Crowdfunding Excellence: How Social Entrepreneurs unleash the Power of Crowdfunding Campaigns

A Blogpost about Crowdfunding bringing Added Value to Social Entrepreneurs and Key Factors for Successful Crowdfunding Campaigns

Topic
Facing the numerous social challenges, there is a growing need for sustainable action in business. Social entrepreneurs are on the rise and aim to repair the world. Previous research has already investigated various aspects of social entrepreneurship and of crowdfunding. This master thesis sets out to explore and answer the research question “How does crowdfunding bring added value to social entrepreneurs and what are key factors for successful crowdfunding campaigns?”.

Relevance
Since one of the hardest challenges for social entrepreneurs venturing social impact is acquiring classical venture capital or bank loans, crowdfunding is an important alternative source of funding. In view of this relevance and certain research gaps, this whitepaper delves deeper into the questions of the added value coming from crowdfunding to social entrepreneurs as well as important factors to succeed in such campaigns.

Results
Crowdfunding is much more than a necessary workaround to get funding. It offers added value to social entrepreneurs by enabling them to market test their products and services or increasing publicity at a very low fee. Further we found that a sufficiently large network of supporters as well as flexibility to react on timing and momentum are significant. Another factor is planning sufficient resources to run the campaign besides the daily business. Moreover, the findings suggest that communication with the crowd has to be very transparent and clear in order to build trust and an understanding about what the social entrepreneurs mission is and why they should support. Last but not least this whitepaper suggests that it is better for social entrepreneurs to strive for excellence (do the best with what you have) instead for perfection.

Implications for practitioners

• Besides reaching the funding goal, crowdfunding campaigns offer market testing and an increase in publicity.
• Crowdfunding campaigns need good preparation in advance, great proactivity during the campaign and endurance in the postprocessing phase.
• In communicating with the crowd social entrepreneurs must focus on transparency, purpose, clarity and emotions.

Methods
To answer the research question we conducted semi-structured interviews with nine social entrepreneurs via 45-60 min MS Teams calls. After a manual quality check, we uploaded the interview transcripts to MAXQDA, where the inductive coding according to the Gioia (2013) methodology took place. We presented the three-layer coding system in two common data structures as suggested by Gioia et al. (2013).