From independent films to entire start-ups, crowdfunding has backed countless projects across the world. In 2015, projects around the world raised a total of $34 billion via crowfunding platforms, and this trend is only projected to grow. But what makes a successful crowdfunding campaign? What grabs attention and lures investors to open their wallets?
According to Alexander Genevsky from RSM Rotterdam School of Management, Erasmus University, the human brain is the key to learning what makes crowd investors say yes with their money.
Genevsky, along with colleagues from Stanford University and the University of Michigan, identified that heightened activity in certain parts of the brain allowed them to accurately predict which crowdfunding projects would be successful.
“For marketing researchers, it is important to know how and why are people are triggered to make their funding decisions,” Genevsky said. To find out, researchers have traditionally asked people about their choices through surveys. However, self-reporting of preference is often prone to all kinds of biases and social influences. That’s why in this study, the researchers decided to also perform brain scans to see if this improves predictions about people’s crowdfunding behaviour.
In the experiment, the team of researchers showed 30 participants a series of 36 actual crowdfunding pitches for documentary films on Kickstarter, while scanning their brain activity in an fMRI scanner.
While in the scanner, people were asked to indicate which documentary they would back. These were real funding decisions; participants knew that their preferred films might get funded and that this might take a cut from money they would otherwise receive. In a later stage, participants were also surveyed about their choices.
The researchers then tracked which of the projects achieved funding on Kickstarter and evaluated both the fMRI scans and responses to the questionnaires. They found that greater activity during the decision task in an area of the brain called the nucleus accumbens predicted the success of a project being funded more reliably than the questionnaires.
In other words, the team discovered that this technique could predict the success of a project at the market level, as opposed to simply on an individual level. Testing just a small number of individuals could predict whether a project would achieve widespread support.
“What’s really interesting is that while brain activity in regions associated with positive affect and balancing benefits and costs predicted individual choices to fund, only activity in the region associated with positive affect forecasted funding outcomes on the internet amongst the market as a whole. Surprisingly, none of the other variables we measured did this, even upon replication of the study,” Genevsky said.
This is one of the first studies to directly compare the power of choice against brain activity in forecasting aggregate outcomes, and to demonstrate that brain activity can have a predictive edge in certain circumstances. The research suggests that the brain can predict behaviour better than past data alone.
