Motivations of Crowdfunding
Crowdfunding, which is a form of financial transaction, is a phenomenon that has been in circulation since many years by now. The foundation of every crowdfunding campaign is its creator and its supporters. As in the image below is shown, in order to realize a project of the creator, people who support his idea - the crowd - are relevant. The supporters are financing the idea, and in many campaigns they get a reward for their support back. The main question when dealing with crowdfunding, however, is what kind of motivations drive people to create crowdfunding campaigns on the one hand, and on the other hand, why this working ideas are being supported.
Motivations of the Creator
The creator is the person who establishes a campaign to a specific idea of himself or of a team. There are many ways of dealing with financial transactions. Therefore, a reasonable question is, what drives people to use crowdfunding as financial means. Besides the unconstrained way of reaching a large accumulation of people, who are willing to finance a certain idea or purpose of work, psychological aspects (see also: Maslov's Pyramide: Human Desires) are as well responsible for becoming a crowdfunding-campaign-creator.
AWARENESS OF WORK
It is safe to say that the World Wide Web facilitates spreading any possible information, thus reaching a lot of people is possible. Therefore, the gain of awareness towards the creator's work is increasing considerably. As a creator the first source of all support will be the own relatives, as familiy, friends and colleagues. With a crowdfunding campaign, however, creators are able to connect with people they are not close to, and who are willing to support their ideas while helping to expand the awareness of their project ideas. This is mostly taken place by the help of social media, as videos, images, links etc. and press.
The search of appreciation from others is a constant human desire, but also the satisfaction for themselves is also an issue. Getting approval might even have a bigger importance than materialistic aspects, as raising funds. A load of confidence is assured, when people support the creator, they simultaneously support their work. Moreover they believe in the success of the creator's work which provides a high level of value and strengthens ability to succeed in the campaign itslf. Thus, the gain of approval can be an enormous motivation.
Beyond this, creators are motivated to get a long-term interaction with their supporters. Donations, for instance, are done in the moment. When it comes to crowdfunding however, the supporters of that campaign get informed about the progress and are part of the crowdfunding community. While other financial transactions distinguishes through a shorter period of time, crowdfunding provides a long-term collaboration between a creator and his supporters.
Another aspect, that might be motivating, is the maintanance of control given through the entire crowdfunding process. In other forms of financing the creator has to forfeit the control to the investor, who can change the work. Adherence to a contract might limit the creativity of the creator and can change the project idea in first place. However, maintaining control, as in crowdfunding, leads to the accomplishmet of a certain task alone, which increases the level of confidence. Autonomy supports the feeling of success and the ability to cope with obstacles depending on certain circumstances.
EXPERIENCE AND SKILLS
Everyone who did not create a crowdfunding campaign before has to conquer certain obstalces which might get into the way of success. Therefore, a side effect is the gain of experience in this area, which can be another motivation. Due to the fact that crowdfunding consists of more domains as, for instance, marketing, communication with the public, time-management, entrepreneurial risk-taking and the prudence of financial arrangements, those different skills can be learned and improved.
Motivations of the Supporter
The most common desire of becoming a supporter is to get rewards. Besides this materialisitc factor, there are also psychological facts which drive people to become a member of the crowd of a certain campaign.
One motivation is the urge to lend a hand to creators. Mostly this desire comes from a certain connection with that person, which might be family or friends or somebody who they are sharing a personal fate with. Furthermore, encouraging creators who are close to reach their goal can also be an aspect. A supporter wants to provide an avenue of reaching this goal.
FEELING OF BELONGING
Motivation can be as well the desire of being a member of a community. Supporters of a certain campaign are like-minded, which forms a huge fan-base on a certain topic. Belonging to such a group of people evolves a feeling of shared commitment and the sense of belonging somewhere meaningful.
SUPPORT A CAUSE
Last but not least, the support of a certain cause that the campaign has in mind, is also an aspect that drives people becoming a supporter. In this case the supporter sympathizes a special project or idea, and wants it to be getting realized.
Motivations of a Deterrent - Creator
FEAR OF FAILURE
One of the main reasons to refuse becoming a crowdfunding-campaign-creator is the fear of failure and exposure in public. As much as the confidence with a successful campaign can be increased, likewise, it might get decreased by nonachievement and the revealing that the public disapproved of the own work. Moreover, the failure will get to unknown people but as well to close ones as family and friends. The fear of disappointment might lead to that great ideas for crowdfunding projects will never be done.
ADHERENCE TO BUDGET AND SCHEDULE
Developing creators have to be aware of the fact that time- and financial commitment is an enormous part of any crowdfunding campaign. The amount of work might seem overwhelming as, for instance, taking care of the supporters by answering emails and inform them with latest acitvities. Time-management must be well-done and the awareness that supporters define the financial aspect is significant. This commitment might also lead to hesitation towards the use of crowdfunding.
Due to the huge impact of supporters or non-supporters the fear of not attracting enough people for the creator's working-idea remains present. Society is teaching that at this point the lack of supporters means the lack of like-minded people, which speaks for the quality of the project itself. However, what gains importance here is the fact that many aspects can lead to an unsuccessful crowdfunding campaign. It doesnt have to be necessarily the idea of the work itself. The nonaccomplishment might be connected with the deficiency of experiences in crowdfunding but also uncontrollable circumstances can have an impact and decide on the result of such a camapaign.
Motivations of a Deterrent - Supporter
As in almost every issue, its safe to say that there are also factors which decrease the motivations of encouragement. The main issue that disapproves of being a supporter is the lack of trust to the creators and their work. Despite the fact that the deterrents might like the cause of the campaign the level of distrust, especially when it comes to how their money would have been used, is too high. The lack in transparency of crowdfunding-campaigns may cause fears regarding the usage of the donated money in a not competent way.
- Crowdfunding: Motivations and Deterrents for Participation
- Crowdfunding: Why People Are Motivated to Post and Fund Projects on Crowdfunding Platforms
- Motivation for Crowdfunding: What drives the Crowd to invest in Start-Ups