Success Factors in Reward based and Equity based Crowdfunding in Finland

Master’s Thesis 
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focuses on the success factors affecting reward based and equity based crowdfunding 
initiatives. Due to the lack of research on crowdfunding in a Finnish context (Lasrado 
& Lugmayr, 2013), this thesis studies Finnish initiatives and their success factors. 
With the use of triangulation and multiple research methods, the thesis aims to pro-
vide holistic, yet descriptive insights into success factors of crowdfunding initiatives.
This thesis aims to provide answers to the following question: 
What aspects affect the success of reward based and equity based crowdfunding initi-
atives in Finland? 
 

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Master’s Thesis 
7 
2. Venture Funding
All ventures require resources and in many cases that means monetary funds. Some of 
these ventures are philanthropic in nature, meaning they serve a non-profitable cause. 
For example, cultural events might be non-profit and thus their funders do not expect 
financial returns for their input.
In the case of business ventures, the goal is for the venture to be financially sustaina-
ble in the future and provide profit to owners and investors. Many ventures are not 
profitable in their early stages and take a varying amount of time to potentially be-
come profitable. Additionally, they contain a high level of risk concerning whether or 
not they ever become profitable. This means funders can expect financial returns for 
their investment, but due to a high risk of failure, the interest placed on the funds is 
often significant. 
Due to the high risk of failure, not many individuals or financial organizations are 
willing to fund start-up entrepreneurial ventures. Earlier research shows that one of 
the biggest hurdles for ventures is finding funding (
Manchanda and Muralidharan, 
2014; 
Frydrych et al., 2014; 
Lasrado and Lugmayr, 2013). Manchanda and Murali-
dharan (2014) go on to state that the lack of funding is a major cause of death for ven-
tures. 
According to Sigar (2012), small businesses are often denied bank loans due to 
lack of collateral, operating history and a proven track record. 
The lack of funding options available for small businesses might seem like a problem 
for the entrepreneurs, not society as a whole, but according to 
De Buysere et al. 
(2012) the majority of new jobs in Europe come from small and medium sized busi-
nesses. They account for 99% of all enterprises in Europe, as well as providing jobs 
for 67% of all employees. 58% of value add in the non-financial business economy in 
2011 was created by small and medium sized businesses, which means the impact 
they have is substantial. 
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1
http://ec.europa.eu/eurostat/documents/3930297/5967534/KS-ET-11-001-
EN.PDF/81dfdd85-c028-41f9-bbf0-a9d8ef5134c5

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