However, instead of concentrating on the motivations that lie beneath their decision to launch projects on crowdfunding platforms, it will rather attempt to discover what factors influence their ability to succeed in their fundraising efforts.

1 INTRODUCTION

Crowdfunding has become a novel and valuable source of fundraising for entrepreneurs and individuals (Belleflamme et al., 2014; Mollick, 2014). This innovation, in the fields of financing and information, enables the entrepreneurs, especially those newly founded minor entrepreneurs and small artistic projects, to raise hundreds of thousands of dollars through a website or a dedicated platform (Howe, 2006; Schwienbacher & Larralde, 2010; Ordanini et al., 2011). Crowdfunding is growing at an incredible fast pace and it can be considered as a sort of social entrepreneurship (Balboni et al., 2015). This type of financing can be witnessed through the case study of internet crowdfunding platforms such as Kickstarter and IndieGoGo, which represent the two most famous existing platforms. These platforms empower different entities to take part in raising an amount of capital that will finance several business plans of Projects, organisations and businesses. This method is an alternative to well-known financing channels (e.g., Venture Capitals, business angels and banks). Nowadays, crowdfunding is used to support philanthropic activities, social and cultural initiatives (Giudici et al., 2013). However, business-oriented initiatives such as reward-based projects are becoming more and more relevant in this industry. Crowdfunding can be seen as part of the digital revolution, with a democratic essence, internet-based mechanism, using elements of free trade and collaborative wisdom, to blend people and communities into a common cause. “By donating money and support to a project on crowdfunding websites, people are shaping society by deciding which idea is worthwhile pursuing and which is not, and they are doing so by managing their own resources and time, investing their own money” state Bruntje & Gajda, (2016) and I could not agree more with this statement because crowdfunding really is giving power and responsibility to people.

Speaking of the origins, Agrawal et al. (2011) find three basic reasons that led to crowdfunding these days: 1. the global financial crisis, which has made the bank credit more expensive and therefore more difficult to obtain; 2. the development of the web 2.0 technologies, which facilitate the interactions between the project initiators and the public of Internet users; 3. the popularity of crowdsourcing. Crowdsourcing and crowdfunding share indeed the same target: the Internet users. However, crowdfunding differs from crowdsourcing, as its main aim is to sollicite the contribution of money by the crowd of Internet users, while crowdsourcing focuses mainly on the provision of ideas, feedbacks and solutions to firms’ problems and innovative projects. In crowdfunding, the people backing the project (i.e., the crowdfunders) are free to offer just their financial support without necessarily contributing to the development of the project with their own ideas and feedbacks. Crowdfunders know that crowdfunding projects are characterized by high uncertainty. These projects are often just works in progress: they will be completed or developed in the future and are therefore susceptible to large changes, even larger in case of adverse contingencies.

4 types type of patterns can be identified into crowdfunding: the donation pattern, the return pattern, the debt pattern, and the equity pattern. The concept of crowdfunding investment and financing is quite recent, in fact it was introduced in America just 15 years ago for the first time. The crowdfunding model offers a new solution regarding the difficulty of financing and the high cost of financing, especially for small and medium-sized enterprises. “At the same time, it provides the innovation and entrepreneurship of all ambitious young people a financing channel, which is conducive to the promotion of scientific and technological innovation and the implementation of new ideas, and is conducive to increasing employments and maintaining social stability.”

“Crowdfunding is part of the world’s progress towards a global and digital society. The idea behind crowdfunding is not new, it is the idea of people pooling their resources in order to realise a common goal, sharing tasks and responsibilities. Yet there is a noticeable lack of scientiﬁc research on crowdfunding.” (Bruntje & Gajda, 2016)

1.1 Purpose

Like Moonhee Cho & Gawon Kim (2016) state: “Despite the popularity of crowdfunding in academy and practice, there is a lack of cross-cultural study”. To contribute filling this study gap this piece of research analysed correspondences and dissimilarities of successful crowdfunding. Moreover, I chose two such different – economically, culturally and politically speaking – countries because Crowdfunding represents a great opportunity for both, in terms of economic benefit and social support. Even though this phenomenon may have started a little earlier in Italy, it became popular later, corresponding with the foundation of the first crowdfunding platform in China. Three que

Question 1: What are the current developments in the Crowdfunding industry China and

Italy?

Question 2: Which are the main drivers that determine the success of a crowdfunding

campaign (i.e. social, political, legal or technological)?

Question 3: Given the different communication tools in Italy and China, are donation-

based crowdfunding campaigns structured in a different way?

1.2 Outline

In order to address the research question, the thesis will begin by reviewing the existing literature review on definition, dynamics, stakeholders’ behaviour and Social Network Effect with particular regard to the crowdfunding industry. Following, the research methodology section will first present the case studies that were chosen for this research. The next part will focus on the findings and analysis of both case studies, followed by a section that will provide details about external and internal analysis of the crowdfunding industry. The discussion and conclusion part will highlight both theoretical and managerial implications of this research. In addition, limitations and recommendations for future research will be examined.

1.3 General overview

Value china $3.3 billion

Value italy $60 million

No. of platforms 608 – 82

Suppoters 857k – 137 million

1.4 Background from Italy

Figure 1. Distribution of platforms per model

Source of information:Il Crowdfunding in Italia, 2015

Nowadays in Italy, there are 82 platforms and 857.331 donors. As of October 21st 2015, 69 can be considered active, while 13 are on a launching phase. If we go back to just one year before in May 2014, the active platforms were 41, meaning there has been a significant 68 percent increase (Il Crowdfunding in Italia, 2015). Among the approved traditional models in the crowdfunding sector such as equity-based, reward-based, lending-based and donation-based, there are some platforms offering more than a model that can be defined as hybrid. In the midst of the 69 active platforms, 31 (45 percent) are reward-based, 13 (19 percent) are donation-based, 13 (19 percent) are equity-based and 3 (4 percent) are lending-based. The hybrid platforms account to 9 (13 percent), and the most common model is reward plus donation-based (Il Crowdfunding in Italia, 2015).

If we compare 2014 and 2015 situation, following the registration to the Italian Securities and Exchange Commission (CONSOB), equity-based platforms have increased from 5 to 19 percent active platforms. Hybrid platforms instead have decreased from 24 to 12 percent.

1.4.1 History and Geography

Crowdfunding in Italy was born in 2005 with “Produzioni dal Basso” (which literally means Productions coming from the ground).

Figure 2. No. of platforms born per year

Source of information:Il Crowdfunding in Italia, 2015

These numbers attest to a high vitality of the sector, which has been accompanied also by a significant mortality rate. Most importantly I would like to bring the attention to the geographical point of view, given the great economic and social difference between the north and the south of Italy (Lynn, R., 2010). This issue is also present in China, on different sizes and reasons, depicted instead from west to east, or from the interior land to the coast (Guojie, C., 1997; Tian, Q., 2004; Zhang & Zou, 1998).

As the north of Italy is far more developed than the south, it is no surprise to find that the majority of crowdfunding platforms, precisely 26, is located in northern Italy. The city of Milan is actually a cluster to these: in fact 16 platforms have their registered office headquarters there. In line with my statement, 9 platforms have their registered office headquarters in central Italy and only 3 in the south. 2015 has been a prosper year for the Crowdfunding industry in Italy, total worth $60,145,520 (Il Crowdfunding in Italia, 2015).

1.4.2 Demographics

Overall, there are 81 founders, with an average of 4.2 founders per platform, with a minimum of 2 and a maximum of 8 founders (Il Crowdfunding in Italia, 2015). Entrepreneurs in this sector are mainly men, aged under 40, graduates with a background in economics or engineering. In particular, amongst the founders of crowdfunding platforms, about two out of three are men, while women account for 32 percent. The founders have on average 38 and a half years. In particular, 21 percent of the founders are aged between 20 and 30 years, 38 percent between 31 and 40 years, 27 percent between 41 and 50 years and 14 percent over 50 years.

Figure 3. Founders’ age distribution

Source of information: Il Crowdfunding in Italy, 2015

Thanks to this information it is possible to understand that for the majority of the founders it is not the first work experience in fact, they might have had the opportunity to gain skills in previous work positions. In addition, 64 percent of the founders plays professional activities besides the platform; these are mainly consultants, managers or professors. Altogether, the Italian crowdfunding platforms employ 249 people, with an average of 5.7 workers per platform. The platforms that have employees account for 50 percent, those who opt for stable employees are 64 percent and 66 percent looks for occasional collaborators.

1.4.3 The Projects

The projects received by the platforms since their launch are in total 100,924, distributed as follows: 67 percent were received by platforms based on the debt model, 23 percent of those based on the rewards, 7 percent by hybrid platforms (rewards + donations) and 3 percent by platforms based on donations. Compared to the figures recorded in May 2014, when the number of received projects stood at 48,357, there has been an increase of one 108 percent. 73 percent of the surveyed platforms performs a selection of the projects before being published. Overall, the published projects are 21,384 (21 percent of those received): of these, 47 percent are based on debt, 32 percent on the hybrid model (rewards + donations), 11 percent of the rewards model and 10 percent on donations model. This data again shows how fast trends can change in one year: lending-based platforms dropped 20 percent of the presence still keeping the largest market share, whereas the hybrid model had a sharp rise of more than 30 percent on the market share, taking some projects from the reward-based model which dropped by 10 percent. Finally donation-based platforms increased their market share. The highest fundraising project collected $1,550,088.

1.4.4 Financing

In the case of 4 platforms (10 percent), just financing shares above 100 are being recorded. The Model Analysis brings to light that platforms based on debt only registered financing shares above 40 Euro, and that equity-based platforms can harvest financing shares bigger than 100 euro 80 percent of the times. According to Il Crowdfunding in Italia, the main reason for a campaign’s failure can be traced to the lack of a suitable and strategic plan of communication. More generally, causes can be that initiators often underestimate the need to support the campaign after it has been published, through both online and offline advertising. Other reasons for failure reported concern the lack of a social meaning or target audience that is too vague. Among the sources used for financing platforms, personal funds are the most used 65 percent of the times on average. Other sources (EC, national, regional, local, venture capital, angel investment, crowdfunding, bank loans and donations) are used in percentages ranging from 1 to 5 percent. In no case they were used loans from relatives / friends. It is worth noting that 27 platforms were financed exclusively with personal funds, a platform has been fully financed by European resources, one with angel investment, one with crowdfunding and exclusively with bank loans. Based on the model, platforms debt-based platforms have resorted to crowdfunding and Angel investment (respectively 50 percent and 35 percent), platforms based on donations and donations + debt, resorted to bank loans (representing in both cases, the 10 percent).

