Platforms' partner networks: the missing link in crowdfunding performance

Abstract

A network of partners helps and assists a crowdfunding platform (CFP) in scouting, assessing and selecting projects. This cooperation increases the number of successful projects by attracting a sizable number of investors, proponents and attracting marginal investors when a campaign falls short of the threshold for success. This study examines the role of partner networks in a platform ecosystem, specifically in terms of number of different partners and their diversity in the performance of the crowdfunding campaign. Using logistic and linear regressions, we analyze a sample of 233 projects, both funded and not funded, launched by 10 Italian equity CFPs between 2014 and 2018. Our findings indicate that the variety of partners in a platform's network influence the probability of campaign success and how much capital the proponent company raises. CFPs are resource-constrained new ventures, and a network with a wider variety of partners ensures the strategic resources and competencies that are required in an early stage market, thus facilitating campaign funding. The variety of partner networks could help CFPs to offer unique and strategic value propositions and define the competitive positioning of platforms. This study provides a deeper understanding of the determinants of equity crowdfunding campaign performance by emphasizing the role of CFP's network of partners on the entire crowdfunding ecosystem and its underlying organizational elements.