalists or Business Angels to fund potential growth projects. The Pebble’s watch

crowdfunding campaign is a good example. They managed to raise one million dollar in 30

minutes ending with 20,3 millions dollars.

In the literature review, we will present the findings about this new area. We will talk about

the drivers of the creation of the crowdfunding, the reasons for using it. We will give a

definition and will present the advantages and risks of this model. In the end, we will give an

update of the regulation and the market retrospective.

Furthermore, we will try to answer to this question: “What are the key success factors and

reason of failure in a crowdfunding campaign?”.

We will present an in-depth qualitative analysis of “web and technology” category projects on

KissKissBankBank platform based on several variables used by Ethan Mollick study (2013).

We analyse the crowdfunding campaign and final result, the effective participation, the

entrepreneur’s implication in the crowdfunding campaign and the investor’s quality

perception of the project.

In a final part, we will give recommendations to entrepreneurs to increase their chance of

reaching their funding goal.

LITERATURE REVIEW

The purpose of this dissertation is to analyse the reasons of success and failure in a

crowdfunding campaign. Before going in depth, we should explain the different financial

solutions at the disposal of an entrepreneur in order to fund his project. After that, the origin

of crowdfunding. Finally, we will discuss the general research findings on this subject.

A. Financial Solutions to Launch a Company:

An entrepreneur that wants to launch and develop his company has different solutions: invest

his own money, indebtedness, attract investors such as venture capitalist or business angels;

finally go for an I.P.O. Unfortunately for different reasons, start-ups are facing difficulty to

get access to resources (Bradford, 2012).

Schwienbacher and Larralde (2010, p.9) describe those different alternatives. The

entrepreneur can finance with money coming from his entourage, “Friends & Family”, attract

business angels or venture capitalists. At a certain point, founders can go for an Initial Public

Offering.

Companies can also seek money with indebtedness. Usually, they are able to obtain a loan of

the bank, get subsidies from the government (1,175 in France – IFRAP (2015). Unfortunately,

seeking money through traditional finance is more and more difficult.

As Bradford explained (2012, P.9), founders with their personal savings combine with money

from theirs friends and family still represent a lack for developing their project. As a result,

they seek other types of founding.

The bank has to evaluate the risk, it will require elements to deliver a loan: dispose of

guarantee as assets, financial records. Start-up frequently cannot present those data (Berger &

Udell, 1998, pp.8-9 / Burkett, 2011, p.70). Tomboc (2013, p.256) demonstrated the bank

mistrust during a crisis period, especially regarding those types of enterprises.

As regard the venture capital, Schwienbacher and Larralde (2010, p.7) specify hedge funds

invest between two and ten million dollars or more in projects with high potential growth. It

does not match with start-up financial needs (Ibrahim, 2008, p.1416). Moreover, venture

capitalists are not enough to match the demand (Lavinsky, 2010). In France, venture

capitalists represented only 1.9% of private investment in start-up in 2013 regarding 7.9% in

the European Union (COFACE Study).

 

 

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Studies show that business angels are the more adequate to invest in seed stage. Ramadi

describe them as “private investors who, during their active work, have gained wealth and

experience and are ready to invest them in new small and medium enterprises in order to help

the young entrepreneurs and receive profit simultaneously”. According to APCE website,

French agency for launching businesses, business angels invest for less than one million euro,

between 300 000 and 500 000 euros. As Laurent Soubrevilla explained, an entrepreneur

interviewed in France Inter in February 2013, business angels hardly invest above 100.000

euros in start-up. Thus, start-ups are facing what we call “equity gap” for amount between

100.000 euros and 1 million because they cannot find any financial resource. COFACE count

only 8.000 business angels in France in 2013 enlightening the lack of private investment in

France.

Finally, the Initial Public Offering is not a good solution for a young company due to the

introduction cost and high level of risk for it (Schwienbacher and Larralde, 2010, p.11).

The actual economic period in the European Union is still delicate for companies that seek

financial resources, despite in the U.S where business angels and venture capitalists never

invested as much. Berger and Urdell (1998, p.38) explained the influence of the

macroeconomic environment on the financial resources for SMEs. In consequence, the crisis

had an impact on the traditional finance that unable start-up to get access to financial

resources.

We can observe crowdfunding can represent an alternative for those entrepreneurs who want

to finance their projects.

 

 

 

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B. From Internet and Crowdsourcing to Crowdfunding:

What we call crowdfunding is collecting small amount of money through a large crowd. One

good example of the first crowdfunding campaign was the Sagrada Famìlia construction by

Gaudi. Indeed, the Spiritual Association of Devotees of St. Joseph wanted to build a religious

institution. They bought the field and started the construction thanks to the almsgiving of the

crowd. Started in 1882, the construction is still in progress and would be done in 2026 thanks

to the almsgiving. In France, the first identified crowdfunding campaign was in 2004 in the

field of artistic project with the movie “Demain la Veille” to cover cost production and

promotion. Which innovations are at the premises of crowdfunding?

Innovation enables crowdfunding to expand nowadays. Literature focuses on the creation the

web 2.0 as a determinant for crowdfunding development because web users collaborate and

interact online (Kleeman et al., 2008, p.11). Moreover, Surawieski (2004) defend in his book

“The Wisdom of crowd” the idea that a collective intelligence has more impact than the

individual intelligence. A group will be more effective to solve a problem than a single

person.

We may mentioned the definition of Tim O’reilly (2005) for the definition of web 2.0:

“Web 2.0 is the network as platform, spanning all connected devices; Web2.0 applications

are those that make the most of the intrinsic advantages of that platform: delivering software

as a continually- updated service that gets better the more people use it, consuming and

remixing data from multiple sources, including individual users, while providing their own

data and services in a form that allows remixing by others, creating network effects through

an “architecture of participation”, and going beyond the page metaphor of web1.0 to deliver

rich user experiences.”

As a result, web 2.0 contributes to the creation of open innovation through the crowdsourcing

(Kleeman et al., 2008, p.6). For them, crowdsourcing take place “when a profit oriented firm

outsources specific tasks essential for the making or sale of its product to the general public

(the crowd) in the form of an open call over the internet, with the intention of animating

individuals to make a [voluntary] contribution to the firm’s production process for free or for

significantly less than that contribution is worth to the firm.”

Thus, combining web 2.0 and the power of the crowd can represent a great opportunity for a

firm so it can use this collective intelligence to find efficient solutions. With the emergence of

 

 

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the social networks, Kleeman et al. (2008) notified the rise of “working consumer”

empowering the consumer role in a company activity.

We combine crowdfunding with crowdsourcing thanks to the crowd’s monetary contribution.

According Lawton and Marom (2013), the crowd is facing a lack of information and

knowledge in accordance with the sector they invest. We can trust the collective intelligence

to acknowledge projects with high value.

For Agrawal et al. (2013, p.6), Internet has the advantage to allow entrepreneurs and potential

investors through a platform and will reduce the cost of the transaction (Bradford, 2012,

pp.27-28) but also the information about the entrepreneur and the project. For them, Internet

gives the possibility to invest very small amount of money so it reduces the risk for investors.

They also notify that investors are highly involved in the evolution and development of the

project.