1.4.5 Payment methods

Speaking of the payment terms, most of the surveyed crowdfunding platforms use the payment gateway (76 percent), credit card (67 percent) and bank transfer (65 percent). The text message is not however a widespread payment method.
Among the payment gateway types, PayPal is used by half (49 percent) of the surveyed platforms. Stripe and Amngopay are both used by 12 percent, 5 percent for Lemonway and Braintree from two percent of the platforms.

1.5 Background from China

Observing Figure 4, in 2016, among all the crowdfunding platforms (excluding Hong Kong, Macao and Taiwan regions) at least 193, of which 84 percent belong to the Grey Import Cars market crowdfunding platforms. As of the end of 2016, the industry counts a total of 608 crowdfunding platforms. Platforms that collapsed, failed, ran out of business or had general problems are 271, accounting for about 45 percent of the proportion, and are represented by the inner circle. Platforms running normal operations are only more than 337, excluding the 119 Grey Import Cars market crowdfunding platforms, the traditional crowdfunding platforms are only 218.

Figure 4. Distribution of platforms per model

Source of information: Zero One Research Institute Data Center, 2016

After April 2016 the Grey Import Cars crowdfunding segment showed a rapid growth trend, in September 2016 the number of new platforms “peaked” to 35 platforms, slowing down for the following 3 months until reaching less than 10 new platforms during December. According to the Zero one research institute data center, it is clear that as of the end of 2016, there were a total of 173 Grey Import Cars crowdfunding platforms, of which 119 were running normal operations, accounting for about 69 percent

Equity-based crowdfunding platforms are accounting for the highest number of platforms counting 131 of them. Among the 337 total platforms we can count 156 equity-based also including hybrid types (equity-based + reward-based) representing 46 percent of the market share. Lending-based platforms are 75 in total therefore 22 percent of the distribution. Finally, Grey Import Cars crowdfunding platforms account for 119 platforms 35 percent. Concerning the platforms under stress, reward-based platforms 113, of which 61 ran out of business 46 percent of total. Equity-based crowdfunding platforms are 93, accounting for 37 percent. The risk of the Grey Import Cars crowdfunding platforms concerns 54 companies, accounting for 31 percent of the total number of types of on-line platform.

1.5.1 History and Geography

Crowdfunding firstly presented itself with a platform called Demohour in 2011. As of 2016 platforms are mainly located in North Canton and Shandong provinces. 337 operating platforms are distributed through 25 provinces (including autonomous regions and municipalities directly under the central government’s control), including Beijing, Guangdong and Shanghai respectively counting 65, 56 and 45 platforms, it is worth noting that the platforms’ number in Shandong has reached 62 (including 58 Grey Import Cars crowdfunding platforms), ranking second in the country. Platforms with problems have a similar geographical distribution to the normal ones, Beijing, Guangdong, Shanghai and Shandong, a total of 185, accounting for 68 percent of the market’s big picture. According to Figure 5 the reward-based crowdfunding platforms are worth a total of $861,000,000, registering an increase of the size of the financing of the year. In 2016, analysing the crowdfunding environment, the industry started with a slight increase in the number of platforms, while the transactions entered an incremental phase with an annual success of financing amounting to $861,000,000, increasing by 107 percent. According to the Zero One Research Institute Data Center, it is likely that reward-based crowdfunding will reach a total of $1.5 billion value counting from 2013 to 2017.

Figure 5. Reward-based platforms’ total value

Source of information: Zero One Research Institute Data Center, 2016

In 2016, the amount of funds raised by the first 15 platforms is $815,000,000, which is 95 percent of the industry as a whole. Five platforms accounted financing for more than $15,000,000. Precisely, these crowdfunding platforms are JD Crowdfunding, Hi.Taobao group, Starting, Suning and Xiaomi. The grand total of individuals funding projects of reward-based crowdfunding in 2014 has had an increase of 1,356,000 at the end of 2015; this mainly happened thanks to JD Crowdfunding, Hi.Taobao and Suning. In the second quarter though, with the “one YUAN lottery” the industry has had a stall, not increasing nor decreasing.

Figure 6. Total supporters for reward-based crowdfunding

Source of information: Zero One Research Institute Data Center, 2016

Altogether 15,260,000 users were counted, which is about 12.2 times more than the previous year. This phenomenon kept on growing reaching 34,540,000 total users by the end of 2016. 102 projects reached a fund-raising of at least $1.5 million, for a grand total financing of $201,538,461. These 102 project come from JD Crowdfunding (50), Suning (21), Hi.Taobao (21), Starting (9) and Xiaomi (1). Among these, the main areas of interest are home appliances, travel and science & technology. If we take a close look at the size of these 102 projects, 85 were worth between $1.5 million and $3 million, 15 between $3 million and $7.7 million and only two raised more than $7.7 million. Switching to the equity-based crowdfunding, the year 2016 peaked at $1 billion of total value of investment. Observing Figure 7, it is quite interesting to see how until 2014 there was barely no investment in this type of segment, in fact no more than $15 million were invested on a year basis. In 2014 though, this number soared to $230 million with a great number coming from JD Crowdfunding, Renrentou and Ijointoo above all others.

Figure 7. Equity-based platforms’ total value

Source of information: Zero One Research Institute Data Center, 2016

Public investment has also been allocated in a large number of platforms and other projects, reaching a grand total investment of $815 million. A total of 49 equity-based crowdfunding platforms flourished. As of the end of 2016 there are at least 49 Internet crowdfunding platforms that completed the investment and financing of the total of 67 cases, the total capital of about $1.2 billion. Among them, in 2016 a total of 14 cases reached total financing of about $84.6 million.

1.5.2 Demographics

Analysing Figure 8, we can see the seniority of the donors in China: 0.4 percent are born in the 50’s, 2 percent in the 60’s. 20 percent in the 70’s, 60 percent in the 80’s and 15 percent in the 90’s (huanqiu.com, 2014)

Figure 8. Distribution of donors by date of birth

Source: huanqiu.com, 2014

1.5.3 Financing cases in China

Table 1, depicts the financing situation. Most of the platforms are collecting a round A of investment, while one is collecting a seed-round and another already at round E.

Table 1. Stage of financing

Source of information: Zero One Research Institute Data Center

Chrono order	Opening time	Platform name	Investors	Amount ($)	Round No.
1	2016-01	牛投众筹	不详	$1-2m	A
2	2016-02	开始众筹	经纬中国、远璟资本	Undisclosed	A+
3	2016-02	聚募网	鼎聚投资、阿米巴资本	$1-2m	A
4	2016-03	众筹客	小牛资本	Uundisclosed	A
5	2016-04	维C理财	戈壁创投	$1-2m	Pre-A
6	2016-05	36氪	投资方未透露	More than $150m	E
7	2016-05	汇梦公社	乾通资本	$2.3m	A
8	2016-06	轻松筹	腾讯、IDG资本、德同资本、同道资本	$20m	B+
9	2016-06	影大人	创梦创投	$307,692	Seed
10	2016-06	京北众筹	不详	$4.6m	A
11	2016-06	开始众筹	昆仑万维	$15.3m	B
12	2016-08	多彩投	英诺天使、分享投资、顺为资本	$3m	Pre-A
13	2016-08	一米好地	中南资本	1亿人民币	A
14	2016-12	柠檬微众筹	大果投资	未透露	天使

1.5.4 Analysing Chinese Donation-based Crowdfunding

Here I would like to analyse the situation regarding the development of donation-based crowdfunding. Even though the growth has not been impressive, what captures my attention in the first place is the very fast response of the market. In fact, when internet giants like JD Crowdfunding, Alibaba or Tencent implemented the charity section on their platforms, there have been lots of positive initiatives. Mainly thanks to the birth of new communication and social tools or platforms such as WeChat and Weibo, donation-based crowdfunding had a quite easy and fast development thus allowing the birth of more independent platforms. Thanks to the prompt response by the market, what witnessed a steady and strong growth was the number of donation platforms, keeping up with the pace of the tech innovation of mobile payment platforms and their popularity. We can define 3 different phases that finally led to donation-based crowdfunding:

Everything begun with the most classic of charity donations online, lately evolving in two types: “all-or-nothing” approach or getting something back after making an offer.
The current crowdfunding is originally inspired by reaching the target that has previously been set rather than “all-or-nothing”, with a difference: the donor has a positive feedback regardless. Rewards are defined as goods, services or simple gratitude. In accordance with the commitment to offer money, in case of failure the donor is refunded.
Nowadays it contains two types: vertical and comprehensive. Vertical spreads more knowledge around life struggles due to poverty. Instead, online companies that gained experience during the development of internet dev and established an important online presence are JD Crowdfunding, Hi.Taobao, Suning and drivetogreen.com.

Figure 9. Donation-based crowdfunding overview

Source of information: Zhongchou Wang report, 2015

As seen in Figure 9 above, in 2015 donation-based crowdfunding reached 700 projects for benefits, with some platforms that are new to the industry, while others have had different type of financing before. 873 donation-based platforms succeeded with 600.000 supporters for a total amount of $5.2 million. These are the steps that donation-based crowdfunding has taken forward from 2014 to 2015: +192 percent successful projects, +170 percent raised amount, +68 percent backers. Average donator, offered 57 yuan ($8.77) leading to a 61 percent increase. Despite the fact that the number of donors did not increase that much, they donated higher amounts of money therefore comprehensive crowdfunding grew. The characteristic of openness to the market can be classified ad one of the strengths of crowdfunding, because it facilitates more cross-border collaborations between different entities and enhances the possibility of innovations for charity fundraising, leveraging more social resources. The drawback though, is that the project’s sponsors need to have high capacity requirements. The “all-or-nothing” approach will encourage the fundraisers to make more efforts in order to achieve the goal, with the benefit to actively promote the fund-raising. The average amount of a single support of coming from donors who participate in crowdfunding campaigns with a single payment is higher than the traditional fund-raising, like simple charity. This way the reward-based crowdfunding attracts investments more effectively, but it will also raise the fund-raising costs.

1.5.5 Project promoters

Project promoters include: individuals, businesses, foundations or social enterprises. There are benefits and drawbacks of having different types of promoters.

