Success Factors in Reward based and Equity based Crowdfunding in Finland

2.2.1. Facilitating Crowdfunding 
Fundraising has become easier to facilitate with the arrival of crowdfunding platforms 
(Valanciene and Jegeleviciute, 2013)
. They allow entrepreneurs to solicit contribu-
tions for their ventures through a specialized site (Wheat et al., 2013). These plat-
forms help entrepreneurs reach a crowd that they may not be able to reach by them-
selves. Additionally, the crowd reached via a crowdfunding platform is likely inclined 
towards making such contributions since they have already shown interest in a crowd-
funding facilitator. Platforms also allow users easy access to information regarding 
projects and entrepreneurs (
Vasileiadou et al., 2015)
.
Using crowdfunding platforms protects both entrepreneurs and investors from under-
funding and unsuccessful ventures. Most platforms have an “all or nothing” rule on 
initiatives – meaning contributions made for unsuccessful projects are not executed
(Giudici et al., 2013)
. This practice is in place so that entrepreneurs need not have to 
commit to an underfunded project as well as protect investors from giving money to 
an underfunded venture
7
. This can understandably be unfortunate for initiatives that 
fall just short of their target amount.
6
http://www.forbes.com/sites/goncalodevasconcelos/2015/05/27/valuations-
in-crowdfunding-are-we-all-barking-mad/2/#2c6a09ce5dad
7
http://ncfacanada.org/research-crowdfunding-models-keep-it-all-vs-all-or-
nothing/

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Master’s Thesis 
14 
Alternatively, individually facilitated crowdfunding allows entrepreneurs to tailor 
their campaigns better than on standardized platforms (Belleflamme et al., 2013). 
Crowdfunding can also utilize social media. Social media allows entrepreneurs to not 
only send and receive information, but also connect with and mobilize the crowd 
(Saxton and Wang, 2013). However, the majority of contributions in social media are 
relatively small (Saxton and Wang, 2013) and individual crowdfunding seems to in-
volve rather small amounts of capital, with the median being 6400€ (Belleflamme et 
al., 2013). 
While reaching the funding target is a goal shared by most crowdfunding platforms, 
the incentives for funders and entrepreneurs to participate in crowdfunding differ 
across platforms (Belleflamme et al., 2015). Thus crowdfunding platforms differenti-
ate themselves by enforcing incentives and rules that are unique.