As we observed, web 2.0 and the lack of financial resources boost the crowdfunding

emergence.

 

 

 

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C. Crowdfunding Literature Findings:

In this section we will present the definition of crowdfunding, the different models present on

platforms, the incentives and risks for using it. In the end, we will have a closer look to the

regulation and the market trends.

1. Definition:

Belleflamme et al. (2013, p.7) based their definition of crowdfunding on the work of Kleeman

et al. on crowdsourcing:

“Crowdfunding involves an open call, mostly though the internet, for the provision of

financial resources either in form of donation or in exchange for some form of reward and/or

voting rights.”

Literature developed several definitions but we found common key elements such as financial

research, Internet use and the usage of the crowd.

Mollick ’s definition (2013, p.2) focus on entrepreneurs’ nature and their contribution:

“Crowdfunding refers to the efforts by entrepreneurial individuals and groups- cultural,

social, and for-profit- to fund their ventures by drawing on relatively small contributions from

a relatively large number of individuals using the Internet, without standard financial

intermediaries.”

Crowdfunding involve on the one hand the match between a project financed by a numerous

investors but also on the other hand, a meeting across an online platform.

As Rubinton (2011, p.2 and 12) explained, bank is now excluded from this new type of

funding system. A form of “disintermediated” system is born where investors and

entrepreneurs can get in touch. According to him, crowdfunding answered to fundamental

questions: “Who decides which projects deserve financing?”, “How can we guarantee they

represent the project markets?” and “What can we do to systematically reduce entrepreneurs

exposure to the risks that they fail to cover their start-up costs?”. Therefore, this new

mechanism answer funding problematic for entrepreneurs and give legitimacy to a project due

to the crowd selection (Lenher, 2012, p.9). Why using crowdfunding to found your project?

 

 

 

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2. Why using crowdfunding?

We present the literature findings about the advantage for the entrepreneurs, investors and

platforms to use the crowdfunding.

i. For the Entrepreneurs:

Here we quote the main advantages for entrepreneurs from Agrawal et al.’s studies (2013, pp.

11-14).

First, capital cost decrease. Thanks to Internet, an entrepreneur is able to attract more

potential investors to his project. The more they are willing to invest the more it is related to

their participation to the project. They pay attention about the information of the project and

the benefits they can gain (Agrawal et al., 2013, pp. 11).

Secondly, crowdfunding enables entrepreneur to have access to ideas and advises for the

product development. More important, it is a free expertise thus it must increase the value of

your project (Agrawal et al., 2013, pp. 12-14).

Furthermore, the entrepreneur can get an idea of how the crowd value his. He can evaluate the

potential demand for his product and the potential sales (Agrawal et al., 2013, pp. 12-14).

Referring to Schwienbacher and Larralde (2010, p.12), he can develop his product knowledge

thanks to social network. Mollick (2013, p.3) says that he can use the information gained from

the crowd to prove his concept so he can have access to the traditional finance resource.

Finally, an entrepreneur still owns his company at the end of a crowdfunding campaign

(Schwienbacher and Larralde, 2010, p.13).

ii. For the Investors:

For investors, one of the main advantages is the variety of project available (Agrawal et al.,

2013, pp. 14-15).

They have the possibility to invest in innovative projects and sometimes disrupt ones. At the

end, they will be perceived as “lead-users” and “precursors”. Investors usually just want to be

part of a project and help the company to succeed. Entrepreneurship spirit is part of their

mind-set (Agrawal et al., 2013, pp. 14-15).

Other investors just feel passion about a cause and participate selflessly. Agrawal et al.

describe this as “philanthropy” (2013, pp. 14-15).

 

 

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For summarising, people are motivated to invest for a monetary/material benefit but not only.

Some backers are simply altruist.

iii. For the Platforms:

From a business point of view, crowdfunding is a business activity with profit expectative.

Their business model is based on a percentage fee between 4 to 8% only if the project reached

his funding goal (Agrawal et al., 2013, p.16). You can refer to Appendix 1 explaining in

detail the different platforms charges.

Belleflamme & Lambert (2014, p.10) emphasis the limits of business model when a platform

diversify its revenue model. Investors would be discourage to invest when a platform charge

them with a subscription.

3. Choosing the right model:

i. Models:

Literature distinguishes five types of models in crowdfunding field (Tomboc, 2013, p.260).

In the first place, donation-based model where funders donate to causes they want to

support, with no expectation of monetary compensation. Foundly platform is a good example.

Then, reward-based model offers funders a non-financial benefit in exchange for their

investment. Tomboc (Tomboc, 2013, p.260) quoted some benefits as a reward or an

acknowledgement published on the project’s website. Symbolic has to be consider has the

main part of the process. Kickstarter is a good example.

Thirdly, the pre-purchase model where investors pre-purchased a product that will deliver if

the founding campaign succeeded so production can start (Tomboc, 2013, p.260). He also

noticed that this type of model can also be associate with the reward-based model due to the

assumption that pre-purchase can be associate with a reward. As, we will explain, platforms

are specialised with a model. Usually, platforms propose both reward and pre-purchase model

like Kickstarter or Indieggo. Those platforms usually propose two type of funding condition:

Keep it All (KIA) or All or Nothing (AON). In KIA model, entrepreneurs set up the funding

goal and keep the amount either or not they meet their goals. In AON model, entrepreneurs

still set funding goals but keep nothing unless the goal is achieved (Cumming and

Schwienbacher, 2015, p2)

 

 

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Then, entrepreneurs can have access to loan model where entrepreneurs borrow from

investors to finance their project. Tomboc quote Kiva platform where investor free lend

without interest rate.

Finally, we have equity model where investors can take share, earn dividends as in the

traditional equity field. WiSeed is a good example.

Ahlers et al. (2012, p.8) presented on a detailed study about this model. For them, equity

crowdfunding is:

“A method of financing whereby an entrepreneur sells equity or equity-like shares in a

company to a group of (small) investors through an open call for funding on internet-based

platforms.”

Literature focus on distinguishes different types of investments in the crowdfunding field:

active and passive.

On one hand, passive investment is related to initiative for seeking investment in return for

rewards; on the other hand, active investment is when an investor takes initiatives in the

development of the product other than his monetary participation (Schwienbacher and

Larralde, 2010, p.13). For instance, “this may provide valuable feedback to the entrepreneur

on potential market demand and product characteristics that the market may prefer most”.

ii. Choosing equity crowdfunding or reward-based crowdfunding?

This chapter is based on the study of Belleflamme et al. (2013).

They developed a theoretical model to predict the optimal choice for an entrepreneur between

equity based and pre-reward based. They focus on the nature of community benefits for the

investors. One key element is that investors value when they directly participate at the

campaign and share a “community experience”

Authors explain reward-based model enable entrepreneur to differentiate customers based on

pricing selection. Indeed, customers are willing to pay more if they care about the product

value proposition. In addition, they have the opportunity to buy it at a lower price than the

official price. Furthermore, investors are willing to pay more to gain access to community

benefits such as participate to the crowdfunding campaign, or product development. Investors

choose themselves to participate to a campaign as a result entrepreneur discriminate his

customers by the price. Nevertheless, entrepreneur cannot fix the price too high because no

 

 

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one would participate. Related to market size, this model is optimal when you have low

funding objectives. The more your financial needs are higher the more you need investors. In

conclusion, more the price is low the less the model is profitable (Belleflamme et al., 2013).