Individual: this category refers to the single fundraiser and can be represented by a single student or a student’s organization.
Project followers: crowdfunding sponsors, it does not matter whether there is not a legal entity representing them, the only concern is reaching the target set previously. In fact, in case of failure to raise the amount set, most prepare a business plan in order to be ready to support the financing.
Foundations: this type of project sponsor is a formally registered entity or a special activity foundation.
NGO: non-official charity organizations.
Social enterprises: these enterprises offer a special product that can bring benefit to the society. Their activity are usually based on profits, therefore include a reward in their business model most of the times.
Enterprises: normal company

Figure 10. Performance per type of initiator – on the x axis from left to right: Amount of successful projects, amount of donors and amount raised

Source of information: Zhongchou Wang report, 2015

Figure 10 above depicts the performances of the different initiators:

Individuals submitted around 350 successful projects, gathering 50,000 donors for 5,000,000 yuan ($769,230.77).
Projects followers submitted 70 projects, with a total of 19,000 donors for 170,000 yuan ($26,153.84).
Enterprises count 50 projects, gathering 60,000 donors counting 10,000,000 yuan ($1,538,461.53).
Foundations have 200 successful projects, 290,000 backers, worth 10,100,000 yuan ($1,553,846.15).
NGOs submitted 230 projects, 140,000 donors for a total of 5,900,000 yuan ($907,692.30).
Social enterprises counted very few projects (16), 19,000 donors and 1,200,000 yuan ($184,615.38).

Individuals and enterprises in crowdfunding – due to their lack of resources – act on a single basis, focusing on one project only most of the times. On the other side, social enterprises and foundations are able to support several projects. This explains why in 2015, successful projects that have been issued by a foundation accounts to 2.9 versus a 1.8 average by a social enterprise. Speaking of projects in general, individuals are the ones who submit more of them, 351 projects, 40 percent of the total projects submitted, accounting for a 17 percent of the total value. Businesses submit less projects (5 percent) but worth more money (29 percent of total value). Finally the ones that gather more donations are the foundations with 48 percent. College students, elite Business Schools students, start-up entrepreneurs, white-collar workers, party members linked with poverty alleviation and millennials, everyone tries to follow his project dream through crowdfunding . These ambitions are constrained by a lack of expertise, therefore the donors on average are quite few, since the average fund-raising is about 16,000 yuan ($2,400). Donation-based crowdfunding for enterprises acts more as Corporate Social Responsibility in the first place and to show the investors their company has a certain diversity. In addition to financial support, the enterprise can deliver high-quality products and services, guarantee employee participation, market channels and public combination of business advantage. The final aim is to promote a Corporate Social Responsibility image at the same time with the development of the enterprise itself. Projects promoted by enterprises, have high-quality products – as mentioned before – either as a reward or as a personal accomplishment for their employees. The project has an average of more than 1,700 people that donating an average amount of 126 yuan ($19.38).

Foundations are the most experienced entity in the crowdfunding sector: they can count on special departments for crowdfunding and have laboratories often frequented with industry experts. The supporters of successful projects are on average 19,000, and the total amount of money raised in one year is more than 1/3 of the total. Other charity organisations that submitted successful projects, raised 20 percent of the total. Single donation per project is not huge, but each project gathers on average 24,000 yuan ($3,700).

Finally social enterprises can count on less projects but more donors and a considerable total funded amount. In fact, these projects on average gathered more than 1,200 persons for an average fundraising amount of 64,000 yuan ($9,800). Successful projects give the priority to “small and beautiful” ideas. 87 percent of projects are included in the 50,000 yuan ($7,700) range, attracting 34 percent of donors, accounting for about 28 percent of the total fund-raising. Projects led by enterprises or VIPs, are able to raise up to more than one million yuan, with a very small number of projects but can count on huge amount of funds (30 percent) thanks to their popularity, channels and resources. The target reached is pleasant, Main differences between classic online charity and donation-based crowdfunding are: “all-or-nothing” and “take everything”. Therefore successful campaigns can raise even more than the set goal. As shown in Figure 11, in 2015, 48 percent of the successful projects, exceeded the raised amount by more than 1.1 times, with some cases reaching even more than 10 times the requirement.

Figure 11. Target exceeded

Source of information: Zhongchou Wang report, 2015

1.5.6 Donation based Crowdfunding areas of interest

Table 2 offers a full coverage of the project area: all types have witnessed an improvement. In 2015, donation-based crowdfunding covered the following areas of interest: children, the elderly, the disabled, veterans, women and minority groups, but also covers the environmental protection, emergency rescue, helping the rural areas, persons in need, artistic and tech dev of the communities.

Table 2. Data per area of interest

Source of information: Zhongchou Wang report, 2015

Area	No. projects	Tot. amount	Donors	Average donation
Child support	534	¥15,245,850.93	280305	¥54.39
Disabled	34	¥2,064,141.03	35965	¥57.39
Elderly	73	¥2,090,808.02	67414	¥31.01
Environment	87	¥3,109,363.67	74987	¥41.47
Veteran	15	¥1,890,928.86	53844	¥35.12
Need for help	12	¥1,422,069.00	19444	¥73.14
Others	118	¥8,504,176.24	67626	¥125.75
Overall	873	¥34,327,337.75	599585	¥59.75

The largest number of projects is covering services for children in the: precisely 61 percent of the projects are targeting child support. Both the number of donors and funds raised accounted for more than 40 percent of total. In addition to the 33 diseases relief or injury relief projects, they also include support and education for children, the purchase of books, construction of stadiums, giving a learning package, covering the children’s food and clothing expenses. Projects paying attention to children’s spiritual companionship and growth are still too few. Despite projects concerning services for people with disabilities are less, the amount of fund-raising and donors involved account for a higher number, with an average amount of 57.39 ($8.83) yuan every single support, second only to emergency relief projects. Now we analyse the services to the elderly and the number of project supporting them: less fundraising projects accounted for 8 percent of total, while donors reached 11 percent, but the money raised accounted only for 6 percent, whereas the average amount of a single donation accounted for 31.01 yuan ($4.77 ), the lowest in all kinds of projects.

The veterans care has become a new focus: 2015 has been the 70th anniversary of the victory of the Anti-Japanese War, in the province of Guangdong supported by Chongshan Le charitable foundation, Shenzhen Longyue Charity. Foundations focused on veterans’ care fundraising and personal promotion, the veterans’ project broke through the Internet with lots of influence, reaching a considerable fundraising amount (almost 6 percent) and people support (nine percent) given the low number of projects submitted. The Guangdong music charity Chongshan crowdfunding platform for veterans, accumulated the highest amount of funds excluding enterprises and VIPs, it also accounts for one of the highest in donors involved.

Environmental protection in the crowdfunding market is not a small niche: in fact, the number of submitted projects reached ten percent of the grand total, while donors’ support accounted for more than thirteen percent, the average amount for single donation is 41.61 yuan ($6.4), obtaining more positive results than the elderly fundraising projects.

But when there a disaster occurs, emergency relief projects speed up the fund raising process – in this particular case the average amount of a single donation reached 73 percent, far more than other categories. Total fundraising for the projects amounted to 34,330,000 yuan ($5.2), nearly 600 thousand people and 873 projects.

Now we take a closer look at the main platforms operating in this segment: Zhongchou Wang has a higher number of projects submitted, counting 632 successful projects, which, among the top 5 crowdfunding platforms can occupy 72 percent of the market share, compared with Hi.Taobao (15 percent) and JD Crowdfunding (13 percent) of the market share. Talking of total amount raised, Zhongchou Wang has 38 percent of the total, while Hi.Taobao 26 percent and JD Crowdfunding 22 percent. Analysing the active donors, Hi.Taobao holds more than half of the market with a total of 317,000 donors that are equivalent to 53 percent of the total, Zhongchou Wang 20 percent and JD Crowdfunding 19 percent. Speaking of Single donation average amount, Zhongchou Wang collects 110 yuan ($16.9), Suning 97 yuan ($14.9), 68 yuan ($10.5) for JD Crowdfunding. Now let’s take a look at the legal aspects: except for Drivetogreen.com, operating in the environmental protection area of interest, other platforms have huge different regulations in setting the campaign (all-or-nothing, take all). These regulations include legal qualification and each of the main Crowdfunding platforms differs in this aspect. For instance Zhongchou Wang can be very flexible with no main requirements. Hi.Taobao instead accepts only registered entities or companies which also have to be registered in their charity section. JD Crowdfunding welcomes only registered companies and organisation while Suning requires passing the Yifubao (third-party payment service equivalent of Alipay for Alibaba) test. These regulations include a time frame within which the project should be completed, quite similar for the top Crowdfunding platforms: Zhongchou Wang from 10 to 90 days, Hi.Taobao 90 days, JD Crowdfunding 60 days and Suning from 10 to 90 days.

2015 counted a total of 599.585 donors supporting Donation-based Crowdfunding, growing +67 percent comparing with 2014, with single donation amount of 57 yuan. The average number of donors per project is 687 persons. 78 percent of the projects have from 0-500 participants.

There has been a lot of participation and interest from the donors ever since the start: people happen to be very active on the platforms, attracting up to 355 hot debates (JD Crowdfunding). The reward is thought to attract donors and to involve them in the matter and the management of the project in some special cases. The reviewers of the project can become some sort of ambassadors of the campaign and promote it. Numbers show us that the some donors often exceed even 10 times the minimum required donation amount. Donation-based crowdfunding is a kind of investment, but investors do not get actual profit or interest, instead they help the creation of social value, social influence. The strength of these projects is not measured like money value but instead in a sense of accomplishment and spiritual satisfaction. Crowdfunding can bring entrepreneurs / innovators and public investors together to jointly promote social change and have an impact. Through the analysis of data and case studies, we found that compared to traditional donations, Crowdfunding’s unique values can be summed up in four aspects: (1) Market validation – thanks to the “all-or-nothing” model, only successful campaigns enter the market. The total number of platforms increased the number of online projects in 2015 to a maximum number of about 1300 “all-in or nothing” projects, of which more than 600 completed fundraising therefore resulting as successful for an average annual project success rate of about 45 percent. Donation-based crowdfunding projects might prefer them to be “small but effective” but even with a few million fund-raising, their policy is to promote and maintain the project intact although supporters’ debates. In the public eye, whether it attracted interest/validity or not, has been completed or not, has been promoted or not, approved from the public or not, profited or not, project exposure actually brings benefit to its topic. In fact the positive side is there is a feedback from the public who can make their own judgment and decide whether to support or not, independently from all these questions. (2) The goal to penetrate people’s hearts and make them feel responsible – There are two ways to breach in people’s heart or interest: choosing the right and most appropriate name in order to highlight and raise awareness of the social issues, and profit that can give the benefits of a product, to attract regular investors. (3) To emphasize belonging concept – This can be done by turning the consumer into an investor, sharing the same stake in the project, an investor would have in some equity, caring for its outcome and development. (4) Creating cross-border cooperation – Creating a group of persons with similar interests. This “help” does not come from professionals of the sector like NGOs or Charities, but uploading the projects on these platforms would be more effective, in providing concrete solutions to problems. Also, the platform would help a lot the diffusion of the project and attract participation. Making some projections this will become a more standardized service that will become more reliable and stable from the investors’ POV. Crowdfunding will become more professional with more social enterprises. The cost-effective ratio will improve and the rewards will become more important. Charity Law and a higher quality of the Crowdfunding platforms will address more professional investors in order to achieve a better overall service. Donors will be more organized and likely to form groups for supporting projects, reaching more resources.

