Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
19 
Contributing in order to gain financial rewards refers to the funder expecting to re-
ceive monetary profit for their investment. Financial rewards can stem from the fun-
der lending money to the entrepreneur in exchange for interest on the loan (
De 
Buysere et al., 2012)
. Alternatively, the funder can have claim to the project’s reve-
nues in return for the investment (
Giudici et al., 2013
). The funder can also buy equity 
shares from the entrepreneur, and expect the shares to increase in monetary value (
De 
Buysere et al., 2012). 
Rewards can also be material in nature. This 
refers to any kind of non-monetary com-
pensation the entrepreneur provides the funder – often a product or service.
The re-
ward can be for example a product - the development of which is being crowdfunded. 
The reward can also be being credited in the end product or service or being allowed 
to contribute creatively to the development process (
Mollick, 2014). In a case of fund-
ing scientific research for example, rewards included guest lectures, dinners and la-
boratory visits (Wheat et al., 2013). 
Funders can also decide to donate to a project without expecting any compensation 
(
Giudici et al., 2013)
. However, this kind of behavior is not driven by pure altruism. 
According to Andreoni (1988) charitable giving is motivated by many things other 
than altruism, such as ethic for duty, taste for fairness or a desire for recognition – and 
thus cannot be explained by purely altruistic motives. The gains of these motivations 
are referred to as social rewards (
De Buysere et al., 2012)
. 
Social rewards mean the “warm glow” or prestige gained from donating to a project. 
Warm glow refers to the purely internal satisfaction that comes from the act of giving. 
In other words, people are motivated to donate, because it makes them feel good. 
Prestige on the other hand is the utility that comes from having other people know of 
the donation. That is to say people are motivated to donate because they want others 
to know that they have donated. Prestige can be achieved by having the entrepreneur 
or charity publicly report the given amount. (Harbaugh, 1998)
Many times non-compensatory funding is a hybrid between getting internal satisfac-
tion and external recognition from it. Funders are often motivated to contribute in 
order to support creators and causes. Some funders have reported wanting to support a 

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