In equity-based, interest of the product is not related to the price. Community benefits are

linked to the act of investing itself. In this model, an entrepreneur can touch a larger

community of investors so he can increase the price. This model is optimal when you seek for

a large amount of investment.

Finally, according to Belleflamme et al. (2014, p.7), relationship between entrepreneur and

investors is different depending on the type of crowdfunding. Moreover, type of project

determines the model.

In conclusion, the entrepreneur has to choose the type of crowdfunding model but also his

pricing strategy. We observe crowdfunding platforms usually specialised and propose only

one of those models. But is the role of a crowdfunding platform?

4. Role of Crowdfunding Platform:

Belleflamme and Lambert (2014, pp.8-9) noticed a crowdfunding platform coordinate

investors and entrepreneurs behaviour. This has more efficiency if actors would meet in a

bilateral relationship. They explain the network effect thanks to the interaction between them.

Shapiro and Varian (1999, p.13) define the network effect when “the value of a product to

one user depends on how many other users there are, economists say that this product

exhibits network externalities, or network effects”.

In fact, platform value is bound for an investor or an entrepreneur to the number of investors

and recent projects on this platform (Belleflamme and Lambert, 2014, p.9).

An investor will consider a platform based on the number of project because he has a large

choice to choose the project to invest. Thus, there is a big competition to finance the variety

of project. Belleflamme and Lambert (2014, p.9) pay attention to the number of active

investors on the platform. More this figure is high; the greater to see the project in which they

financed is high.

On the one hand, the entrepreneur may value a platform that present a high number of

investors because it will increase his chance of success to reach his funding goal. On the other

hand, he will avoid platforms presenting a large choice of projects due to the competition.

 

 

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As a result, Belleflamme and Lambert (2014, p.12) predict crowdfunding market must

consolidate because investors are looking for platforms with large investors and entrepreneur

values platform with great number of investors. We can observe platforms are often

differentiate in several ways: type of model, type of sector, geography.

Actually, crowdfunding platforms are specialised and choose one type of crowdfunding

model. As in Indiegogo platform, reward-based and pre-purchased based coexist and the other

one are distinctive. Other platforms propose large variety of sectors and some other only

propose one discipline.

5. Agrawal et al. Findings:

This part focus on the literature about the crowdfunding phenomena and present the first

trends based on Agrawal et al. study (2011). Crowdfunding is a new sector so studies are

taking facts in a short term. It may be appropriate to verify the trends in the future.

Agrawal et al. (2011) study is based on the Dutch Sellaband platform specialised in financing

music projects. The study focuses on geography and investment timing. He firstly highlights

the role of “Love money” – Friends and Family – because they are the first to invest during

the campaign. Friend and Family investment and local contributor invest more compare to

distant contributors. The reason is that friends and family have access to more information

about the project. As a result, we are facing an asymmetry of information dilemma. Secondly,

without love money variable, distant contributors compared to traditional finance invest more

because online mechanisms can reduce economic frictions associated with investing in early-

stage. Another observation is investment increase with the project’s capital gain. According to

authors, investors pay attention to signals delivered by the other investors in their investments

decisions. They “emphasizes the important role that friends and family may play online and

offline in generating early investment in entrepreneurial ventures.”

In conclusion, Agrawal et al. (2011) show investment distribution is distort. Indeed, only a

few projects reach their funding goals and those who succeeded receive most of the

investment. Therefore, major part of investments are allocate to few projects. After this, why

some entrepreneurs succeed their crowdfunding campaign?

 

 

 

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6. Factors of Success:

Literature also tried to identify factors of success when a project reaches its funding goal.

Some factors are linked to the quality of the project itself and others are linked to the

entrepreneur.

Based on Mollick’s study (2013, pp.7-8 and p.14) with data extract from Kickstarter platform,

the success of a crowdfunding campaign is bounded to the quality of the project. Bakers pay

attention to signals reflecting the quality such as spelling mistakes, video explaining the

project, updates about the project progress posted by the entrepreneur.

Mollick (2013, pp.6-8) identified other elements. He shows that a high level of funding goal

or a longer campaign reduce the probability of success. He highlights the role of the size of

social network (Facebook) but also the boost observed when your project has been published

on the front page of the platform web site. We will emphasis this part in the research question.

Considering equity crowdfunding, Ahlers et al. (2012, p.3) noticed that investors matter to

education of entrepreneurs, work experience, financial records. As with Mollick’s study, network

is again identified as a factor of success. What about the risks and opportunities ?

7. Risks and Opportunities in the Crowdfunding Field:

i. Risks:

As any business, crowdfunding present risks when you invest. Platforms decided to create

mechanism of control to attenuate the risk.

For Agrawal et al. (2013, pp.20-21), the main risk in crowdfunding is related to asymmetry of

information between entrepreneur and investors. An entrepreneur will naturally possess more

information than the investors will. With the platform, investors are not contacting directly

the founder as a result; it may have difficulty to evaluate his credibility.

The authors identified three main situations of asymmetry of information that would collapse

the market. First of all, as Akerlof defined (1970) with the lemons problem, we could face an

adverse selection. Investor could not identify which project present a lower risk based on the

quality due to the lack of information there is at their disposal. Therefore, the price they are

willing to pay represent only medium quality projects. For the entrepreneur, this price is not

sufficient to make profit so actors will leave the market.

 

 

21  

Another issue relating to the asymmetry of information is moral hazard: “The creator may

behave in a short-term opportunistic manner and not exert the level of effort that was implied

at the outset. This is a form of moral hazard. The most extreme example of this is outright

fraud.”(Agrawal, 2013, p.21). Investor could also face delay in the delivery of the product

thus would leave the market. The Mollick’s study (2013, pp.11-13) clearly show that fraud or

failure cases are rare but delay in the delivery is recurrent. Furthermore, they add when a

project reach beyond its funding goal, they would face delivery issue. They conclude project

with high expectation in funding goals are likely to face longer delivery delay than the small

funding goals.

The third risk identified by Agrawal and al. (2013, pp.21-22) is the “free riding” risk:

“individual crowdfunders are disadvantaged in terms of due diligence because they typically

have a much smaller stake and therefore less incentive to spend time and money investigating

creators.”

The authors noticed other problems for investor and entrepreneur. Investor can face

incompetency in management or lack of investment experience of some founder.

Entrepreneur will face intellectual property issues because of information they have to reveal.

Choosing crowdfunding for an entrepreneur is renouncing to real expertise from qualified

investors.

What mechanisms a platform can propose to reduce the risk?

Agrawal et al. (2013, pp.22 – 31) described tools to reduce the asymmetry of information.

