Research On Crowdfunding Development And Platform Dynamics That Determine Outcomes In Africa

The development of crowdfunding has become an important field in the financial sectors of many Africa countries.Crowdfunding increasingly becoming a useful approach for business startups and entrepreneurs to “leapfrog” the challenges they often confront when securing earlystage funding.Some other advantages that crowdfunding offer include low cost of financing,promotion of efficient investment decisions,elimination of geographic barriers etc.the African continent also holds an enormous potential for crowdfunding development owing to the existence of credit gap and some other specific factors.However,Africa lags behind in the crowdfunding global regional markets whereas credit gaps continues to broaden in many countries.Hence,two aspects regarding the development of crowdfunding in Africa are assessed in this study.The study examined the determinants of the frequency of crowdfunding campaigns based on the demand and supply of entrepreneur who adopts crowdfunding.I employed statistical techniques that incorporates regularization to overcome multicollinearity in the analysis due to high the dimensionality of the independent variables involved in the study.My analytical approach also incorporated supervised machine learning methods in order to determine the predictive accuracy and explanatory power of the underlining theories used in the study.The results showed that the total number of crowdfunding activities in African countries is efficiently predicted by population size,technological advancement,education,and financial development.However,since my first approach was a predictive modelling of the number of crowdfunding,insights on how individual variables contribute to the frequency of crowdfunding in Africa are not obvious,hence,I relied on explanatory research techniques to provides evidence on the determinants of the frequency of crowdfunding.So,I find evidence that the economic variables have a significant impact on the number of crowdfunding campaigns.For instance,the results showed that the relationship between GDP growth and the frequency of crowdfunding is statistically significant and negative for the total sample indicating that Africa in general,is a fertile ground for crowdfunding due to the underdevelopment of many African economies.It can also be observed that total investment has a positive impact on the frequency of crowdfunding campaigns in Africa.Hence,my recommendation is that policymakers should implement policies that promotes investments in their economies.The findings also help us to understand that technological advancement has a significant impact on the number of crowdfunding.The spread of broadband subscription in Africa is enabling the spread of Fin Tech disruptions in the financial sectors of many African countries.Hence,the adoption of advanced technology especially in telecommunication could have a significant effect on the development of crowdfunding.The findings show that education,wealth,institutional features,and labour force have a significant impact on crowdfunding in Africa.Although crowdfunding has great potential to end the credit gap for business startups in Africa,most crowdfunding campaigns often fail to achieve their funding targets.Hence,I examine the dynamics of campaigns platforms that determines the outcome of a crowdfunding campaigns based on social capital theory.The study identifies three major types of social capital that contribute to the outcome of a campaign namely,structural social capital,relational social capital,and cognitive social capital.Data on various attributes of crowdfunding campaign is taken from The Crowdfunding Data Center.The study includes predictive and explanatory modelling techniques for the analysis.In order to explain the determinants of crowdfunding outcome,the study adopts ordinal logistics regression modeling.The results indicate that a fundraiser's information has a significant impact on the outcome.Hence,my conclusion is that a crowdfunding campaign that signals relational social capital has a great likelihood of attaining the funding goal.The results also indicate that the type of crowdfunding campaign and the average amount pledged to the campaign has a significant impact on the outcome of crowdfunding.Hence,it is determined determine that campaigns that signal cognitive social capital qualities have great likelihood of achieving the campaign target.The study also reveals that the number of backers for a project has a significant impact on the outcome of a crowdfunding campaign.Hence,I conclude that campaigns that signal cognitive social capital have a great likelihood of achieving the campaign target.Furthermore,entrepreneurs must increase their visibility to potential capital providers by giving detailed information about themselves and their projects.Also,the provision of personal contacts and referees are some of the important measures to increase their visibility.Entrepreneurs must also endeavour to advertise their projects through other channels to increase the visibility of the projects.Again,entrepreneurs must increase access to information about their projects.This move is achievable through creating websites for the projects and increasing the presence of the projects on social media.