2 LITERATURE REVIEW

In the following chapter, the literature collected for this research will be presented. The chapter is divided into three main parts, each one highlighting all the previous studies that have taken place lately. The first one is dedicated to the definition of crowdfunding, when and how it was originated. Secondly, the dynamics will be taken into account: how it works, how people can benefit from it and the opinions of the pioneers of this field of study. Thirdly, behaviours of initiators and backers are analysed, giving an overview of who are the main stakeholders and how they act. Finally, attention will be given to the Social Network Effect and how it affects this new type of financing, and what are the potentials.

2.1 Definition of crowdfunding

The idea of crowdfunding is extracted from a bigger notion which is crowdsourcing. This, too involves the “crowd” when looking for ideas, feedback, and solutions to flourish different types of corporate activities. According to Kleemann et al. (2008) “crowdsourcing takes place when a profit-oriented firm outsources specific tasks essential for the making or sale of its product to the general public (the crowd) in the form of an open call over the internet, with the intention of animating individuals to make a voluntary contribution to the firm’s production process for free or for significantly less than that contribution is worth to the firm.” Even though this notion provides a good starting point, there still is a need for more clarifications in order to apply this definition to crowdfunding. If we see Internet as a vehicle to make an open request, it may work efficiently applied to crowdsourcing in general, but it can be too general if we talk about crowdfunding, especially when there is equity being offered to the audience. A lot of countries tend to give a limited number of private investors to a company (Griffin, 2012; Schwienbacher & Larralde, 2012). Since we are not talking about crowdsourcing – where the input consists of ideas or time – but crowdfunding, where capital is included, actions are subject to strict legal limitations. This is the reason why a great number of platforms base their rewards on other type of benefits like a product or a membership, rather than some shares. Different types of platforms offer profit-sharing instruments where the crowd is given a pre-specified portion of profits from the sale of the product for their contribution. Belleflamme, lambert and Schwienbacher (2013) give another definition of crowdfunding as «an open call, mostly through the Internet, for the provision of financial resources either in form of donation or in exchange for the future product or some form of reward and/or voting rights». If I had to give a definition of crowdfunding, I definitely share Ethan Mollick’s (2013) view when he states that “a broad definition of crowdfunding can be elusive, especially as crowdfunding covers so many current and future uses across many disciplines. That is why a narrower definition is more likely to explain this business model: crowdfunding refers to the efforts by entrepreneurial individuals and groups – cultural, social and for profit – to fund their ventures by drawing on relatively small contributions from a relatively large number of individuals using the internet bypassing standard financial intermediaries”

2.2 Dynamics of crowdfunding

Crowdfunding generally counts three engaged stakeholders: the project founders who are looking for funding for their projects, the backers who are willing to invest in a speciﬁc project, and the intermediaries represented by the matchmaking crowdfunding platforms (Tomczak & Brem, 2013). Intermediaries or crowdfunding platforms that provide the service of matching investors with fundraisers, are for example Kickstarter, Indiegogo, and GoFundMe. Each of these platforms features investments of different style, either “all-or-nothing” or “keep-whatyou-get” (Barnett, 2013; Zvilichovsky et al., 2015). Fundraisers direct attention to individuals who are looking for backers for their projects in the market. They have different motivations and reasons for funding, and they provide information and feedback to their investors. Investors or donors are the crowd that provides financial support. Supporters’ motivations to help a certain project can be affected by their personal interests, social reputations, and the return on investment (Moonhee Cho & Gawon Kim, 2016). Initially, the crowdfunding model was established for a business purpose in order to recruit investors. Lately the crowdfunding instrument has grown popular for non-profit organizations and their supporters, who do not necessarily expect returns on investment but support crowdfunding projects with philanthropic reasons. To support this, Belleflamme et al. (2012) reached to the conclusion that non-profit organisations are more likely to reach the capital targets that are set, saying, “We also document that non-profit organizations positively affect the success chances of entrepreneurs to reach their capital targets. The empirical evidence from multivariate analyses supports our theoretical predictions that non-profit entrepreneurs tend to be more successful in using crowdfunding. In our setting, the reduced focus on profits by such entrepreneurs is viewed by crowdfunders as a credible commitment to provide larger community benefits and, thereby, extends the range of initial capital requirements that can be pledged through crowdfunding.”

2.3 Behaviours of initiators and backers

On a general basis, project founders and backers are private persons (Gerber et al., 2012; Verstein, 2011). Nonetheless, project initiators can be represented by organisations, like startups or non-governmental organisations (Belleﬂamme et al., 2014; Bradford, 2012; Schwienbacher & Larralde, 2012). Moreover, as seen in the recent adoption of the JOBS Act in the USA there are also organisational backers (Mollick, 2014; Ordanini et al., 2011). Most of the research done on the crowdfunding stakeholders focuses to backers. Backers differ in their reason for support (Bretschneider et al., 2014). In the crowdfunding context, supporters observe and are conscious of the decisions taken by the other backers and are altered by their behaviour (Bretschneider et al., 2014). Friends and family are often determinant groups of supporters in crowdfunding projects (Agrawal et al., 2011). Agrawal et al. (2011) continue arguing as follows: “Backers could be motivated to support projects to which they have an emotional relationship, projects with which they are familiar, or projects that are initiated by somebody they have a friendship identiﬁcation with.” This is analysed as the direct identiﬁcation-motive. The most obvious characteristic of a crowdfunding platform is the type of return provided by the project initiator. In crowdfunding, project initiators offer a range of possible returns. From a legal perspective, Bradford (2012) distinguishes five returns: (1) No compensation — the backer makes a donation in order to support projects for the greater good. (2) Reward — the backer receives a non-monetary return. (3) Pre-ordered product—the backer’s support is a prepayment for a product. (4) Interests — the backer participates in a loan. (5) Proﬁt shares— the backer receives equity shares from the project (e.g. a start-up). The degree of complexity for the provision of capital and the resulting returns increase from donation, rewards, pre-selling, lending and equity. Studies also ﬁnd that the commitment decision of supporters is highly determined by social networks (Lin et al., 2013; Zvilichovsky et al., 2013), herding (Burtch, 2011) and free-riding behaviour (Burtch et al., 2013). Lin, Boh, and Goh (2014) summarise that crowdfunding is varied and addresses diverse interests.

2.4 The Social Network Effect applied to crowdfunding

In this section I would like to bring the attention to the Social Network Effect (SNE) which has had a huge impact over businesses, news spreading and campaigns in general over the past nine years. In fact, these Social Networks, for example Twitter and Facebook, give persons and institutions the chance participate in online discussions, connecting with other peers, generating and sharing content and information. Such cases suggest both the growing importance of social networking-based fundraising and the ways it is distinct from traditional fundraising activities argued Saxton & Wang (2014), but instead of stating the ways it is different from the traditional fundraising activities, I would rather emphasize how these two different realities combined reached the current potential of crowdfunding.

First, social media fundraising represents one way non-profits can use crowdfunding, to reach geographically dispersed people who are willing to support the cause by donating small amounts of money or helping spread the word. Using the fans’ networks, more donors can be reached by a non-profit, even those who are not directly linked to the non-profit.

Second, continue Saxton & Wang (2014) potential donors are directly solicited by someone in their social network. This personal, or peer-to-peer, fundraising differs from other types of fundraising, as the recipient has pre-established connections with and is more likely to trust the solicitor, which relates to chapter 3 about “Relationships and proximity dynamics”.

Furthermore, prospective donors’ reactions to the inputs are open to the public, as the donation applications are tied into social networking applications, which means friends in the “circle” can see whether a potential donor responded to a specific solicitation (Saxton & Wang, 2014). The logic consequence is that as soon as someone donates, this creates peer pressure (Meer, 2011) for the recipient of a solicitation to support a cause that a family member, friend, or colleague supports. Altogether, these arguments suggest a strong “social network effect” driving donations on social media sites. We can say that social networks have offered new opportunities for non-profits to expand their “customer” base and spread knowledge of their reasons and needs. Informal and personal relationships, which are usually “relationally embedded” network ties, result to be linked to volunteering and donor support (Eng et al., 2012). Thanks to social media, non-profits are able to include “members” to promote their cause. These persons may not directly contribute with donations themselves, but directly or indirectly they might generate other people’s interest through social networks. Preceding researches prove that individuals with larger social networks are more likely to donate because they receive more solicitations (Wang & Graddy, 2008), and because the crowd, transparent nature of social media fundraising may generate charitable donations as potential donors feel pressured to give when they are publicly solicited by family and friends (Meer, 2011).

3 METHODOLOGY

As the goal of this thesis is to provide the widest possible perspective on the drivers that can affect crowdfunding’s success, I will do an explorative research using secondary data extracted from different previous researches and reports mostly focused on donation-based platforms. The research will be held applying the theoretical research methods, as literature review, and data analysis. Firstly I will do a PESTLE analysis for an external analysis with a wider scope for the whole Crowdfunding industry. In this PESTLE analysis I will feature International measures for analysing countries and Hofstede’s cultural dimensions, when analysing the social section. Secondly I will use a SWOT matrix to identify which are the main strengths, weaknesses, opportunities and threats regarding this new type of financing. Moreover, included in the secondary data I will benefit of a survey that has been coordinated by Associate Professor Ivana Pais, Economic Sociology at Università Cattolica, Milan. The research involved 1000 donors that have made at least 1 donation between 2012-01-01 and 2016-02-29 through the crowdfunding platform: www.retedeldono.it. The survey was made through CAWI (Computer Assisted Web Interview) and analysed with Qualtrics software. Based on this theoretical information about the current situation, I will analyse the retrieved data and findings taking into account the different background existing between Italy and China. After that, I will do more of a qualitative study focusing on case study per country in order to understand the similarities and differences between them. Especially I will focus on the platforms these project have been published on, the rewards’ plan and their communication strategy.