Platform created index to evaluate the reputation of the entrepreneur to reassure investors

such as the quality of the project (patent) or entrepreneur skills (work experience). We can

also create a system of peer evaluation based on feedback where contributors can post

comments, evaluations. Platform also uses independent cabinet to certify the quality of a

project. It is in their best interest to deliver serious certifications (Agrawal et al., 2013, pp.22-

25). The platform itself can certify the quality of the project. For instance, French equity

crowdfunding platform Anaxago audit 40 index and proclaim a rigorous selection process

with only 3% of candidature go to campaign. KissKissBankBank select with an audit but ask

his community to vote if the project could access to the campaign.

Agrawal et al. (2013, pp.25-28) pointed out the matter of regulation both on platform and in

the law. Platforms can require a high level of divulgation to entrepreneur. The regulator fixes

 

 

22  

a limit of investment for each investor and a limit of fund-raising per year. We will emphasis

on this part in a next chapter.

In the end, Belleflamme and Lambert (2014, p.11) propose an alternative solution: found a

referent investor per project so it will give legitimacy to the crowd to invest in this project.

They quote the example of MyMicroInvest platform.

ii. Opportunities:

Crowdfunding sector is expanding very fast due to its advantages and literature is recent.

What literature proposed remain hypothesis and projections, it must be verify in the next

years.

This sector has an impact on innovation because it can reallocate funds toward innovative

firms (Agrawal et al., 2013, pp.13-14). It may influence the reallocation process exclusively

on innovative firms.

Crowdfunding expansion is creating jobs thus economic growth.

As Rubinton said (2011, p.12), crowdfunding democratize the access to financial resources

because everyone can invest in a project with just little of money. Then, democracy is an

important aspect of crowdfunding because it ensures legitimacy of a project, especially for

social one (Lenher, 2013, pp.9-10).

Agrawal et al. (2013, p.34) explain the potential opportunity to redistribute the funds

worldwide because it give access to entrepreneurs who live in area with lack of financial

resources thanks to internet and new technology. In consequence, it may give opportunity to

developing countries to create economic growth and jobs.

 

 

 

23  

8. Regulation:

Because crowdfunding is a new phenomenon, regulators are passing a bill to regulate the

collaborative economy.

In Europe, State members regulate themselves crowdfunding but the European Commission

did not propose yet a directive (European Crowdfunding Network, 2013).

France has passed an ambitious reform in 2014 regulating equity crowdfunding model. France

can be considered as a precursor to develop this market. Every crowdfunding platform must

obtain an agreement from the S.E.C French agency call “Intermédiaire en financement

participative” (IFP) to reassure potential investors. In addition, the Government ensure to

protect investors fixing a limit to invest per contributor per project per year with 1.000 €.

Start-up can raise a maximum of 1.000.000 € per year. The law facilitate/reduce the

administrative forms to fill-in to the Security and Exchange Commission.

United State passes on April 2012 the Jumstart Our Business Startups Act or J.O.B.S Act.

The purpose is to promote business creation through equity crowdfunding. As in the French

Bill, it fixes a limit of investment per contributor and facilitates administrative forms.

Schwartz (2013, pp. 1461 – 1462) noticed that it increases the maximum number of

stakeholders.

9. Market Retrospective:

Crowdfunding is a market with very high potential of growth. In 2014, the crowdfunding

sector raised $16.2B worldwide; it represented a growth of 167%.

Loan platforms concentrated 68% of the total raise with $11,1B (+223% compare to 2013),

Simple donation $1.9B, Reward donation $1.3B. Equity Crowdfunding count for $1.1B.

USA is leading the market with 58.6% ($9,5B) following by Europe with 20% ($3,3B) and

finally Asia with 20.1% ($3,4B).

According to Massolution’s global report (2015), platform would double their amount

reaching $34.4B raising. In 2012, crowdfunding only raised $2.7B.

In France, since the bill was passed, the market share double with 152 million euros raised in

2014.

 

 

 

24  

Chart 1: Crowdfunding Market in 2015

Chart 2: Crowdfunding industry Dynamic 2011 -2015

Leaders on the Market:

Kickstarter is with Indiegogo the leaders on the crowdfunding market. They are both

specialized in the donation and reward/pre-purchased model.

Kickstarter was created in 2009 in New York. In 2014, official website statistic declare B2$

of rising which financed 89.675 projects with an average of success funding of 37.35%. More

than 53.000 projects were financed with a funding goal between 1.000$ and 9.999$ (59.3%).

153.407 projects did not reach their funding goal.

Indiegogo was born in 2007 in the US. In 2013, they launched 44.498 projects and raised 193

million dollars with an average success rate of 33%.

Source: MASSOLUTION, « Crowdfunding Industry Report », 2015

Source: LES ECHOS, « La finance participative accélère son incroyable

expansion » 03/31/2015

 

 

25  

Thanks to the reform, the French market is expending doubled in 2014 with 152 million euros

raised dispatched with 33.5M€ for donation, 88.2M€ for lending and 25.4M€ for equity.

The leaders are Wiseed (equity) with 43%, Ulule (reward) with a success rate of 63%,

Anaxogo (equity) and KissKissBankBank (reward) with 56% of SR.

Ulule is claiming the European leadership with 35 million euros raised (12,865,037€ in 2014)

since 2012 for 9,756 projects funded. They declare a success rate of 67% in 2015.

Table 1: Key figures in 2015 from Crowdfunding Platforms

Kickstarter (2014) Indiegogo (2013) Ulule KissKissBankBank

Funds collected

(in millions of €)

500 193 11.2 6.6

Average Success

Rate

(in %)

37.34 33 67 59

Average

Contribution

(in €)

- - 45 61

Nb of successful

projects

22,252 4,348 2,781 4,227

 

RESARCH QUESTION

We will present in this second part our research question, our database and finally the

variables we used.

A. Introduction:

The literature review enables us to present the crowdfunding area: how it worked, the

different business models, its limits and finally introduce the research findings.

The study of Ethan Mollick, Crowdfunding: Tapping the Right Crowd, in 2013 had all our

attention. His database comes from Kickstarter platform. He tried to determine the key

success factors for a crowdfunding campaign in this platform. He concludes that backers

(investors) respond positively to signals reflecting the quality like a neat presentation or the

presence of a video presentation. The crowd would act as a traditional investor, able to

evaluate the project quality and thus choose those with high potential growth.

We decided to conduct a similar study based on database from French reward-based

KissKissBankBank platform. We will try to determine key success factors and reason of

failure in a crowdfunding campaign. We will perform a qualitative study through different

variables.

We will firstly present KissKissBankBank platform and a framework of the selected projects.

We will present the different variables and describe the data. After this, we will present every

projects selected in order to describe precisely what are the drivers for a successful

crowdfunding campaign but also the errors performed in projects that did not reach their

funding goals.

In conclusion, we present this research question:

What are the key success factors and reason of failure in a crowdfunding campaign?

 

 

 

27  

B. Data Base:

In this section, we present the platform and the method of analysis of our data.

1. Platform:

The data were gathered on the crowdfunding platform of KissKissBankBank. We choose this

platform among others for three reasons. Firstly, KissKissBankBank is one the leaders on the

French market. Secondly, this platform proposes a large choice for the investors, classify in

categories, and strengthen the quality of the analysis. Finally, KissKissBankBank is one of the

few to keep online the projects that did not reach their funding goals and even after the

campaign end date. Competitors may pay attention to their public image by not showing the

failed projects. As a result, it will be easier for us to compare projects and therefore,

determine the elements of a success or failure of a crowdfunding campaign.

