Short answer

Consider using crowdfunding as a dual-purpose strategy: for capital generation and for market validation, particularly for projects where end-users are likely to be active participants in the funding process.

Field
Innovation & Markets
Source
Management Science (2015)
Method
Comparative analysis
Evidence
Strong effect

Crowdsourcing platforms for funding can effectively complement traditional expert-led decision-making processes, often by supporting projects that experts might overlook. This innovation & markets research insight is drawn from a 2015 study published in Management Science. Using Comparative analysis, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Consider using crowdfunding as a dual-purpose strategy: for capital generation and for market validation, particularly for projects where end-users are likely to be active participants in the funding process.

Study
Innovation & MarketsHigh ImpactStrong effect

Crowdfunding Decisions Align with Expert Funding Preferences, Favoring Underfunded Projects

Crowdsourcing platforms for funding can effectively complement traditional expert-led decision-making processes, often by supporting projects that experts might overlook.

Management Science · 2015

01

Key Findings

  • 01There is significant agreement between crowd and expert funding decisions.
  • 02Crowds are more likely to fund projects that experts do not.
  • 03Projects funded solely by the crowd show no significant difference in outcomes compared to those funded by both crowds and experts.
02

Application

Design takeaway

Consider using crowdfunding as a dual-purpose strategy: for capital generation and for market validation, particularly for projects where end-users are likely to be active participants in the funding process.

How to apply

When seeking funding for a new product or service, consider a crowdfunding campaign to not only raise capital but also to gather insights into public reception and identify potential early adopters.

Project actions

  • 01When researching funding models, consider the strengths of both expert panels and public opinion.
  • 02Analyze how different funding sources might influence the direction and success of a design project.
03

Method & Evidence

AimTo what extent do the funding decisions of a crowd differ from those of expert evaluators in the arts sector, and how do these differing decisions impact project outcomes?
MethodComparative analysis
ProcedureThe study compared funding decisions made by a panel of national experts with funding data from a major crowdfunding platform for theater projects. Project outcomes were then analyzed based on funding source.
ContextArts funding and crowdfunding

Variables

IVFunding source (expert vs. crowd vs. both)
DVProject funding decisions and project outcomes
CVProject type (theater), platform used, expert panel composition
04

Strengths & Limitations

Strengths

  • +Utilizes real-world data from a large crowdfunding platform.
  • +Compares crowd decisions directly against a panel of national experts.

Limitations

The specific context of arts funding might not directly apply to fields like engineering or software development without further investigation.

Reliability & validity

The study's reliance on actual funding decisions and expert evaluations lends it strong ecological validity. Reliability would depend on the consistency of expert judgments and the stability of crowd preferences over time.

Think critically

How might the 'wisdom of the crowd' differ in sectors with less direct end-user engagement compared to the arts?

05

Design Principles

"Leverage diverse evaluation methods to broaden the scope of innovation and reduce the likelihood of overlooking promising concepts."

This research suggests that designers and innovators can leverage crowdfunding not only for financial support but also as a validation mechanism. Understanding how crowd preferences align with or diverge from expert opinions can inform strategies for product development, market entry, and stakeholder engagement.

06

What This Means for Your Design

When people vote with their money on crowdfunding sites, their choices are often similar to what experts would pick, but they are also more willing to fund unusual ideas. Projects that get funded by the crowd, even if experts didn't pick them, tend to do just as well.

How to use in your project

  • 1.Use this research to justify exploring crowdfunding as a method for testing market viability or securing initial funding for a design concept.
07

Add to My Project

08

Quick Cite

Paragraph starter

Research indicates that crowdfunding platforms can serve as a valuable complement to traditional expert-driven funding, with crowds often supporting projects that experts overlook, and these projects demonstrating comparable success rates. This suggests that incorporating public sentiment through crowdfunding can broaden the scope of innovation and reduce the risk of 'false negatives' in project selection.

09

Source

Management Science

Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts

journal · 2015

View source

Questions About This Research

What does the research say about crowdfunding decisions align with expert funding preferences, favoring underfunded projects?
Consider using crowdfunding as a dual-purpose strategy: for capital generation and for market validation, particularly for projects where end-users are likely to be active participants in the funding process. Evidence: Management Science (2015).
Why does "Crowdfunding Decisions Align with Expert Funding Preferences, Favoring Underfunded Projects" matter for design?
This research suggests that designers and innovators can leverage crowdfunding not only for financial support but also as a validation mechanism. Understanding how crowd preferences align with or diverge from expert opinions can inform strategies for product development, market entry, and stakeholder engagement.
How can designers apply this research?
Consider using crowdfunding as a dual-purpose strategy: for capital generation and for market validation, particularly for projects where end-users are likely to be active participants in the funding process.
What were the main findings?
There is significant agreement between crowd and expert funding decisions.. Crowds are more likely to fund projects that experts do not.. Projects funded solely by the crowd show no significant difference in outcomes compared to those funded by both crowds and experts.
What research method was used?
Comparative analysis.
How strong is the evidence?
Evidence strength is rated Strong effect, based on a 2015 journal from Management Science.
What should I do differently in my next project?
When seeking funding for a new product or service, consider a crowdfunding campaign to not only raise capital but also to gather insights into public reception and identify potential early adopters.
What are the limitations?
The study focused on a specific sector (theater arts) and may not generalize to all creative or technological fields.