4 ANALYSING AND COMPARING FINDINGS

4.1 External study: PESTLE analysis

For beginning this analysis and comparison I thought of using the PESTLE analysis model, which focuses on a macro point of view, important when speaking about two large subjects as countries can be. I will not consider the Environmental factor though, since it does not impact this type of study.

Table 3. PESTLE analysis

Factors	Impact
Factors	Italy	China
Political stability	1	4
Economic trend	2	4
Social: lifestyle, buying trends, media	2	4
Technologic: acces to technology	4	3
Legal: market regulation	2	1

The PESTEL (Political, Economic, Social and Technologic) analysis above is designed as follows. According to the PEST factors I chose some reasons that I believe are the most appropriate when speaking of crowdfunding. The last step of the PEST analysis consists in determining the effect of such reasons on the 2 different countries taken in consideration. The effect is measured on a scale from 1 to 5, with 3 being the neutral point (e.g. 1=very bad; 2=bad; 3=neutral; 4=good; 5=very good).

4.1.1 Political factors

Political instability and fragmentation have always been subjects of the Italian scene through most of the post-World War II period and that explains how until now governments have changed with such frequency— In fact Italy has had over 60 governments since the end of World War II—though in most of the cases the leadership of the political parties did not change, actually reappearing with the same parties and individuals over and over in the successive governments. Important changes have taken place in the political landscape over the past ten years. Yet fragmentation and instability continued to reign, although in a somewhat different way, and broad coalitions of both the center-right and the center-left find it difficult, for a variety of reasons, to carry out a coherent program of government. Italy’s political system is inherently weak for institutional reasons (Calingaert, 2016). The country’s 1946 constitution can be blamed at the basis for deliberately setting the layer for a weak system of government, which was made to prevent the repetition of a strong and damaging government similar to the one Italy had experienced under the fascist Benito Mussolini. Since then the constitution created two compeer houses of parliament – The Senate of The Republic and the Chamber of Deputies, both of which need to approve the same texts of a bill for it to be enacted into law. Yet the houses decide and act on legislation totally independently of each other— which ultimately mean without a system for negotiation (the same that operates in the United States in the form of congressional conference committees). Hence, proposed legislation must pass back and forth from one house to the other until the two have agreed on identical versions. Further contributing to the hazardousness of the legislative process is the size of parliament. The position of prime minister is relatively weak – The prime minister does not have the power to dissolve parliament, as is the case in many other countries, whereas parliament can, as it did in January 2016, vote the prime minister out of office through a no-confidence vote. Another key factor in Italy’s political instability is the voting system. Until the mid-1990s members of parliament were elected under a system of proportional representation. On one hand, that enabled party leaders to exercise control over the selection of candidates and their rank order on candidate lists (the higher on the list, the greater the chance of election). On the other hand, it resulted in many small parties’ gaining seats in parliament. Because proportional representation encourages coalition governments, the small parties have often exercised influence and power disproportionate to their numbers in parliament and the electorate as a whole. This way, reforms are hardly ever carried out successfully, making it difficult – or at least slower for the Crowdfunding ecosystem to develop itself at the pace the market requires it. Unfortunately this situation is unlikely to change in the short period, and will limit the benefits of Crowdfunding. On this side we have seen a similar participation and involvement in the campaigns, with the local administrations (Comune di Bologna in Italy and the members of the local government in Fujian) being very supportive and even promoting these projects. Speaking of the Italian project, it is the first case ever to have public administration achieve the restoration of a public place though Crowdfunding. Both in Italy and China there were some members of the party attending the events and giving a speech of encouragement. The presence of the institutions is helpful for obvious reasons: funding, promotion and image.

The Deng Xiaoping open up reform enabled China to witness a double digit growth for more than one decade. GDP per capita steadily increased in the past twenty years and the Institutions played a central role in allowing the transition. Political stability has been if not the main, one of the most important features that enabled the transition. Along with the Chinese miracle it is important to keep in mind that economic inequality is on the rise. In fact, the Gini Coefficient in the country is now equivalent to 46.5 placing China at the top of income inequalities worldwide. In contrast these figures are notably higher than official estimates made by China’s statistics bureau. Another estimate by widely respected economists at the Southwest University of Finance and Economics in Chengdu put the Gini coefficient at 0.61 in 2010 (Chen et al., 2010). The steady economic growth brought also in China the needs which donation-based crowdfunding seek to solve in the Developed Countries. The development of donation-based crowdfunding platforms and projects might shed a light on the citizens’ concerns. As noted above, the main areas of donation crowdfunding projects directly reflect raising citizens’ concerns. The Chinese Charity Law enacted in 2016 seems to respond to these problems in attempting to regulate a sector often left behind by national legislators. However, it is need to keep in mind that the regulation of this sector is following also more pragmatic reasons. Many credit the Sichuan earthquake of 2008 as the moment crowdfunding and support for social and environmental issues took hold in China. Without a clear idea for local governments on how to both process and collect donations, the development possibilities of donation-based crowdfunding would be undermined. The peculiar and massive participation of local and national agencies is another factor that needs to be taken into account.

4.1.2 Economic factors

From an economic development point of view, the two countries are dramatically different. If we analyse both countries’ Gross Domestic Product (GDP) Per Capita we find a huge difference: according to the World Bank, Italy’s latest GDP per capita amounted to $29,957.8 whereas China’s was $8,027.68. This can be explained in two ways, Italy’s population is much smaller than China’s and the last time Italy recorded $8,000 was in 1980, which means its development started way earlier. Instead if we take into account the growth rate and the Overall GDP, Italy grew at a 0.73 percent pace whereas China’s GDP was 6.91 percent for a total respective amount of $1.82 trillion and $11 trillion. It is evident that the economic perspective is in favour China, and that Crowdfunding can count on a country that is constantly growing at an incredible pace. In fact Italy is the second country that suffered more consequences of the economic crisis, with a GDP that went negative between in two phases 2008-2010 and 2011-2013. On the other side, over the past five years China’s economy experienced a significant GDP growth rate. There are several factors that justify this impressive growth, such as high rate of savings, abundant and skilled labour, export business and potential urban growth. Any economic development could have a major impact on the SMEs and their actions. China’s GDP rate tells us that each citizen is adding more and more values to the society. The reflection of this is an increasing purchasing power for consumers. The labour cost in China has been very competitive until recent times, when South East Asian countries developed more and are able to offer lower labour costs, leading companies like Apple are inclined to hire workers from the country. The growth rate is impressive, but is already slowing down, albeit keeping an incredible pace. Some of the worrying trends in China can be defined as high inflation rate, high property prices and the citizen’s immigration issue due to the Hukou system. Some of these problems can be controlled and some less, but what the Crowdfunding industry can benefit from, is the average per capita spending in China. Based on data collected by Alibaba (New Consumer Era, Aliresearch, 2017), China’s consumer economy is set to reach $6.5tn by 2020 even if annual GDP growth slows to 5.5 percent, below the official target of 6.5 percent. Furthermore Chinese consumers are highly digitalized and the growth of daily online shoppers far exceeds global peers. It is expected the trend in China will spread across the world in the future. In fact Chinese consumers are closely connected with internet. These reasons are far enough for the Crowdfunding industry to believe it will keep on growing.

4.1.3 Social factors

I would like to begin this comparison using Hofstede’s (1980) cultural dimensions, not considering all 4 of them (Power distance, uncertainty avoidance, individualism vs. collectivism and masculinity vs. femininity) but just the first two. It is curious to see for example the Power distance dimension – which has to do with whether people´s self-image is defined in terms of “I” or “We”- rating 50 for Italy and 80 in China (Hofstede, 2016). In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘in groups’ that take care of them in exchange for loyalty. Therefore, according to the rating, the culture of donations for helping others should be much more developed in China than in Italy. Now we take into consideration the Uncertainty Avoidance, which in other words represents the way that a society deals with the fact that the future can never be known: should it try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. At 75 Italy has a high score on Uncertainty Avoidance which means that as a nation Italians are not comfortable in ambiguous situations. Therefore a low Uncertainty Avoidance approach (where the planning process can be flexible to changing environment) can be very stressful for Italians. The same cannot be said for China that rates 30. The Chinese are comfortable with ambiguity; the Chinese language is full of ambiguous meanings that can be difficult for Western people to follow. Chinese are adaptable and entrepreneurial. This applies to Crowdfunding when analysing their projects, which look less clear and are often mismanaged. Furthermore the WRBC continues: “The analysis shows a moderately negative correlation between face-saving, uncertainty avoidance and ingroup collectivism and the launch of crowdfunding platforms, perhaps because all factors are related to risk aversion. For example, the more people are concerned with saving face, the more important they will consider other people’s perceptions of them to be and the less likely they are to take risks. A similar dynamic occurs in cultures with a high degree of ingroup collectivism or uncertainty avoidance”. Based on the latest United Nations estimates, processed by Worldometers.info (2017), Italy has a current population of 59,798,658 as of April 10, 2017 – of which 71 percent is urban (42,447,483 people in 2017), and the median age in is 46.3 years. On the other side China’s population amounts to 1,386,895,372 with 59.1 percent of the population being urban (819,767,019 people in 2017), and a median age of 37.3 years. Observing this data and the one mentioned in chapter number 1, if we calculate a ratio of the total Crowdfunding supporters over to the total population, Italian donors represent 1.4 percent of the total population, whereas the Chinese ratio of supporters over total population is 2.16 percent. In Italy, due to a lack of knowledge of the instrument and mistrust on the side of the potential users, the donation culture and trust from supporters is still too slow to allow the development of large platforms. A compact movement needs to be created in order to evangelize the public crowdfunding, explain how and what are the real benefits to reduce the usual mistrust. Italy also lacks dissemination of a culture of giving, sharing and collaboration: the culture of average Italian person is in stark contrast to that of crowdfunding. The Italian user tends to place little trust in others, and this greatly penalizes the creation of a culture of crowdfunding and digital culture in general. A low diffusion of forms of electronic payment also plays an important role in slowing down this type of development. Italy is currently living a period of low and decreasing public funding, which has brought more attention to the quality of higher education and the way funds are being allocated. According to data from the Ministry of Education, Universities and Research, the proportion of performance-related funding allocated to tertiary education institutions rose from 20 percent of total funding in 2015 to 23 percent in 2016 and is set to gradually increase to 30 percent. Standard costs were established and are being rolled out gradually as a criterion for allocating the remaining part of public funding. The social and cultural aspect of China plays an important role since the demographic data is changing continuously. For example, the most fluctuant data regards population growth and age distribution. These can alter social trends and cultural values. Household size and social behaviours often impact how decisions are taken, together with other social factors such as consumer lifestyles, education, religion, and emigration. The literacy rate – representing the percentage of people who are able to write and read – is more than 90 percent, meaning China gives a lot of importance to education. According to the World Bank Report on Crowdfunding (WBRC) though, there is a positive correlation “between the proportion of the population with secondary or tertiary education and the rise of crowdfunding” (infoDev, 2013, p. 37), forming the cognitive key variable for crowdfunding platforms count. However, the quality of education should be taken in consideration rather than the absolute number of a country’s graduates, which might be a misleading mean of comparison. In terms of China, the government recently sought an increase in the number of university places in order to address the lack of skilled people. Still there are millions of Chinese graduates who are victims of unemployment (Branigan, 2008). Additionally, the Chinese education system still enjoys a bad reputation, which is reﬂected by the number of students seeking to study abroad (Siddiq, 2013). Therefore, the proportion of a country’s graduates is not a signiﬁcant variable for the crowdfunding platforms count. Besides cognitive factors, the WBRC has also found other variables, which altogether appear to indicate a country’s risk aversion tendency. Amongst the category of normative variables, the authors of the WBRC recognised face-saving, uncertainty avoidance, in-group collectivism, and performance orientation, claiming that “the more people are concerned with saving face, the more important they will consider other people’s perceptions of them to be and the less likely they are to take risks” (infoDev, 2013, p. 37). While this thesis sounds plausible, one should know that the Chinese mentality is indeed face-saving and quite collectivist; yet, according to Hofstede’s cultural dimensions, China shows a rather low level of uncertainty avoidance (The Hofstede Centre, n.d.).

