Forecasting equity crowdfunding success and investment dynamics with a Dominance-Based Rough Set Approach: the case of Invesdor Oy

Abstract

With more than $ 16.2 billion raised in 2014 and an annual growth of 167% from the previous year, crowdfunding is an emerging promising phenomenon bringing innovation and life to the financial environment. Providing seed capital for many companies in their early stages of activity, allowing start-ups and persons to obtain loans from the crowd instead of from traditional sources, empowering individuals seeking to launch their product and organisations looking for donated funds, crowdfunding has attracted more and more attention in the recent years. In this work, Dominance-Based Rough Set Approach is applied to a dataset of campaigns run on the equity-based crowdfunding platform Invesdor Oy, a leader in Northern Europe. The choice of DRSA forecasting model followed from the desire to implement an alternative and original study on success determinants, investment trends and investing paths of the activity that took place on the platform, since its creation. The results obtained generally confirm that some factors signal success in crowdfunding and in the specific equity-based model; for example, the presence of a video on the pitch and the provision of financial forecasts, as well as the appropriate choice of target amount and round duration appeared to foster the likeliness to hit the set target. In addition, the dataset revealed that the combination of target reached and pitch page views increment is able to roughly predict an eventual success or failure.