KissKissBankBank was created in March 2010, and raised 36,7 million euros for 55,739

projects created financed by 665,142 KissBankers (08/19/2015). Actually, they are 489 live

projects. The average of success rate for every category is 54%. Projects are categorizing in

several sectors: music, film and video, theatre, solidarity, journalism, art, book and edition,

photography, ecology, education, food, adventure and sport, mode, Show, web and

technology and Game. KissKissBankBank aims to promote innovation and creativity through

artistic and creative projects.

KissKissBankBank propose a reward/pre-purchase model based to finance projects. In this

type of crowdfunding, the average contribution is smaller compare to loan or equity

crowdfunding platform. In KissKissBankBank, the average contribution is 64€.

KissKissBankBank pay attention to the risks and propose transparent statistics compare to

other platforms. Potential bakers and entrepreneurs have access to statistics on live. The next

table present the statistics of the platform on the 19th August 2015.

Table 2: StaKissTics on KissKissBankBank platform in August 2015

 

 

28  

The platform works with the All-or-Nothing rule (A.O.N). If an entrepreneur does not reach

his funding goals, he will not receive the money that he raised so the investors will recover

their contribution.

Before explaining our database and variables, we would like to discuss about the process of a

crowdfunding campaign on KissKissBankBank’s platform.

You have several sections on the main page where you have to write an in depth presentation

of your project and the allocation of your future resources. In order to succeed your campaign,

the website propose a method: “How to develop and write your project”.

You can develop your project with the tab “News” in order to entertain and provoke the buzz.

You can also use the intern email account to discuss with potential bakers. Finally, the

platform recommends the use of a mini Frequent Ask Question (F.A.Q.) to propose the best-

detailed project.

Source: KissKissBankBank, Statistic August 2015,

http://www.kisskissbankbank.com/en/stats

 

 

29  

When you write about your project, the platform recommends the presence of a video

(maximum 2 minutes) but also insert other videos in the “detailed project presentation”.

KissKissBankBank encourage you to link your project with a Facebook page or Twitter

account or a Google+1 account. They also advise the entrepreneur of the importance of the

counterparts in the success of his campaign.

In the end, KissKissBankBank detail a step-by-step methodology to promote your project by

writing an emailing campaign to your first network circle, personalised them, create events

and guerrilla marketing and convince bloggers and journalist to talk about your project. You

can see it on the Figure bellow (Table 3). You need to first involve your first circle (friends

and family), then the second circle (friends from your friends) and the third circle (public

audience).

Table 3: KissKissBankBank Action Plan

To confirm his reputation as a crowdfunding leader, KissKissBankBank propose for

entrepreneur the next statistic:

“Vous avez 96% de chance de réussir lorsque votre collecte atteint 41% de son objectif.

40% des projets qui dépassent 1% de leur objectif réussissent leur collecte.

87% des projets qui dépassent 21% de leur objectif réussissent leur collecte.

96% des projets qui dépassent 41% de leur objectif réussissent leur collecte.”

Source:  KissKissBankBank  web  page,  Promote  your  project  (2015)    http://www.kisskissbankbank.com/fr/pages/guide/promote_your_project  

 

 

 

30  

2. Data:

The database contains 10 projects on the category of “web and technology” which 5 succeed

(Group 1) and 5 failed (Group 2). We decided to focus on this specific category because it has

one the lowest success rate on the platform with 29%. Projects were selected if they succeed

or not their funding goal. We choose sometime projects that went beyond their funding goals

(139% to 100%) the rest raised are between 0% and 3% of their funding goal. We will present

them in another section. Projects that failed took place between June and August 2015 and the

projects that succeed were between March 2014 and August 2015.

We choose variables used in different studies especially from Mollick’s study (2013).

Firstly, we choose variables linked to the crowdfunding campaign and the final results such as

the funding goal, the final result and the percentage of the objective financed.

Then, we focus on the effective participation on the campaign with the final number of

investors and the average contribution.

We want to measure the implication of the entrepreneur by analysing the characteristic of the

project. We choose the variables carefulness of the presentation of the project (noted from 0

to 3 through the detailed description, the layout and the effort of presentation), the degree of

innovation (noted from 0 to 3 with the ability of distinguish itself from competitor), the

presence of a video and pictures, the number of news posted from the entrepreneur, the

presence of F.A.Q, the presence of a social network account and website.

Finally, we used variables to measure the investor’s quality perception with the use of the

social networks, the number of share and comments and the presence of mentors on the front

page.

You can find the resume on the Tables 4 and 5 on the third part.

 

 

 

31  

i. Variables:

In this section, we present a general view of the projects that succeed or not through the

variables. We present an in depth analysis of each project in Part III.

When we look at the success project, the funding goal oscillate between €8,000 and €30,000

with an average of €21,550 compare to failed project that are between €4,000 and €89,000

(average €27,000).

The effective participation is also important with an average of 236 final investors for the

succeed projects compare to 7 for the other Group project. Final bakers invested €118 in

Group 1 and only €7 for Group 2.

Entrepreneurs are much more implicating in the promotion of their project in Group 1. We

will present in much more detail the projects but Group 1 present projects with more

innovative concepts and take time to have a nice and clear presentation than the Group 2. He

grade with an average rate of 3 against 2 for both variables. Videos and pictures are present in

both groups except one project that did not have a video in Group 2. We observe that every

project that succeed posted news (with an average of 5) in opposition with failed projects that

posted zero news! On Group 2, 66% had a Facebook Page and Group 1 had 100%. A large

majority in both groups had their website (83%). Finally, entrepreneurs that used the F.A.Q

framework had much more success (83% used it); only one project used it in the failed

projects.

Finally, investors used their network to promote the project. In Group 1, they shared projects

on Facebook 212 times compare to 114 to Group 2. Success projects had 983 averages “likes”

in comparison with 139 for failed projects. Comments are also important; in Group 1 the 6

projects had ones (average rate: 46) instead of only 66% in Group 2 had none (average rate:

2)! Mentors seem not to have an incident in the investor’s perception: 33% in Group 1 had

ones and one project in Group 2.

Those different variables reflect the importance of the quality of the different projects and the

degree of implication of the entrepreneur base on the number of news posted all along the

campaign. As a result, the network is a strong asset in the success of a campaign.

It confirms the Mollick’s model (2013) arguing that investors respond positively to those

quality signals in their choice of investment.

 

A QUALITATIVE ANALYSIS OF KISSKISSBANKBANK PROJECTS

This section will present an in-depth qualitative analysis of each projects based on their ability

to achieve or not their funding goals. Then, we will present our recommendation to

entrepreneurs in order to achieve a crowdfunding campaign.

A. Success Projects:

1. ti’Be:

ti’Be propose a smart beacon to find lost objects with an app on your smartphone. It ended on

March 23rd 2014 with duration of 90 days. This project has the higher success rate of our

entire database with 139% of final objective financed. The initial funding goal was €25,000

and ended with €34,762. In addition, the project catches the most KissKissBankers (bakers) in

the database with 518. The average contribution was €67.