4.1.4 Technological factors

Technological factors usually are measured in access to technology, which is the case that is mostly affecting this research. Distribution mechanisms like Internet both in Italy and China are playing a crucial role. Not only internet allows the creation of a crowdfunding platform, but it gives access to it. Therefore the index that better represents this factor is the Internet penetration, which is the number of internet users based on the total population of the country. An individual who has access to the Internet at home. This indicator does not record use, or frequency of use, but only access. In order to have access, the hardware equipment must be in working conditions, the Internet subscription service must be active, and the individual household member must have access to it at any time. According to Internetlivestats.com “an “Internet User” is therefore defined as an individual who can access the Internet, via computer or mobile device, within the home where the individual lives”. Italy counted 39,211,518 internet users over 59.9 million people in 2016, which results in a penetration rate 65.6 percent. On the other side, when speaking of the social factors China counts 731 million internet users, with a penetration rate of 52.2 percent (Internetlivestats.com, 2015). A major technological problem in China is that the development of the B2C industry does not have a safe and stable online payment system. As Chinese buyers are on high Uncertainty Avoidance level and Long-Term Orientation, the problem is strengthened. China is a flourishing market with the need for some small changes. Crowdfunders will benefit if they can understand the external macro-environment in which they function and will operate in the future. The rapid economic growth and stable political conditions make the e-commerce industry lucrative to investors. There are risks like lack of trust. Other risks include lack of stable and secure online payment systems. Also, there isn’t proper legal protection. All of these create uncertainties and challenges to the market players.

4.1.5 Legal factors

In China, the charity law firstly has been enacted as a first and experimental legal framework for the sector. However, it attempt to regulate not just the Non-profit sector but also CSR initiatives of private companies. In failing to address donation-based crowdfunding, the Charity law would miss an opportunity for regulating the sector. “China has not yet the relevant legal policies to the crowdfunding investment and financing, which are easy to be associated with the illegal fund-raising. In order to get stronger competitiveness, a crowdfunding platform is more willing to accept some mature projects which have a certain scale and achievement to finance so as to improve its credibility in the industry” (Yang Chunlei & Niu Liyun, 2016). This situation leads to difficulties for some creative projects in an early stage of their development to gather financing, which is not favourable for the independent innovation’s progress of China, especially the innovation in the field of science and technology. The main reason investors do not feel enough trust and do not commit in crowdfunding is the weak credit and management system that generates a risk of fraud. This hinders the development of the crowdfunding investment and financing of our country to a certain extent. The risk of legal circumstance is mainly related to the legal compliance and the reason compliance of the contract design, the intellectual property disputes, and the market regulation and so on.

On the other side Italy has a complete opposite view: excessive constraints and regulations are considered a risk as the market is too regulated. The biggest fear for the platforms’ executives is that bureaucracy and regulations in Italy can clip the wings of a process like this, preventing the right development of the system and the subsequent stabilization of the market. Moreover, there is the doubt that the legislation unduly limits the market and make it too complex for issuers and investors to carry operating procedures on. Regarding equity-based platforms, the presence of too rigid rules caused the industry to ask for an update on the regulation. A rise in operations under Markets in Financial Instruments Directive (MiFID) threshold is expected. People in Italy are positive about crowdfunding as it represent a new complementary tool to bank loans. But again, excessive bureaucracy and MiFID even for small imports can discourage investments. CONSOB has to change the absurd rule that prevents equity crowdfunding, otherwise the market will remain small.

4.2 Internal study: SWOT analysis

Table 4. SWOT analysis (China)

Strengths	Weaknesses
Low taxation Fast control Cost saving High success rate	Project content Excessive package/projects Management Carry out of the project
Opportunities	Threats
Art or community-related projects Microfinance Micro development Social lending	No transparency No regulation

Table 5. SWOT analysis (Italy)

Strengths	Weaknesses
Lean management Fast control Cost saving	Success rate decreasing Imbalance between the models Entrepreneurial innovation Lack of digital culture
Opportunities	Threats
Art or community-related projects Microfinance Micro development Territory specialization	Too many limitations Too many regulations Lack of resources Lack of electronic payment systems

4.3 Quantitative analysis: The Donor’s Research

This research focuses on analysing the donor (the person who donates a certain amount of money). In fact it is a unique research in its gender, since most studies are about the performance of the platforms. Another reason this work is different from the others is that it can highlight the social aspects and impact of Crowdfunding, which are indeed becoming more and more relevant to society.

4.3.1 Profile of the Italian donor

For starting things with the research, it would be useful to give a profile to the subject of this survey who is going to be represented as the donor. So as Figure 12 shows us, there is not a big difference of gender, given that 46 percent are males and the remaining 54 percent of the donors are women. This is a big statement that should not be underestimated: usually women are less, not rightfully, involved in these kind of businesses or initiatives compared to men.

Figure 12. Composition or Italian donors per gender

Source of information: Sharitaly Research, 2016

If we take a look at the age instead, in Figure 13 we can see some disparity, given that the majority – 56 percent – of the donors are between 36 and 55 years old. It stands out that youngsters until 35 years old are less inclined in donating – thirteen percent – compared to thirty-one percent of over 55 year old people.

Figure 13. Distribution of donors per age

Source of information: Sharitaly Research, 2016

Figure # gives us insights about who are the recipients, or by which purpose the donors are motivated to donate: research and health share the biggest interest with 33 percent followed by social purposes (21 percent) and co-development (16 percent). The others – Disabled support, sports, environment and arts and culture – are less considered by the donors.

Figure 14. Areas of interest

Source of information: Sharitaly Research, 2016

Figure 15 overviews the type of motivation that pushes the donor: the majority is motivated by intrinsic and reputation reasons. For example someone could feel him/herself gratified by donating, therefore conscious of having done a good gesture. Others do it for reputation, in case a friend or a relative asks them to, or barely mentions it, donors do not want to let these people down, or simply want to be known as responsible persons that care about these kind of projects. A minority – still not small part – of the donors donates because of extrinsic reasons that have a direct or indirect impact on their lives. Some project can involve the restoration of a building or area that is not necessarily interesting to the donor, but can affect his daily life in a positive way.

Figure 15. Distribution of donors per motivation

Source of information: Sharitaly Research, 2016

This research also takes in consideration other types of donation such as labour, and volunteering. For example some people do some volunteering in the same no-profit organisation or have helped advertising the project. Some people more simply collaborate professionally at the project, which sometimes can even be more useful for to the final outcome.

4.3.2 Motivation and amount of the donation:

Breaking down their motivation, 35 percent donates for different projects and no-profit, 28 percent for the same project multiple times, 17 percent for the same no-profit but for different projects, 10 percent donate for a similar kind of project, but promoted by different no-profits. Interesting finding is that 10 percent of the donors said that they do not remember for whom they donate. Going more deep into the donors – accounting for 36 percent of the people donating on “retedeldono.it”, an Italian crowdfunding platform – we surprisingly found out that in this case the majority are women 51 percent vs 49 percent men, and that 53 percent of them are 50+ years old. Among all the serious donors, 63 percent are graduated and 77 percent regularly employed. 35 percent of the serial donors donate to different non-governmental Organizations (NGO) supporting different types of projects. 28 percent offers money to the same project, whereas seventeen percent give the money to the same NGO but for different projects. 10 percent of the serial donors offer to projects part of the same domain but promoted by different NGOs. The remaining 10 percent states it does not remember to whom he/her donates to.

If we want to analyse the donation based on the age, we find that individuals over 50 years old donate higher amounts of money (40 percent more than 50 euro vs 26 percent keeping it less than 50 euro). Under 50 euro individuals are more likely to have a higher extrinsic motivation, relying a lot on social networks to get the information about the projects. Of course these number are linked to the age of the donor: logically, 50+ years old donate more. Actually 40 percent of them donate more than 50 euro, compared to 26 percent donating under 50 euro. It is very different when it comes to the 50 years old, who rely more on social media in order to get some information regarding the projects. More specifically these people are mostly driven by some type of extrinsic motivation that will give them some benefits.

Now I would like to bring the attention to who donates more than 50 euro: the majority are driven by intrinsic motivation rather than extrinsic. This data is interesting since on average reputation is considered more relevant to donors. In the 38 percent of the cases, these 50+ euro donors know directly the recipient compared to the 31 percent who barely know the recipient or in some cases even do not. 40 percent of the times they are directly asked to donate by the recipient which confirms what was said before – regarding the importance of relationships over advertising. Regarding the subject of donations, Research and health are the top picks, over social aid and cooperation and development accounting for 34 percent.

