Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
5 
1. Introduction 
One of the biggest challenges for new ventures is finding funding (
Manchanda and 
Muralidharan, 2014; 
Frydrych et al., 2014; 
Lasrado and Lugmayr, 2013
). In tradition-
al funding, such as bank loans, venture capitalists and business angels, small busi-
nesses are under intense scrutiny (Gompers and Lerner, 2001) and are often denied 
capital (Sigar, 2012). In Finland, venture funding from these traditional sources has 
decreased substantially in the past few years 
(Lasrado and Lugmayr, 2013, 
Napier et 
al., 2012
).
This hurdle often proves to be fatal for budding entrepreneurs (
Manchanda 
and Muralidharan, 2014).
Crowdfunding has emerged as an alternative for small businesses with limited financ-
ing options to attract capital
(Valanciene and Jegeleviciute, 2013)
. In crowdfunding, 
the entrepreneur looks to find a large number of small contributions from the public 
(
Mollick, 2014, 
Lehner, 2013
). This open call for funding is facilitated through online 
mediums (Gerber and Hui, 2013, 
Lehner, 2013
). Funders as well as entrepreneurs 
participate in crowdfunding for numerous reasons (Gleasure, 2015, Mollick, 2014). 
Crowdfunding is often categorized into four types: donation based, reward based, 
lending based and equity based crowdfunding (Mollick, 2014, 
Frydrych et al., 2014). 
These all provide slightly varying compensations for the funders for their contribu-
tions as well as having differing implications for the funders looking for capital. The 
type of compensation funders receive for their participation also affects whether or 
not a crowdfunding initiative reaches its funding target 
(
Frydrych et al., 2014).
A crowdfunding initiative that reaches its funding target is viewed as successful. Most 
initiatives fail to reach their target and those who are successful, surpass their target 
by only a small margin. (
Mollick, 2014) Some research has been done on the aspects 
that affect the success of crowdfunding initiatives (
Ahlers et al., 2015, Frydrych et al., 
2014, 
Mollick, 2014, Belleflamme et al., 2013
)
. 
This thesis aims to broaden the understanding of which aspects in the crowdfunding 
practice have a significant impact on the success of initiatives. Moreover, this thesis 

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