Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
2 
 
Author
Pilvi Paakkarinen
Title of thesis
Success Factors in Reward based and Equity based Crowdfunding in 
Finland 
Degree
Master of Science in Economics and Business Administration 
Degree programme
Information and Service Management
Thesis advisor(s)
Virpi Tuunainen
Year of approval

2016
Number of pages

89
Language

English
Abstract 

Finding funding is a key hurdle for small ventures and businesses. Crowdfunding has 
emerged as an alternative option alongside traditional funding options in the past 
decade. Crowdfunding refers to soliciting funds from a large group of people often 
through the Internet. The raised capital is often formed from numerous small contri-
butions. 
In academic literature both entrepreneurs and funders were found to have heterogenic 
motivations for participating in crowdfunding. Entrepreneurs partake in order to raise 
funds for their business as well as to find validation for ideas and to verify demand 
for their offering. Funders’ motivations for contributing to crowdfunding include 
supporting a cause or seeking financial returns. Crowdfunding projects have been 
found to fall into four models: donation, reward, lending and equity based crowd-
funding – based on the type of compensation funders receive for their contribution. 
Earlier research indicates that project type, entrepreneur background, social network, 
timing and duration, information sharing, geography and other crowdfunding pro-
jects all affect the success of crowdfunding initiatives. 
A study aimed at identifying success factors in crowdfunding in a Finnish setting was 
conducted in this Thesis using data from online sources and five interviews. Inter-
views were held with three reward-based and two equity-based crowdfunding entre-
preneurs. The study results support especially indications that project type, social 
networks and information sharing impact the success of a crowdfunding project. 
Contrarily, entrepreneur background did not seem to affect crowdfunding success as 
much as previously thought. 
By utilizing a wide social network and providing a captivating narrative, entrepre-
neurs can attract interest in their crowdfunding project. Herding behavior of funders 
can draw in further contributions, increasing the success rate of the crowdfunding 
project. 
Keywords
crowdfunding, social network, crowdfunding project, funder motivation 

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