The rise of crowdfunding as a new method for entrepreneurs to raise capital in order to bring their innovative ideas and business plans to fruition has been a significant development in recent years. As a result, crowdfunding platforms such as Kickstarter, GoFundMe, and Indiegogo have been developed to assist in the hosting and mediation of fundraising efforts. Several successful funding reports have helped to make such platforms extremely popular, attracting increasing attention and participation from a diverse range of entrepreneurs and investors.
While establishing a project on these platforms is relatively simple, achieving the funding goal at the end of the process is more difficult to achieve. Approximately 35.83 percent of crowdfunding projects succeed, according to statistics released recently by Kickstarter, the world's largest crowdfunding platform at the time of this writing.
Many factors may play a role in the outcome, including the previous success rate and experience of the creators, promotion on social media, and the language used to describe the projects. While competition among projects in the crowdfunding markets is a critical consideration, to our knowledge, it has not been the subject of much research attention, despite the fact that it has been a topic of research in the traditional marketing field.
The success of a project is significantly influenced by the level of competition. Backers can see all of the projects that are being offered on a crowdfunding platform. A zero-sum game is created by a limited supply of resources (available funds in the market). If one project receives more funding than another, it is possible that other projects will receive less. To put it another way, there is competition among projects, whether explicitly or implicitly. This research aims to develop a model to quantify projects' competitiveness on a crowdfunding platform. This model will help creators better understand the global picture of market competition and, as a result, increase their chances of raising funds through successful fund-raising campaigns.
Competition in Crowdfunding:
Crowdfunding Competition is typically quantified in the marketing literature in terms of competitive pressures, according to the works that have been published. Competitive pressures can be measured in a variety of ways, including the degree of substitutability of a product and the number of competitors in the market. These existing approaches have a tendency to take into account a large number of factors that could be relevant in a competition and to employ heuristics to estimate those factors.
Rather than comparing apples to oranges, one intuitive approach is to take into account only projects with the same subject matter in the same competition, as if it were a perfect competition. This method is implausible and ineffective. If you are looking for two projects with exactly the same content on a real crowdfunding platform, you will almost certainly come across them. As opposed to being a binary number 0 or 1, content similarity is typically measured as a continuous measure ranging from 0 to 1. According to heuristics, the greater the similarity between two projects, the greater the likelihood that they will compete for the same resource. The second challenge is how to deal with content similarity in competition modelling in an appropriate manner.
Finally, as the popularity of a crowdfunding platform grows, the competitiveness of projects on the platform changes over time. If a new project is introduced, it may attract more supporters than an existing project that has been in existence for a long period of time, for example. When a project is nearing completion, on the other hand, it may elicit a sense of urgency, which may result in a more rapid increase in funding levels than otherwise. Furthermore, according to the “rich-get-richer” theory, projects that are close to or exceeding their pledging goals are more likely to attract additional funding from other sources than those that are not. Every one of these dynamic, time-dependent phenomena that manifest themselves in crowdfunding competitions must be taken into consideration when developing the model.