*This was submitted as a project for my data mining class in my MS Business Analytics program. My team included classmates:** Anh Duong and Luoqi Deng. This project was done for educational purposes only. Click the photos to enlarge.*

# Abstract & Key Learnings

- The hypothesis that crowdfunding campaigns from Colorado have higher success rates than campaigns that are located in other places was proven.
- The category, the number of comments, the number of funders, and the fund goal of the campaign contribute significantly to its success.
- If a campaign creator from Colorado promotes these factors, they will be able to increase their chances of success significantly.

# Project Rationale

- Indiegogo, the largest global crowdfunding and fundraising site online, has funded over one hundred seventy-five thousand (175K) campaigns, with an estimated valuation of eight hundred million (800M) dollars, in the past seven years. Over two million five hundred thousand (2.5M) funders from two hundred sixty-six (266) countries have contributed to the success of these campaigns.
- Based on a recent tally by Krowdster.co, a crowdfunding marketing and PR solution provider, stated that nine of ten (90%) Indiegogo campaigns fail to reach their goal; which is significantly higher than the 66.6% failure rate of Kickstarter, one of Indiegogo’s biggest competitors.

# Problem Statement

This study aimed to determine whether campaign success can be predicted by certain attributes of its profile, campaign activity, and Indiegogo funder engagement.

# Data Description/Preprocessing

The data used came from a public data set from BigML.com.

- 15K rows
- Global data
- No time factor
- Contains finished and unfinished campaigns

## Cleaning

In order to make the data usable, the data set had to undergo cleaning. All the blank cells were turned into zeroes. Variables that had inconsistent units (hours, days, minutes) had to be converted into consistent values. To make analysis easier and more reflective of performance, two calculated fields were created:

- Attainment Rate = Raised/Goal
- Attained = if(Attainment Rate >= 100), then 1, else, 0

## Variable Selection

State and country were disregarded because the scope of the study was focused on Colorado-only campaigns.

# Model Building

For this study, the Decision Tree, Neural Network, Bayesian, and Clustering models were used to determine the most important predictors to a campaign’s success. Multiple models were chosen so that the outcomes could be compared and a more logical conclusion could be confidently drawn. The association model wasn’t used because, although it would be interesting to determine the confidence and correlation of the occurrence of the different variables, it would contribute little to the goal of this study.

# Assumptions and Limitations

- The study is inadequate due to the researchers’ inability to collected all the variables, such as the important dates of the campaigns. The result of our predictive model is solely based on the pre-given attributes
- The observations are independent of each other
- Campaigns happened within the same year
- A successful campaign is when the amount of capital raised by the crowdfunders exceeds the goal set by campaign owners. Therefore, in our dataset, we create two new calculated fields called Attainment Rate and Attained. Attainment Rate is the Raised amount over the Goal amount. If the Attainment Rate is above 100, the campaign is attained, which is indicated as 1 in the Attained field, and 0 vice versa. The two fields will be used as target for our model.

# Hypothesis

According to Krowdster.co, only 10% of the Indiegogo campaign meet their goals. In our sample data set of Colorado, the actual result we found is 30%.

- The p-value (Sig.) of the one sample T-test is less than 0.001; thus, we reject the null hypothesis that the sample mean is equal to the hypothesized population.
- This means that crowdfunding campaign in Colorado does have higher chance of success than the average campaign globally.

# Descriptive/Regression Analysis

- Consideration: potential correlation between continuous variables.
- A strong correlation between two variables will make explaining what’s going on harder. The Correlation table shows the correlation table between the variables. The two pairs Updates & Gallery (0.589) and Comments & Funders (0.681) show strong positive correlation.
- However, since we already have very few variables, we decide not to conduct the Principle Component Analysis nor Factor Analysis to drop variables.

- It is helpful to understand whether a high number of comments, updates, gallery or funders is correlated to the attainment rate. If the correlation is indeed strong, campaign owner could promote the variable to increase the attainment rate.
- Attainment Rate has a correlation of 0.397 and 0.44 with Comments and Funders, respectively, which is a good indicator that a high number of comments and funders could lead to a higher attainment rate

- The Statistics table (Figure 2) shows the descriptive statistics about the continuous variables and the outcome Attainment Rate.
- All the continuous variables are heavily skewed to the left (mean >> median). The skewness of the dataset makes it difficult to apply hypothesis testing since most of tests are based on normal distribution assumption.
- Regarding the Attainment Rate, the fact that it has the mean and median below 100 indicates the high failure rate of the sample.
- The standard deviation of 260 and the maximum value of 14281 suggest that there are many outliers in the dataset.

- The Category table (Figure 3) shows the distribution table of Category, the only relevant discreet variable of the sample data set since the geographical dimension has been eliminated.

# Predictive Analysis

If the results from the classification models are similar to each other, a conclusion about the predictor of success of a campaign can be confidently drawn.

## Decision Tree

Preparations:

- Partition: 50-50 Training and Testing data
- Irrelevant attributes, such as text and urls, were casted as typeless to prevent noise and misrepresentation in the model itself.

## Neural Network

Preparations:

- Partition: 70-30 Training and Testing data

## Bayesian Network

Preparations:

- Partition: 50-50 Training and Testing data

## Clustering

## Summary

Overall, the performance of our analysis stays at the fair/ moderate acceptance level. The results from our classification models share some consistency with each other, meaning that we can trust their outcomes. The following table shows the summary of our analysis:

# Domain Knowledge

Domain knowledge was gathered to be able to ground the study to what happens in the business context.

- With the advent of social media, it has been more evident that crowdfunding is not bounded by geographical constraints.
- It was also observed that funders exhibit herding mentality. This means that as a campaign accumulates capital, more and more individual funders are motivated to make the campaign a success.
- Immediate markets, such as friends and family, play an important role to the early success of a crowdfunding campaign. This market has been known to spike the fund during the first few days of the campaigns.
- Crowdfunding is a platform of incentives to both the creators and funders.
- Funders lose motivation in supporting campaigns where creator incompetence and inexperience is evident.

# Moving Forward

- A bigger dataset in terms of dimensions and quantity will definitely impact the overall quality of the classification results.