Success Factors in Reward based and Equity based Crowdfunding in Finland

5.3. Duration and Timing 
The duration of a crowdfunding initiative and how it carries out over time influences 
the probability of success. Initiatives with higher funding targets tend to have longer 
funding durations. Yet, a long duration might expose the initiative’s legitimacy and 
narrative to questioning, leading to loss of support. (Frydrych et al., 2014) Without 

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Master’s Thesis 
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conciseness, funders can easily feel that the narrative of the crowdfunding initiative is 
disorganized and uncertain. Longer funding durations diminish the sense of urgency, 
encourage procrastination and tend to lose interest in the eyes of the funders
89
. 
Crowdfunding initiatives go quickly out of favor with the funding community unless 
momentum is maintained (
Ward and Ramachandran, 2010)
. 
The role of early funders is important to the success of the initiative. Word of mouth 
and herding behavior drive other funders to contribute as well. (Buttle, 1998, Huang 
and Chen, 2006) Funding propensity increases as the total amount funded increases. 
This is called the “snowball effect”. The funding tendency of people distant to the 
entrepreneur is especially responsive to the snowball effect. (Agrawal et al., 2015) 
This is likely because funders close to the entrepreneur often feel obliged to be early 
funders. Additionally, these funders have a social connection with the entrepreneur 
and thus do not rely on the community’s social network effect in order gain 
knowledge of the initiative’s attractiveness. 
5.5. Financial Signaling and Information Sharing 
In order for an initiative to gain financial capital, funders need to view it as an attrac-
tive financing opportunity. One key challenge in crowdfunding is the information 
asymmetry between funders and entrepreneurs (Agrawal et al., 2015). Entrepreneurs 
hold much more relevant information concerning the venture than potential funders. 
This means entrepreneurs need to reveal certain information pertaining the project in 
order to create true funding interest in the crowd. 
Attractive ventures have a clear plan and goal. Thus, entrepreneurs need to be trans-
parent and persuasive about the funding goal. This often calls for a market-referencing 
business plan to be presented to funders. (Frydrych et al., 2014) This is especially true 
for investment-based crowdfunding. Since equity and lending crowdfunders are inter-
ested in the financial rewards gained from their investment, clear plans regarding the 
project are important to them. Investment-based crowdfunders pay a lot of attention to 
8
http://www.crowdfundingfocus.com/how-long-should-my-crowdfunding-
campaign-last-for/
9
https://go.indiegogo.com/blog/2010/11/more-time-doesnt-mean-more-
money.html

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