Success Factors in Reward based and Equity based Crowdfunding in Finland

9.2.8. Financial Signaling and Information Sharing 
Due to the information asymmetry between entrepreneurs and funders (Agrawal et al., 
2015), it is important for entrepreneurs to provide potential funders with adequate 

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Master’s Thesis 
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information on which to base decisions on. All the interviewees recognized the im-
portance of good communication and sufficient provision of information. 
Since funders are contributing capital for the project, entrepreneurs are to be transpar-
ent and persuasive about the project goal. This is often achieved by providing a busi-
ness plan to the funders. (Frydrych et al., 2014) As suggested by this research, 
Leppänen felt transparent and open communication was central for the Autolla Ne-
paliin project. As for providing details concerning the use of the capital raised, only 
the main goal of producing the film was described. Further details were given of the 
amount exceeding the target of 25 thousand euros. In accordance with Frydrych et al. 
(2014), EkoRent’s “basic business model is available on the company website” and 
details about the use of the raised capital were provided on the campaign site. 
Providing clear plans for the future of the project is especially important for invest-
ment-based crowdfunders. This is because they expect monetary rewards for their 
contribution and are thus more interested in the profitability of the business. (Ahlers et 
al., 2015) Juuri acted in accordance with this research having “all the financials pre-
sent, because without them nothing works”. Since Juuri had only one location open at 
the time of the crowdfunding campaign, the crowd could not be provided with much 
historical financial data. But, “estimates of revenue development” were provided. Pere 
from Pyynikin Käsityöläispanimo also felt it was important to provide business plans 
for funders. He claimed they “had to tell what investments were going to be made, 
what was going to be done with the money and what the goal was”. Additionally, he 
said, “there were some inquiries about financials”. According to Ahlers et al. (2015), 
investment-based crowdfunders pay attention to financial and governance reports, and 
consequently, businesses that do not provide financial forecasts are less likely to at-
tract funders. Thus, it would seem that both Juuri and Pyynikin Käsityöläispanimo 
followed research supported practices in regards to financial signaling. However, both 
doubted the role that this played in their crowdfunding success. Pere from Pyynikin 
Käsityöläispanimo claimed financial data “was not that important in this campaign” 
and that “a detailed inspection of data is not the most important aspect for funders”. 
Thus, it seems both the equity crowdfunding businesses acted somewhat according to 
researched best practices, but did not feel they were crucial to their success. 

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