Figure 1: ti’Be screenshot front page

We decided to grade the gracefulness and innovative variables with a 3. The structure of the

text is simple, clear, and even funny. A potential baker understands quickly the value

proposition: find your object with your smartphone and be part of the “ti’Be” community.

They explained the allocation for manufacturing.

Source : KissKissBankBank web page, ti’Be front page (August 2015),

http://www.kisskissbankbank.com/ti-be-un-porte-cle-bluetooth-basse-consommation-pour-ne-

plus-perdre-ses-affaires-ti-be-by-ticatag?ref=successful

 

 

33  

The projects posted few pictures and the video is 2m04s like KissKissBankBank advised.

Regarding the social medias, ti’Be posted his Facebook and Twitter account and his website.

It was shared only 25 times on Facebook and 73 on Twitter.

For us, this project had success because of the implication of the entrepreneur in order to

create a community spirit. They posted 6 news but the first one was 10 days before the ending

of the campaign to thanks the bakers to already achieve the funding goal (€25,000). They

encouraged them to keep sharing the projects to their network and gave updates about the

product, delivery and advancement.

We can measure the implication of the crowd thanks to the number of comments: it has the

highest number of comments of our database with 117. Most of them asked details and

answer about bugs and the app. The company replied directly 5 times to answer those

questions by taking in account their remarks and keep posted about the corrections of the

product. They also designed a F.A.Q that most of the bakers checked.

 

 

 

34  

2. PiouPiou:

PiouPiou is a wind sensor to measure on live speed and wind direction, strength and soft gusts

and atmospheric pressure. It ended on August 14th 2014 with duration of 45 days. This project

went beyond his objective by 128% raising €38,177 instead of 29,850 initially asked. Bakers

were 264 with an average contribution of €144.6.

Figure 2: PiouPiou screenshot front page

The carefulness and innovative variables are rank as a 3. The text clearly expose the target

market, the value proposition (5 to 10 times cheaper than the competitors, self-powered, small

device). Innovation part is related to the technology, the entrepreneur decided to have an open

data about the wind measures and the hardware hihlighing the benefit of beeing part of a

« PiouPiou » community. He aslo used a F.A.Q framework. We noticed the entrepreneur took

time to explain his motivations and challenge, a lot of pictures shows how he created the

product.

The entrepreneur had a Twitter account and a website. He was followed by many bakers

(269).The news was used 7 times about sealing journey, giving solutions about bakers’s

stealing concern and encourage the community to share it to their network. For instance, his

second newsletter dated on July 13th 2014 presented a geolocation technology with the sensor

that alamarded you directly. We counted 48 comments from bakers encouraging the

Source : KissKissBankBank web page, PiouPiou front page (August 2015),

http://www.kisskissbankbank.com/pioupiou?ref=category

 

 

35  

entrepreneur in his projects, asking questions regarding the product and giving technical

advise.

3. Hydrao:

Hydro is a smart shower educating you with a colour system of the quantity of water you

used. They collected €18,759 (125%) supported by 222 bakers. The duration was 60 days and

ended on December 20th 2014.

Both gracefulness and innovative variables were grated with a 3. The text structure is

composed of short and clear sentences sending a powerful value proposition (Universal

plugged, Education, Sustainability and savings on energy bill). The video present the product,

the team and the future allocation of resources. Moreover, animated pictures help the potential

baker to understand the project as well as the graphs explaining the timeline, detailed

potential savings (web link to calculate it yourself) and they gave precise figures of the

resources they needed. They presented the team, media and public institutions support. They

also used a F.A.Q framework. Innovation is related to the product and the application on the

smartphone where you can see your savings, modulate your water variables ect…

They posted a Facebook Page, a Twitter account and their website. The company was

implicated during the campaign. They posted 8 news about press cover, application

advancement and encourage the crowd to share the projects. In consequence, bakers shared it

442 on Facebook and commented 32 times.

We noticed the company proposed 13 counterparts from low to high prices proposing to buy

the product (€5; €19; €26; €54; €69; €80; €96; €126; €135; €180; €4,000; €5,500). As a

result, they had a proof of concept with 203 customers. The bakers invested an average price

of €84.5.

 

 

 

36  

Figure 3: Hydrao screenshop front page

  Source: KissKissBankBank web page, Hydrao front page (August 2015),

http://www.kisskissbankbank.com/hydrao-la-douche-intelligente-the-smart-

shower?ref=category

 

 

37  

4. Ween:

Ween is a smart thermostat that raised €41,627 (104%) in December 18th 2014 support by 232

bakers. They invested an average price of €179.3.

We think the success of this project is link to his innovation (3): it controls the temperature

(gas, electricity, oil) by detecting your “unplanned absences”. In addition, they file a patent.

The carefulness is high (3) by highlighting the competitive advantage compare to competitors,

ecology spirit and money saving arguments. The company presented the team and explained

clearly their needs of the crowdfunding campaign with graphs. The video duration is 3m14s

with a high professional presentation. They used a F.A.Q framework.

Figure 4: Ween screenshot front page

The entrepreneur was implicated in the campaign: 7 news linked to press cover of the product.

They had a Facebook page, a Twitter account and a website. As a result, bakers were

implicated too because they shared it 435 times and followed it by 246. The 35 comments

revealed the enthusiasm of the crowd for the product.

The counterpart proposed to buy the thermostat. As a result, Ween had a proof of concept

with 114 buyers.

 

Source: KissKissBankBank web page, Ween front page (August 2015),

http://www.kisskissbankbank.com/l-energie-sur-mesure?ref=category

 

 

38  

5. Weecame:

Weecame is a free app helping you to organize and find parties at homes or in public places.

This campaign ended on August 21st 2015. They raised 103% of their funding goal objective

(€8,268) and supported by 85 bakers. The aim of the raising is to develop the app on

Android’s platform.

Carefulness and innovative is medium high with both 2. The text structure focuses on the

presentation of the app, the team, the media and the allocation of the raise. Innovative is the

geolocation technology and the discount price with the bars.

The company focus on the advantage of being part of a “Weecamer” community by attending

or participating to parties. They had a Facebook page shared 264 times and like more than

4,000 times. They posted 2 news asking the community to continue to share the project to

their network.