4.3.3 The importance of acquaintances, geolocation and social influence

In this second part of the work other dynamics are taken in to consideration and account. Relationship and proximity are two determining factors that can deeply influence the donor, especially in a small country like Italy, where relationships are of major importance, just like in China. Figure 16 breaks down how much people donate. As shown in the pie chart, 32 percent donate more than 50 euro, while 37 percent – the majority – donates an amount ranging between 21 and 50 euro. Finally 31 percent of the donors offer less than 21 euro.

Figure 16. Donation amount

Source of information: Sharitaly Research, 2016

Figure 17 breaks down the importance of the information’s origin: 39 percent of the times it is a friend telling the donor about the project, followed by a staggering twenty-nine percent stating they do not get the information from “anywhere”. Others get the information by the recipients and the no-profit itself and sometimes by acquaintances or relatives.

Figure 17. Invitation to donate origin

Source of information: Sharitaly Research, 2016

Speaking about the geographic proximity – which is explained in the Figure 18, the promoter resides in the same municipality in 30 percent of the times. This data is important although quite predictable, given that Italy is such a small country. Furthermore it is more likely for the promoter to reside in another region (25 percent) rather than the same one (23 percent). Only 4 percent of the times the promoter resides abroad.

Figure 18. Residence of the promoter

Source of information: Sharitaly Research, 2016

Figure 19. Identity of the donation

Source of information: Sharitaly Research, 2016

Figure 19 analyses the anonymity of the donors, so how and if they want to appear as donors or not. Fifty-two percent makes the donation stating name and surname, therefore being easy to recognize, whereas twenty-nine percent just provides his/her name in a general way. Fourteen percent prefers to stay anonymous while five percent will share the donation on social networks, trying to emphasize the gesture or simply to make other people aware of it.

Figure 20. In case of reward, would you donate a larger amount?

Source of information: Sharitaly Research, 2016

Figure 20 finally questions whether or not the amount of a donation would change in case of reward for donating. A great majority of eighty-three percent said they would have donated regardless the presence of a reward. Instead, fourteen percent states they would have donated more in case of a modest reward. Only three percent would donate more in exchange for a rich reward. This last information is positive at it shows how people have good attitude towards this crowdfunding model and society.

4.4 Qualitative analysis: Case Study

4.4.1 Italian case study

“Un passo per San Luca” which literally translated means “a step for San Luca” was born from the impelling need of the City of Bologna to find the resources necessary for the opening of some construction sites in the restoration of San Luca’s arcades, which are the authentic symbol of the city. Anyone who was born or has lived in the city of Bologna, if only for a short period of time, the arcades of San Luca have always acquired a very personal meaning. The covered walkway, with a length of almost 4 km, connects seamlessly with continuity the heart of Bologna with the top of “Colle della Guardia” (hill of the watch), on top of which the Basilica of the Blessed Virgin of San Luca is standing. Anyone passing through the covered walkway of St. Luke does it for a special/personal reason; some out of devotion, some for sports, and some do it for love and finally some just to get some fresh air. The portico of San Luca is therefore part of the life of each and every citizen of Bologna, reason why the Municipality of Bologna has decided to reach for crowdfunding for its restoration. Through crowdfunding anyone who was thus able to take care of something that is, for several reasons, part of his/her life. The goal set was to collect 300,000 EUR, in order to execute the work most urgent parts of the restoration. In order to ensure the maximum transparency, it was decided to begin with the work alongside the collection of funds necessary, therefore without waiting for the crowdfunding campaign to end. “Un passo per San Luca” which literally translated means “a step for San Luca” was born from the impelling need of the City of Bologna to find the necessary resources for the opening of some construction sites in the restoration of San Luca’s arcades, which are the authentic symbol of the city. Anyone who was born or has lived in the city of Bologna, if only for a short period of time, the arcades of San Luca have always acquired a very personal meaning. The covered walkway, with a length of almost 4 km, connects seamlessly with continuity the heart of Bologna with the top of “Colle della Guardia” (hill of the watch), on top of which the Basilica of the Blessed Virgin of San Luca is standing. Anyone passing through the covered walkway of St. Luke does it for a special/personal reason; some out of devotion, some for sports, and some do it for love and finally some just to get some fresh air. The portico of San Luca is therefore part of the life of each and every citizen of Bologna, reason why the Municipality of Bologna has decided to reach for crowdfunding for its restoration. Through crowdfunding anyone who was thus able to take care of something that is, for several reasons, part of his/her life. Although the amount of donations collected is not the only significant data for “Un passo per San Luca”, it still represents a crowdfunding initiative. So far “Un passo per San Luca” did not just reach the target, it exceeded that amount, becoming the most important project of crowdfunding in Italy at that time. That fact is even more important if we consider that the subject of the campaign was the restoration of cultural property. This result has only been possible through the use of an organized strategy, which is not limited to online publication on the crowdfunding platform.

The communication strategy of “Un passo per San Luca” has set three main objectives: raise the funds, spread the word about the emergency and bring up the project to the public’s attention. Updates about the progress and development of the project, events related to the initiative were uploaded in the “News” section of “Un passo per San Luca”. All major news regarding “Un passo per San Luca” were shared and published on newspapers, television, radio and blogs, thanks to press releases. This activity was carried out in collaboration with the Press Office of the City of Bologna. “Un passo per San Luca” has also been very active with the use of social networks, in fact these have been crucial to constantly update and involve the community of supporters. Five main social networks were used: Instagram, Facebook, Twitter, Flickr and YouTube. The communication strategy was also carried out with some events that were organized in order to encourage the involvement of the community of supporters of “Un passo per San Luca”. This strategy also focused on including this crowdfunding campaign in other important meetings. “Un passo per San Luca” was being presented to the public, simultaneously carrying on fundraising activities for special occasions such as sporting events, traditional festivals, food and wine events, festivals and happy hours. In this way, many people have had a great number of opportunities to learn and become familiar with the initiative. Getting people involved and entertained at the same time, gave birth to three photo contests which were called “Io passo #persanluca” e “Scatta #persanluca” and respectively mean “I walk for St. Luke” and “shoot a picture for St. Luke”. These contests included both the arcades and any trace of the project itself scattered throughout the city. Around 300 people participated by sending their photographs shot around the city.

People who support a crowdfunding projects generally receive small rewards in return for their donation. Even “Un passo per San Luca” has honoured its donors with different rewards. Among the many rewards available, Cracking Art frogs – an artistic movement born in Italy and spread around the world, reaching Shanghai last year – made by contemporary artists Cracking Art Group, were the most popular becoming the symbol of the crowdfunding campaign. More than 2,000 people have chosen them and #persanluca frogs have so invaded homes, shop windows and even the walls of some buildings.

Table 6. Reward plan

Source of information:“Un passo per San Luca”, report

Reward name	Amount	Object	Donors
A recipe for San Luca	€ 5 ($5.35)	Edited video of a recipe made by a Bolognese grandmother, chosen from the pastry the tortellini and ricotta cake	—–
(Re) discover San Luca	€ 10 ($10.72)	To join a guided tour. The visits took place at the Museum of Beata Vergine, along the portico of San Luca and the Basilica of Beata Vergine.	—–
Cracking Art frog	€ 20 ($21.45)	Get a “Cracking Art” frog. Cracking Art Group uses its own modern art to the recovery of classical works. In Bologna, “being a frog,” means not having money.	—–
100% San Luca	€ 100 ($107.28)	Enter the club of donors 100% and to post on the website a testimony by a photo or video.	114
Adopt a fresco	€ 300 ($321.85)	Contribute to the “fixing” of one of the frescoes on the portico of San Luca.	—–
Adopt an arch	€10.000 – 15.000 ($10,728.46 – $16,092.69)	Contribute to the restoring of one of the arches on the Portico of San Luca	—–

The testimonials were important and that is why some VIPs individuals, football and basketball teams took part in the crowdfunding campaign, shooting and also recording some short video testimonials. The videos were then uploaded and disseminated through social networks.

The community has an important value and one of the most significant results obtained from step A to San Luca has been the involvement of numerous and different components of the Bologna-based society in the crowdfunding campaign. Not just private individuals, but also businesses, associations, public institutions, traders and schools, have worked for the protection of a common heritage. “Un passo per San Luca” has managed to act as a catalyst for many contributions, not necessarily in cash, coming from different realities holding a desire to participate in the restoration of this porch. Such a broad and transversal involvement that made “Un passo per San Luca” a project that has been shared and supported by the whole city Bologna. The result of “Un passo per San Luca” shows what is the potential of crowdfunding when it is applied to the protection and promotion of cultural heritage. Potential that is not just measured by the amount of collected donations or the number of donors, but also in the rediscovered centrality of the porch of San Luca for the Bolognese community.

Civic crowdfunding, if proposed and used properly, has also proven to be able to unite and involve all components of a city, directing all the efforts towards a common goal. Another element of extraordinary importance of “Un passo per San Luca” is the circumstance that, for the first time in Italy, a public administration has resorted successfully to crowdfunding in order to pursue such an ambitious goal. By GINGER, we believe that in a historical period like the current one, where resources dedicated to the protection of cultural heritage are not always sufficient, crowdfunding is proposed as an alternative that must be taken into account. “Un passo per San Luca” led the way, showing that following the right strategy, the campaign can be accomplished with success. This project was made possible thanks to the Municipality of Bologna and all the other institutions involved and to all the partners and the supporters who participated contributing to the restoration of the porch of San Luca 338,578 times.

