Psychological Determinants of Investor Motivation in Social Media-Based Crowdfunding Projects: A Systematic Review

Abstract

Background: Using the power of Internet, crowdfunding platforms are currently changing the traditional landscape of fundraising. Social media-based IT platforms in particular are bringing the creators of crowdfunding projects closer than ever to potential investors. A large variety of factors function as determinants of individuals' intention to participate in crowdfunding and have an intertwined impact on funding as the ultimate project goal.Objectives: For a better understanding of investor behavior in social media-based crowdfunding projects, this paper covers identifying, analyzing, and classifying general and specific factors of investor motivation, based on the literature in the field.The main focus is the relationship between the affordances provided by social media-based crowdfunding platforms and the psychological determinants of investor motivation in innovative start-up projects.Methods: Using IEEE Explore, Clarivate Web of Science, ScienceDirect, and Scopus, we conducted a systematic review of the existing research on the emerging role of crowdfunding as a disruptive technology in financing the start-up innovative projects. The paper explores the main determinants of investor motivation and aims to streamline the success factors in crowdfunding campaigns.Results: A total of 1,216 publications were identified after searching the aforementioned databases and, upon refining the results, 515 articles were considered for the final sample. After reading the titles and abstracts, the sample was reduced to 78 articles that were read in-depth and synthesized in accordance with the defined research questions. The selected articles were clustered into three main categories: general studies, determinants of investor behavior, and success factors.Conclusions: In the new global economy, crowdfunding platforms have become the nexus between the emerging creators of innovative products and services and the necessary funding sources. This connection is possible via a cumulative collection of contributions from multiple investors recruited from the audience of the selected platform, without time or space constraints. However, the determinants of the investment decision are very different in the case of social media-based crowdfunding platforms compared to determinants in the mainstream environment. This paper surveys these motivators and reveals how platform features can be used to persuade individuals to make a financial contribution toward the success of a project.

Technology Project Summaries as a Predictor of Crowdfunding Success

“…Technology Project Summaries as a Predictor of Crowdfunding Success Mika Westerlund, Ishdeep Singh, Mervi Rajahonka & Seppo Leminen investors and happens online may not be easy and the determinants of investment decisions on crowdfunding platforms may be different than in traditional investing environments (Lukkarinen et al, 2016;Hoegen et al, 2018;Song et al, 2019;Popescul et al, 2020;Cappa et al, 2021). Rosetto and Regner (2018) found that most successful crowdfunding projects are not succeeding for 75 percent of their funding period.…”

“…Crowdfunding has become an important channel for innovators, entrepreneurs, and incumbents to raise funds for developing new technology products and business ideas (Yuan et al, 2016;Kraus et al, 2016;Brem et al, 2019;Popescul et al, 2020;Rrustemi & Tuchschmid, 2020;Sahaym et al, 2021). Crowdfunding has been defined as "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" (Hörisch, 2015;Simons et al, 2019).…”

“…The benefits of crowdfunding include online platforms that allow for efficient matching of fund-seekers and funders, aggregating small donations into large pools of capital, lowering geographic barriers to fundraising, funding projects that may otherwise be outside of traditional funding methods, and democratizing research and exploration in underexplored fields (Pomeroy et al, 2019;Popescul et al, 2020;Felipe et al, 2022). Crowdfunding platforms provide fund-seekers and funders with means for investment transactions to take place that create value (that is, via legal groundwork, pre-selection screening, and processing financial transactions), as well as allowing for the testing of new products, estimating demands, and running new marketing campaigns (Cordova et al, 2015;Lukkarinen et al, 2016;Borst et al, 2018;Wehnert et al, 2019;Popescul et al, 2020).…”

Noise of Investors’ Attention Mania in the 21st Century Indian Stock Markets

“…At the internet of things, attention is scarce economic resource (Falkinger, 2008) and investors are exploited psychologically, socially and economically at online searches (Bhargava and Velasquez, 2020;Popescul et al, 2020). From a welfare perspective, this study is vital for investors and marketing practitioners.…”

“…Investors are exposed to biases, irrationality, hope, frustrations and microstructure noise (Popescul et al, 2020;Sinha, 2019a;Ahmed, 2017). Noise of election mania (NOEM) exists -victory of the Democratic Party influences the US stock market/s negatively, the Republic Party has little effects and elections have transitional effects (Ejara et al, 2012;Behl and Sethi, 2016).…”