Figure 5: Weecame screenshot front page

 

Source: KissKissBankBank web page, Weecame front page (August 2015),

http://www.kisskissbankbank.com/fr/projects/weecame-l-application-qui-revolutionne-

 

 

39  

Table 4: Key Variables with projects that reach their funding goals

Variables Ti’Be (03/23/2014)

PiouPiou (08/14/2014)

Hydrao (12/20/2014)

Ween (12/18/2014)

Weecame (Ended on 08/21/2015)

Funding goal (in K€) 25 29,8 15 40 8,2

% of objective financed 139% - €34,7K

128% - €38,1K

125% - €18K

104% - €41,6K

103%

KissKissBankers 518 264 222 232 80

City (>10000) Lannion Grenoble Grenoble Aix-en-Provence

Paris

Time of the campaign (in day)

90 45 60 43 45

Carefulness 3 3 3 3 2

Innovative 3 3 3 3 2

Photos Yes Yes Yes Yes Yes

Videos Yes (english) (2m04s)

Yes Yes (3m34s)

Yes (3m17s)

Yes (39s)

Website Yes Yes Yes Yes Yes

Nb of News 6 7 7 7 2

Facebook’s Share 25 (Twitter: 73)

10 (Twitter: 269)

442 435 (Twitter: 246)

264

Facebook Page Yes No Yes Yes Yes

Nb of likes in Fb Page 324 - 221 163 4,008

Nb of Comments 117 48 29 35 20

Nb of Comments from the Entrepreneur

5 1 0 0 0

Average Contribution in € 67 144.6 84.5 179.3 102.5

Nb of counterparts 6 13 13 12 13

Mentors 2 2 0 0 0

F.A.Q Yes Yes Yes Yes No

 

 

40  

B. Failed Project:

1. Just The Bell:

Just the Bell is an alarm clock that aims to “free the bedrooms from smartphone”. It was

launched on July 25th 2015, with a funding objective of €89,000. On August 24th, they raised

€2,231 (3%) by 35 bakers.

The front page is beautiful, classy (grade: 3) but it is fill in with only images. Innovation is

low with 1, the bell is connected with smartphone to set the alarm clock. They have a

Facebook page shared 340 times and liked by 167 people. They used a F.A.Q framework.

They had a mentor and very strong media support (Time, TechCrunch…). The story and

action plan were well explained.

So, what went wrong?

Few errors were identified: Just The Bell did not explain at all the allocation of the €89,000.

After one month of campaign, they did not post any news to encourage the community to

participate or share the projects. However, the main problem is the difficulty to understand the

value proposition. There is a contradiction between ‘leaving the phone in the bedroom” and

using the phone to set the alarm clock. Moreover, the bell is not intuitive because you need to

shake it and count the number of lights to now the time.

Then, there is no mention of being part of a community like in the success projects.

Moreover, they explained briefly on their Facebook page the KissKissBankBank campaign

was as you can see on Figure 6.

Finally, the company proposed 9 counterparts with very high prices (1; 10; 78; 89; 173; 329;

1 482 and €3,342).

In conclusion, Just The Bell presented a nice project on the paper with many likes on the

social media but they did not succeed to create and gather a community. They should post

news and create the network. In our opinion, the objective seems to be too high.

 

 

 

41  

Figure 6: Just The Bell Facebook Page

Figure 7: Just The Bell screenshot front page

 

Source: KissKissBankBank web page, Just The Bell front page (August 2015),

http://www.kisskissbankbank.com/en/projects/introducing-justthebell

Source: Just The Bell Facebook Page (August 2015),

https://www.facebook.com/justthebell?fref=ts

 

 

42  

2. Taxihub:

Taxi Hub is an app to find taxi like Uber. It was launched on July 25th 2015 and stopped on

August 19th because they raised only 1% of their funding objectives (€4,000) by 2 bakers.

The gracefulness and innovative aspect of the project were low 0 and 1. The text structure has

a political-orientation with an Uber/ V.T.C conspiracy speech. The resources would be used

to travel and communication expenses. They did not used a video tape to explain their project.

Regarding their implication, they did not post any news. They had a Facebook page shared 45

times but with the same political orientation. Moreover, they counterpart were high (from €20

to €4,000).

Figure 8: Taxihub screenshot front page

 

Source: KissKissBankBank web page, TaxiHub front page (August 2015),

http://www.kisskissbankbank.com/en/projects/taxihub-et-si-trouver-un-vrai-taxi-etait-simple

 

 

43  

3. The Shoppers:

The Shoppers is a social marketplace between customers and retail dealer. It started on July

14th 2015 and will end in September. They raised 1% of their objective (€25,000). This

project is interesting because it has a neat presentation (gracefulness 3) with pleasant

calligraphy. Plus, the allocation of resources was clearly explained with figures.

There are a Facebook page, a Twitter account and website. Furthermore, the Facebook page

was shared 258 times and liked 195 proving an implication of the network. We observed on

his Facebook page that the crowdfunding campaign was shared 83 times.

What went wrong?

The Shoppers did not post any news asking help to the community. The video contained only

images without anysound. As a result, we do not understand the purpose of the project and the

campaign. In addition, we noticed the entrepreneur was one of the first baker and it may have

been perceived has a bad sign for potential bakers. Then, there were no comments posted.

In conclusion, the crowd seems to respond positively by sharing the project but respond

negatively to the entrepreneur’s implication.

The crowd may not share the value proposition of this project thus does not meet their needs.

Figure 9: The Shoppers screenshot front page

 

Source: KissKissBankBank web page, The Shoppers front page (August

2015), http://www.kisskissbankbank.com/en/projects/the-shoppers-la-

marketplace-sociale-et-solidaire

 

 

44  

4. Freedom:

Freedom is an app enabling automation in your home. It started on July 25th 2015 and will

end the 28th of August. This project failed his funding goal by raising only €55 for €18,000

asked.

The project is well presented explaining in detail the purpose of the campaign, the value

proposition (powerful and ergonomic graph with customized pictures from your home) and

his cost (less than €1,000). The video is very professional and is longer enough (3minutes) to

understand the project but it was a promotional adds. Thus, it did not explain the needs of the

campaign. We graded both the carefulness and innovative with a 3.

The project failed because of the non-implication of the entrepreneur during the campaign. He

posted zero news and had not a single comment. We noticed the entrepreneur did not

communicate about his crowdfunding campaign both on his Facebook page and on his

website. As a result, it was shared only one time. Nevertheless, he was active on the social

media posting news with innovative updates and press cover. He should have done that on the

KissKissBankBank front page to show implication for bakers. One remark concerns

communication that is concentrated for local customers in Toulouse.

It is also the second project of the database that invested in the crowdfunding campaign. He

was the first to bake the project with €50 on the first day of the campaign. The second baker

came one month later.

Figure 10: Freedom screenshot front page

  Source: KissKissBankBank web page, Freedom front page (August 2015),

http://www.kisskissbankbank.com/en/projects/freedom-la-maison-connectee

 

 

45  

5. 1001boxers.com:

The 1001 boxer’s project is a website selling male customized boxers. The goal of the

campaign is to finance the creation of the website. It was launched in July 2015.

We choose this project because it had the lowest funding goal objective of the database

(€3,400), it did not reach to raise a single euro and it will finish on August 28th.

The carefulness on the front page is at his minimum level with blur pictures ruining the

quality product perception. At the contrary of lots of projects, they explained with figures the

allocation of the raising. In addition, the video is very short (54s) without explanation about

the project or campaign. It shows the creative process for customizing your boxer on the

future website.

This project is the only one that did not have a Facebook page or Twitter account but was

shared one time. As a result, potential bakers rejected the project because of the un-

implication of the entrepreneur. We count zero news and comments. Thus, the entrepreneur

did not communicate at all with it network.