4.4.2 Chinese case study

For this case study I chose a special type of campaign that could be interesting from a social point of view, although being able to play a role in management and therefore having some economic impact. This project had a great success, raising 339 percent of the initial goal of 300,000 yuan ($46,153.84), reaching 1,015,871 yuan ($156,287.84) of total funding. The campaign starts with an introduction about this woman and her story, who lived abroad far from her motherland, getting used to foreign customs although never forgetting her family and roots. All of a sudden, she joined state council poverty alleviation department as a volunteer with the function of helping poor people. She is currently helping poor people selling tea. The work brought her to Wuyishan, some beautiful mountains located in the heart of Fujian region. In the most remote part called lijiangcun, which is a poor area, 80 percent of the families don’t make more than 5,000 yuan ($770) per year. Everybody in the village relies on growing tea and refining it. In fact this area is ideal for this type of activity, due to its geographic position. The region is special because of its past volcanic activities. In fact, more than thousands of years of natural erosion shaped this area into a beautiful landscape crossed by rivers, caves and cliffs. The red-coloured soil is extremely fertile, which benefits the amazing taste of the tea coming from this area. Geology is of such importance that oolong teas from this region (yancha) are classified based on growing location. The mountainous area naturally protects against the cold air from the northwest while it retains the warm and humid air from the sea coming from the east. Due to this, the region has a relatively moist climate with humidity levels between 80-85 percent and high rainfall between 2200-3200 millimeters. Appearance of fog is common. See the below table for average daily min/max temperatures and rainfall per month. Farmers are not able to manage their business therefore can’t properly enter the market and are selling at a much lower price than what it is worth, nearly leading to a no profit situation. This campaign 3 core objectives (1) – Support the families in the village. (2) – Try to set up a market professionalism, firstly helping the farmers do commercialize their product, distribute and sell it. On a second moment the goal is to enhance this as an automatic mechanism that can be carried out by themselves. (3) – In case the raised amount exceeds the target, the money will be used to help.

Fortunately Zhonchou Wang, differently from the Italian donation-based crowdfunding platforms, discloses the data about the donations: number of donations, the amount of each donation, the date and the time, as well as the name of the donor, in case he/she does not ask for anonymity. This decision is quite important and can be explained as a method to raise awareness among the public. The platform taken in consideration, publishes data regarding some of its campaigns, making it possible to analyse them. This way it is possible to divide the donations in time slots (eg. By month) and see during which one the donors are more active. Furthermore there are two more sections, where the news about the campaign are posted and one for the discussions. The last one is very important as it engages the donors to express themselves and comment the development of the campaign. This last section is quite curious as a lot of comments, are written by peers, who are not always donating, instead they use that exposure space for promoting their own campaign, uploading usually two pictures: one about the cover of the project, and another one with a QR code to be scanned and follow their campaign. Analysing the data provided by the platform we can observe see the distribution of the donations over time it not regular at all.

Figure 21. Donation’s distribution over time

Source of information: http://www.Zhongchou Wang.com/deal-show/id-539362

Starting the campaign September 12^th with 52 donations received during the first month, dropping to 17 donations in October reaching the lowest number of 2 donations in November. The trend then starts to grow dramatically from 2 donations reaching 216 donations in December, keeping the same trend during January, closing the campaign with 237 donations in the last 20 days. This sharp increase in donations is reflected in the updates that are published in the platform. Some updates, for example are stating that social events are taking place, involving members of the party to promote this initiatives. Other updates want to make people aware of the fact that the support has begun, even if the campaign is far from over. These actions have had a consequence on the amount of donations, as seen on the graph above.

Now I would like to bring the attention to the modus operandi regarding the “rewards” obtained when supporting this project with a certain amount of money, and on the weight these different donations had on the success and the total amount raised. The rewards have been organised in the following order:

Table 7. Reward plan

Source of information:http://www.Zhongchou Wang.com/deal-show/id-539362

Reward name	Amount	Object	Donors
Donate 6 yuan and get a chance to win the lottery	¥6 ($0.92)	Lottery	186
A sip of tea	¥49 ($7.53)	Small box of tea	41
A sip of tea	¥99 ($15.23)	Big box of tea and “thank you”	29
Volunteer for poverty alleviation	¥199 ($30.61)	0,6 kg of top quality tea + letter from the head of the village	108
Volunteer for poverty alleviation	¥399 ($61.38)	0,6 kg of top quality tea + 750ml tea oil + letter from the head of the village	66
Master of poverty alleviation	¥4,400 ($676.9)	Top quality black tea in leaves 6×0,6 kg; Top quality black tea in leaves 4×0,6 kg; Top quality BAIXINGMUDAN tea 2×0,6 kg; 3lt Tea oil; Letter from the village head; Give the name to a tea plantation; Tailor made tea pot; Participate in activities in the village for 3 nights (for one person only).	46
Help poor farmers planting some tea	¥5,900 ($907.7)	Top quality black tea in leaves 6×0,6 kg; Top quality black tea in leaves 8×0,6 kg; 750ml tea oil*8 bottles; Tailor made tea pot; Letter from the village head; Give the name to a tea plantation; Participating in activities within the village for 3 nights (for one person only).	27
Find some people to buy tea, make a group and place an order	¥100,000 ($15,384)	NGO or private companies may benefit of the following products: (black tea, white tea, tea oil), tailor made packaging for tea product and may participate into the tea activities within the village.	6

The table analyses the weight of the donations, after being grouped based on the amount, precisely this way:

49 yuan 0.2 percent
6 yuan 0.11 percent

99 yuan 0.28 percent
199 yuan 2.11 percent
399 yuan 2.7 percent
4,400 yuan 19.9 percent
5,900 yuan 15.7 percent
100,000 yuan 59 percent

Figure 22. Donations’ weight

Source of information:http://www.Zhongchou Wang.com/deal-show/id-539362

4.5 Comparison of the two case studies

4.5.1 Platforms

The two platforms are quite different, and any other choice of platform would have given the same result, as Italian platforms operate on a smaller and local scale mostly, whereas Chinese platforms are often part of an E-commerce or financial group, therefore have more resources.

GINGER is an acronym for Gestione Idee Nuove e Geniali in Emilia Romagna meaning New Management and Ingenious Ideas in Emilia Romagna – a region in the north-east of Italy – this is a crowdfunding platform operational since June 2013. GINGER unites to the website tool the team’s advice as a consultant and a network of strategic partnerships at the service of the project managers. The territorial focus allows GINGER to be also very much present from the offline point of view and to increase the bond of trust between initiators and donors. It also offers the ability to create do-it-yourself crowdfunding campaigns throughout the national territory and to replicate the “local crowdfunding” model in other areas. The platform can support herself through an initial fee required by the founders, which varies according to the required services: for the use of platform and initial services of consultancy the cost is 300 euros, whereas in case some want to take advantage of additional services (such as drafting a business plan, services of communication, digital PR, legal and administrative advice) GINGER elaborates a customized estimate.

On the other side Zhongchou is a specialized platform in finance through crowdfunding. It is part of the Wangxin group. The main goal is to offer the public the raising resources, investment and innovation The Zhongchou platform offers a crowdfunding service through its website. The backing area of interest covers the following fields: film stories, music, welfare social, travel, art, people left behind (poor) scientific research. They support them as long as the projects are exciting also you can join us. The motto says: “You only need a dream and we will make it real”

4.5.2 Rewards

Both projects included a reward plan and I must say they were quite similar. The minimum amount though differs: the Chinese project requires a minimum donation of $0.92 whereas the Italian set $5.35 as the minimum donation amount. Then there are respectively 8 and 6 different amount of donations that refer to a reward, with both maximum amount of $15,000 – $16,000. Despite many tries to contact the Italian project initiators, unfortunately they did not share data regarding the distribution of the donations, saying the data has not been processed yet.

4.5.3 Communication

The communication strategy has proven quite different. The only similarity these project share is the publishing of updates and discussion on their dedicated platform. The Italian platform gave 103 updates with the last one dating January 1^st 2014. Un passo per San Luca counted 2137 “likes” on their Facebook page and over 550 posts between 25/10/2013 – ongoing. Twitter instead counted 1910 “tweets”, 695 followers and 463 “likes”. Another vehicle used for social media is Instagram, used only for sharing photos. Un passo per San Luca counted 754 posts with the hashtag #persanluca and 172 followers. Moreover 24 videos were published on Youtube. On the other side the Chinese project published 19 updates which – aforementioned coincided exactly with the donations’ peek. Furthermore these updates generated 38 discussions. The Social Network Effect did not play a key role in this project, as the only available data are 66 followers on the project’s Weibo page. This can be explained since other social media as weixin and QQ have their own “Charity” section featured in their platforms

5 CONCLUSION

Wrapping up all this information, I can come to the conclusion that the from an external point of view the factors affecting the success of a donation-based crowdfunding campaign are the Internet penetration rate, therefore the access to technology and quality of education.

These external factors actually reflect the internal one I and most researchers believe to be the most important: the communication, especially through the use of Social Media.

5.1 Implications

There are a lot of implications of this research for experts of the sector and for further research. Firstly, we should consider that research on this topic is unique due to its newness. Crowdfunding is a platform that recently emerged and can be defined state-of-the-art, therefore many areas of this topic still need to be examined in depth. While there is a scarcity of academic efforts to explore such a mechanism and the existing crowdfunding literature explores a single country or countries with similar cultural backgrounds, this research is one of the first efforts at a cross-cultural analysis of this contemporary instrument. Furthermore, since the large majority of the current literature on crowdfunding is matured from business venture, entrepreneurship or computer human interaction perspectives, this study is one of the first attempts to examine the crowdfunding mechanism through a communication lens.

5.2 Limitations & future research

This research has several limitations to be mentioned, even though it has some contributions. The biggest limitation of this study is that we cannot generalize or apply exactly these cultural aspects to other countries since the focus here are China and Italy. Secondly, this research focused mostly on donation-based Crowdfunding therefore, a careful interpretation of findings is required. Thirdly, in order to better evaluate the Social Network Effect, both campaigns should have the same Social Media Vehicle (Facebook), for a more objective analysis. Hence, this research’s structure should be applied to multiple countries and projects along with dissimilar crowdfunding types, like technology, small businesses, or education to better comprehend how cultural features are represented in crowdfunding projects. It is also suggested to contrast crowdfunding campaigns used for more fundraising reasons in different sectors, for example business organizations. Moreover, while the study tried to compare crowdfunding campaigns in two culturally different countries, the data collection is restricted to one campaign per country. Since each platform has its own publishing policies, the collected data may lack some. Accordingly, a careful interpretation of the findings is needed and scholars should be encouraged to collect data from numerous platforms of each country to minimize such concerns. Future research may consider in-depth interviews or surveys of crowdfunding supporters to determine whether people from different cultural backgrounds have distinctive motivations to support a crowdfunding. In addition, while this study provides a snapshot of crowdfunding at one time, a longitudinal observation approach could offer a holistic view of crowdfunding projects.

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Appendix

ACKNOWLEDGEMENTS

First and foremost, I would like to express my personal gratitude to my supervisor Professor Li Haigang for his suggestions and support.

I am also very grateful to Associate Professor Ivana Pais, for sharing her findings and discussing them with me, therefore for dedicating me some of her special time.

Last but not least, I thank my family for their support from afar, but strong as usual.