Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
3 
Table of Contents 
1. Introduction ............................................................................................................. 5 
2. Venture Funding ..................................................................................................... 7 
2.1. Types of Funding ................................................................................................ 8 
2.1.1. Government Grants ....................................................................................... 8 
2.1.2. Bank Loans ................................................................................................... 8 
2.1.3. Venture Capitalists ....................................................................................... 9 
2.1.4. Business Angels .......................................................................................... 10 
2.2. Defining Crowdfunding .................................................................................... 11 
2.2.1. Facilitating Crowdfunding .......................................................................... 13 
2.2.2. Current State of Crowdfunding .................................................................. 14 
3. Motivations to Participate in Crowdfunding ......................................................... 16 
3.1. Motivations of Entrepreneurs ............................................................................ 16 
3.2. Motivations of Funders ..................................................................................... 18 
4. Crowdfunding Models .......................................................................................... 21 
4.1. Crowdfunding Types ......................................................................................... 21 
4.1.1. Donation Model .......................................................................................... 22 
4.1.2. Reward-based Model .................................................................................. 23 
4.1.3. Lending Model ........................................................................................... 24 
4.1.4. Equity Model .............................................................................................. 24 
5. Success Factors of Crowdfunding ........................................................................ 26 
5.1. Project Type and Rewards ................................................................................. 27 
5.2. Entrepreneur Background ................................................................................. 28 
5.3. Social Network Ties .......................................................................................... 29 
5.3.1. Social Network of the Entrepreneur ........................................................... 29 
5.3.1. Social Network Effect ................................................................................ 30 
5.3. Duration and Timing ......................................................................................... 31 
5.5. Financial Signaling and Information Sharing ................................................... 32 
5.6. Geography ......................................................................................................... 33 
5.7. Other Crowdfunding Projects ............................................................................ 34 
6. Legal Regulation ................................................................................................... 35 
6.1. Donation and Reward-based Crowdfunding ..................................................... 35 
6.2. Investment-based Crowdfunding ...................................................................... 35 

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