Comparing Crowdfunding Theory and Practice: The Case of Technology Industry in England

Abstract

This article analyzes crowdfunding campaigns of technology firms in England. We compare the predictions of crowdfunding theories with empirical evidence. We are particularly focused on factors of campaign success related to indirect signalling (such as the choice of campaign target) by founders that have mixed evidence in existing research as opposed to direct signalling (eg. the number of updates by founders). We are also focused on comparing different cities of UK with regard to crowdfunding. Regression and correlation analyses were used to analyze the connections between different factors and the campaign outcomes. We have found that the campaign target has U-shape effect on success of campaign. For example, the probability of success increases if the threshold value is neither very small or significantly large. This is consistent with the spirit of some theoretical research on crowdfunding. We also find that cities with better access to ultrafast broadband among households and cities with greater number of people with higher education have significantly better results in crowdfunding. We also provide an overview of literature related to informational problems in crowdfunding, highlight gaps and controversial areas and provide some suggestions for future research.