Figure 11: 1001boxers.fr screenshot front page

 

Source: KissKissBankBank web page, 1001boxers.fr front page

(August 2015), http://www.kisskissbankbank.com/1001boxers-

fr?ref=search

 

 

46  

Table5: Key Variables with projects that did not reach their funding goals

Variables Just the Bell (Launched 07/25/2015)

Taxi Hub

(Launched 07/21/2015)

The Shoppers (Launched 07/11/2015)

Freedom (Launched 06/29/2015)

1001 Boxers

(Launched in July 2015)

Funding goal (in K€) 89 4 25 18 3,4

% of objective financed 3% - €2.2 1% - €40 1% - 170€ 0% - €55 0% - 0€

KissKissBankers 35 2 3 2 0

Last KissKissBankers invested 6th August 22th July July 14th July 25th -

City (>100.000) Paris Nantes Boulogne Billancourt

Toulouse Paris

Remain Time (in days) 21 Stopped 08/19/2015 12 End on

08/28/2015 8

Carefulness 3 0 3 3 0

Innovative 1 1 3 3 2

Photos Yes Yes Yes Yes (3)

Yes

Videos Yes (1m54s)

No Yes (1m35s) Yes (2m59s) Yes (59s)

Website Yes Yes Yes Yes No

Nb of News 0 0 0 0 0

Facebook Share 340 45 258 1 1

Facebook Page Yes Yes Yes Yes No

Number of likes on FB Page 167 44 195 151 -

Nb of Comments 8 2 0 0 0

Nb of Comments from the Entrepreneur

4 1 - - -

Average Contribution in € 65,5 20 56,6 27,5 -

Nb of counterparts 9 7 13 6 6

Mentors 0 0 0 0 0

F.A.Q Yes No No No No

FINDINGS

The dissertation purpose is to identify the key success factors to reach your funding goal

when an entrepreneur has a “web ant technology” project.

We noticed few common points between success and failed projects: the carefulness standard

is very important. The entrepreneur should have an in-depth detailed project presentation with

a clear message of the value proposition and the competitive advantage. The structure must be

written without grammar errors and should be fun or direct to understand the project.

Then, he should explain the needs of the funding with precise figure for the allocation. A

large majority of the projects had videos (between 2 to 3 minutes) that detailed the project, the

team and the needs of the funding. The entrepreneur should post his social media’s account

(Facebook Page, Twitter, Google +, Instagram, Trumbl) and website (if he has one) so the

potential bakers can share the project. Obviously, they can post pictures has they want but

they must be smart to understand the project.

In our opinion, the Group 1 succeed because of several points:

The innovative variable is quite significant. Group 1 proposed concrete projects linked to

sustainability, education and carefulness of your favourite objects. It might be a driver for the

bakers. However, in our opinion, those projects succeed because we can feel to be part of a

community.

One crucial driver is positive signals send by the entrepreneur to his community through his

continuous implication in the crowdfunding campaign. From the first day until the end, the

entrepreneur must post news. It can concerns press cover of the product, updates and answer

to potential baker’s questions. Nevertheless, you have to encourage your bakers to share and

discuss your project with their network. Regarding the comments from bakers, the

entrepreneur can respond directly to them or by the “news” tab and keep asking to share the

project. Moreover, the sense of community is another key driver for success.

It seems that providing mentors is not mandatory but it can still represent a plus. The number

of counterpart can be, for us, many as the entrepreneur want but should be scaled from a low

to a large rank.

We think the entrepreneur should not bake his project because it seems to send a negative

perception on the project quality.

 

 

48  

We finally strongly recommend the use of a F.A.Q framework so bakers would be reassured

about the project itself.

 

CONCLUSION

The crowdfunding is a new phenomenon coming from starch and is now escalading. It is

becoming a new and important alternative to finance a project. Academic research and public

institutions are studying and regulating this sector. Because of its newness, lake of database

and resources give it difficult to study.

In this dissertation, we wanted to present the crowdfunding sector to every person interested

by this subject. We also tried to explain in details the drivers to success a crowdfunding

campaign in the “web and technology” projects. It can be interesting for entrepreneurs if they

want to launch a crowdfunding campaign.

We noticed correlation between our finding and the academic literature. Crowdfunding

enables innovative projects and creative entrepreneurs to get access to fund. We confirm

Ethan Mollick’s (2013) study relating to the investor’s perception to the quality signals. First,

carefulness of the presentation is not the only variables that send quality to potential bakers.

Then, we show that the entrepreneur implication in the crowdfunding campaign is a key

driver to prove the quality of the project and help to attract potential bakers. Moreover, the

sense of community is another key driver for success. Finally, bakers play a key role in the

success of the campaign with their network by sharing the project.

We give from a managerial perspective, recommendations to increase the chance of success

of a crowdfunding campaign. Crowdfunding is an interesting solution to fund a project for an

entrepreneur as long as it shows innovation and community spirit. We advise every

entrepreneur to consider this solution to finance his project.

From a society point of view, we think that crowdfunding can give many advantages for

entrepreneurs and investors for the sharing knowledge. Thanks to the regulation, it represents

a reliable solution compare to traditional canals.

Nevertheless, our findings must be relativizing because of the newness of this sector. It should

be confirm in the future when the crowdfunding market will be consolidated. They will have

access to more important database for research. A study should consider verifying the drivers

of success of crowdfunding campaign in every category to identify similarity or not. In

addition, one could also continue to analyse drivers to interest or not bakers to fund projects.

Thus, identify new key success factors.

 

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Brabham, D.C. (2008). Moving the crowd at iStockphoto: The composition of the crowd and

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Bradford, C. S. (2012). Crowdfunding and the Federal Securities Laws. Columbia Business

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crowdfunding platform

 

APPENDIX

Appendix 1: Crowdfunding guide book

T

ype

de

plat

efor

me

Nat

ure

des

proj

ets

Con

serv

ati

on d

e

Prop

riét

é

inte

llect

uell

e Sele

ctio

n

des p

roje

ts

Règ

le d

u

“Tou

t ou

Rie

n”

Tar

ifs

Con

trib

ute

urs

Réu

ssite

s

Kickstarter

Crée en 2009

Financement

avec

contreparties

non

financières

Projets

créatifs

Oui Oui Oui 5% de la

somme

collectée

+ 3% frais

bancaires

<1,3

millions

44%

Ulule

Crée en 2010

Financement

avec

contreparties

non

financières

Projets

créatifs

Oui Oui Oui Entre 5 à

8%

<200

000

63%

KKBB

Crée en 2010

Financement

avec

contreparties

non

financières

Projets

créatifs

Oui Oui Oui 5% +3%

FB

<166

000

56%

INDIEGOGO

Crée en 2008

Financement

avec

contreparties

non

financières

Généraliste Oui Non Oui et non 5% si obj

atteint /

9% si boj

non

atteint +

3% FB

NC NC

ANAXAGO

Crée en 2012

Financement

avec prise de

participation

Entreprise Non :

cession

d’une part

de capital

de

l’entreprise

Oui Oui / seuil

de

faisabilité

fixé entre

50% à

80% de

l’obj

Frais de

dossier :

500 euros

HT + 5%

de la

somme

collectée

NC NC

Source:  Le  Guide  du  Crowdfunding  (2013),  www.leguideducrowdfunding.com/a-­‐savoir-­‐mode-­‐d-­‐emploi/