Skip to main content

Research on the Best Ways to Get Seed Money Through Crowdfunding

"Emphasis on the entrepreneur is directly related to the probability of success in securing seed funding in the artistic category."
Early on in our careers, many of us were tutored as to how to best write an effective and attention-getting curriculum vitae (CV) in looking for a job. But in today's world, many are looking not for just a job, but are engaged in wide, often Internet-based searches for seed money to launch entrepreneurial ventures of one sort of another. But what guidelines exist as to the best way to go about securing this kind of funding?

To look into this issue and provide some answers, an extensive research project was launched at the Hebrew University of Jerusalem, in which the researchers sought to resolve these questions: Are prospective investors being influenced in their investment decisions by the entrepreneurs' description? Should entrepreneurs focus their business pitches on themselves or on their projects? The answer, for some fund seekers, is: don't hesitate to boost yourself.

Securing seed funding is one of the biggest challenges for any entrepreneur. When pitching the initiative to investors, there are various methods the entrepreneur can call upon in order to convince the investor to fund the project. 

  • The entrepreneur may decide to place the emphasis of the pitch on the business idea. Alternatively, 
  • The entrepreneur may center the presentation on his personage, calling upon his name, resume, or past accomplishments.

This study empirically investigated the importance of the entrepreneurs' description in the early investment pitches of more than 20,000 fundraising efforts, conducted by various entrepreneurs through a leading, US-based crowdfunding platform -- Kickstarter.

Using custom software to collect the investigated data, they amassed a database from Kickstarter consisting of 4,304 ongoing projects, 16,641 successful projects, 4,128 failed projects, 22,274 entrepreneurs, 1,108,233 investors, and investments that sum up to more than $120 million. The period investigated in the project was from the inception of Kickstarter, in April 2009, up until March 2012.

Suggested Reading
Click on Image
Focusing on the frequency of the mention of the entrepreneur's name in the funding applications, the researchers found that this factor was significantly higher in the applications involving "artistic" projects (those ventures involving such areas as entertainment, food, music, fashion and others) than in the technological category. Further, they found, that this emphasis on the entrepreneur was directly related to the probability of success in securing seed funding in the artistic category.

"In an era in which crowdfunding is a growing source of venture capital (more than $2.7 billion was raised in the US in this manner in 2012), it is important for academics, investors and those seeking funds, to have a basis for aiming their pitches in the most effective manner," said Sade.

*  *  *  *  *

Story Source: Materials provided by The Hebrew University of Jerusalem, via EurekAlert!, a service of AAAS. (2014, January 2). Best ways to get seed money through crowdfunding. ScienceDaily.

Comments

Popular posts from this blog

The Facts of the Small Business Survival Rate

Back thirty years ago when I first wrote about small business, a hoary and horrible statistic was bandied about, even by some of the most experienced entrepreneurial pros: "80% of new businesses fail in their first five years." 

This "statistic" has appeared in more places than you can imagine, from the leading small business magazines, books, presentations by employees of SBDCs, the SBA, SCORE, Chambers of Commerce, even professors on the college level - who should know better than to quote un-sourced numbers.  It still shows up in small-business blogs today.

For some years, I searched for a source of that statisitic.  Never found where that number came from, leading me to believe that some self-appointed expert made it up.  To quote a character from the popular television show, M*A*S*H, "Horsepucky." 

Here is the truth about the survival rate of new start up businesses in the U.S. economy from two unimpeachable sources, The Marion Ewing Kauffman Foundati…

Earn a Living Shining Shoes. . . Really

Earning a Living as a Bootblack
Can someone make a living shining shoes in today's economy?  At on time there shoe shine boys as they were called were found on street corners across the country, thousands of them.  Many were from poor families and worked to help support themselves and their families.  Today, I found three established shoe shine stands in downtown Seattle, plus two bootblacks, the traditional name of those who shine shoes, working on the streets of Seattle.

Meet George Johnson, age 74 on October 20th, a self-employed operator of a shoe shine stand in downtown Seattle's Rainier Place.  George has been shining shoes for the last sixty years, starting in Arkansas and ending up some thirty years ago at the Washington Athletic club a few blocks from his current location.
"Sixty years," I asked him the day we met.  "You ever think of retiring?"

"Gonna work until I can't do it no more," he replied.  "I don't even think about i…

Illegal Immigrants Start Legal L.L.C.'s, Create Jobs While Awaiting Deportation

The situation is a little like a story from the Twilight Zone.

Illegal immigrants can't get driving licenses, vote, or get benefits, but they are legally able to start Limited Liability Companies often creating jobs for legal U.S. Citizens.  All the while waiting to find out if they are going to be deported because they are, admittedly in most cases, in this country illegally.

It's long established that new immigrants to the U.S. are far more likely to start a business, and in so doing, create jobs often filled by U.S. citizens.  I mean, the sun rises in the East, the sky is blue, and immigrants create jobs - it's that level of certainty.

So why do certain elements in Congress,  allegedly pro-business, pro-growth, and pro-job, scream and yell about immigration as though it's a total drain on the economy?  If anything, immigration has been and will continue to be a boon to our economy, creating both wealth, new jobs and even new industries.

Here's an article from the L…