Solent: Portsmouth Business School examines motivations for crowdfunding

Economists at the University of Portsmouth have taken a vital step towards understanding how crowdfunding is changing the UK and global financial landscape. Portsmouth Business School and the Crowdfunding Centre have announced a formal partnership, thought to be the first of its kind.

The agreement will tell researchers, led by economist Dr Joe Cox, what makes people want to contribute, which projects are most likely to succeed and what the answers might mean for financial markets or the economy.

The Crowdfunding Centre’s founder and director Barry James is a leading advocate for crowdfunding and for research into how it is helping change the face of business. He has also been appointed visiting fellow at the University’s Business School.

James said: “Things continue to move extremely fast in what is a transformative field, so research is increasingly crucial. Traditional financial institutions, regulators and governments need the kind of analysis and insights that can only be achieved by the academic sector working hand-in-hand with those closest to the action. Industry and academe must hold hands to provide this, which is why I am so pleased to be appointed a visiting fellow at Portsmouth Business School and to be working closely with Dr Cox and his team.”

Dr Cox said the partnership between the University and the Crowdfunding Centre would make it possible to address significant questions relating to crowdfunding and how it was changing business the world over.

He said: “Technology has made it possible for anyone to become an investor but we are only just beginning to develop a robust understanding of crowdfunding. Established economic and financial models are in danger of being made redundant as technology drives down the cost and complexity of individuals taking responsibility for how and where to invest their money, or from where to ask for it.

“As we’ve seen in social media, the Internet is enabling a new type of democracy in funding. It will be fascinating to study this as it evolves and the findings are likely to be of enormous significance to economists and the financial industries.”

Crowdfunding works by using the Internet to find backers for individuals and companies who are unable or unwilling to borrow from banks. According to a BBC report, more than nine million investments and donations were made via crowdfunding platforms in the UK last year and more than 650,000 projects were funded.

The Crowdfunding Centre has been tracking and mapping the exponential growth of crowdfunding for some time and say London and the UK are major players in the new e-economies being made possible by the democratisation of funding.

James said: “The data is revealing a new picture, changing our understanding of what's happening to the world’s economies.  As people, the crowd, connect more directly with entrepreneurs, makers and innovators, making the decisions on who and what to fund, it is their wishes, needs, desires and decisions that are driving and directing this new economy which is in turn democratising, and humanising, capitalism and finance.

“It’s vital we work together to understand how these financial innovations are changing the world and their potential to help create a brighter future.”

Cox is one of very few academics in the UK to be studying crowdfunding and crowdsourcing. He is leading a £750,000 crowdsourcing research project to establish why people give up their time to help scientists better understand some of the biggest mysteries, from searching for the cure for cancer to trying to understand the galaxies that fill our Universe, and is thought to be the first academic in the world to advertise for a researcher who is an expert in crowdfunding to crowdfund their own salary.