Technology crowdfunding in Russia: Alternative finance for start-ups

Abstract

Purpose: Crowdfunding has proved to be an effective way for many technology start-ups worldwide to start or grow their businesses. One of the largest crowdfunding platforms in the world, Kickstarter, claims to have over 700 million dollars pledged to succesfully funded projects. Russian crowdfunding market is relatively smaller in size, but can as well provide another source of alternative finance for technology start-ups. Design/Methodology/Approach: In this article, we analyse empirically the major factors that contribute to technology projects success in crowdfunding. Exploring 832 technology projects posted on two most popular Russian crowdfunding platforms, we use correlation and cluster analysis to highlight the factors explaining fundraising success over failure. Findings: Our results show that an increase in the project funding goal is correlated with a lower probability and extent of success. Practical Implications: Our findings suggest that crowdfunding may play a vital role in financing for a rather limited number of Russian technology start-ups, since the average amounts funded are still too small to be significant for most start-ups. Originality/Value: Issues for further research and discussion are identified including successful and failed projects attributes and backers' motivation.