Category: crowdfunding

A new article published this week in the Journal of Business Finance and Accounting takes a step forward in the path that has been unfolding for those of us working at the intersection of community projects and private investments. The paper abstract says (emphasis added): “We investigate determinants of investment decisions in investment‐based (equity and bond) crowdfunding campaigns, using a novel investment‐, investor‐ and campaign‐level database, where equity refers to investments in entrepreneurial start‐ups and bonds to large real estate projects. We find that investors who have higher social interactions invest more. Social interactions are important in an equity crowdfunding context but do not affect participation in bond investments. This is consistent with the view that investors’ social networks help reduce information asymmetry. Women invest less in the riskiest (equity) investments but more in safer ones (bonds). These findings are better explained by differences in risk aversion than differences in overconfidence between men and women. Overall

, the findings contribute to the understanding of how investment‐based crowdfunding can be a viable source of entrepreneurial finance and how entrepreneurs’ campaign decisions affect investor participation in this new form of entrepreneurial finance.”

What this means for us, simply, is that Baysave equity crowdfunding strategy should focus on men who are active is social media platforms or otherwise well-connected in their communities. Other lower risk debt-based projects like private mortgage might be more interesting to female and institutional investors.

This research finding appears to be consistent with earlier research and our own observations. Specifically, it addresses the ongoing conflict where the larger private investors want to discourage us from publicizing news of bayshore redevelopment while, in contrast, I see public media and social medial more frequently as a source of strength. Whenever publicly disclosed information is used against us in a marketing or legal situation, I hear a “told you so” from investors who prefer to remain private.

This is a useful reminder to us as we revise our 2018 strategic plan documents for 2019.

Since 2015, public media in Australia has covered the gradual transition of funding for scientific and environmental project to social media. ABC and NBC networks produced updates this week. ABC writes:

“The competition for research funding is driving some Australian scientists to crowdfunding. It can take up to a year for academics to find out if they’ve been successful in getting government grants. It’s highly competitive with the success rate for the Australian Research Council usually about 18 percent. But going cap in hand to the public, via the internet, isn’t a sure thing either.”

Crowdfunding has the potential of being faster than the grant process. But it has its own challenges. Baysave is also learning about crowdfunding; we’ve had some success and some learning experiences that were not immediately successful. In the long run