Elsevier

Drug Discovery Today

Volume 24, Issue 7, July 2019, Pages 1413-1420
Drug Discovery Today

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Success factors of crowdfunding campaigns in medical research: perceptions and reality

https://doi.org/10.1016/j.drudis.2019.05.012Get rights and content

Highlights

  • Crowdfunding serves as an additional tool for financing medical research.

  • The stated preferences of prospective donors differ from the revealed preferences.

  • Large social networks are essential for successful crowdfunding campaigns.

  • Crowdfunding campaigns could succeed regardless of the disease characteristics.

Crowdfunding in medical research is becoming more popular owing to increasing competition for the shrinking amount of government funding. To inform researchers applying for this complementary source of research funding, we investigate the determinants of successful crowdfunding campaigns in medical research. We find that establishing and maintaining professional contacts through social media is of major importance for successful crowdfunding campaigns; an additional tweet or retweet significantly increases the success of crowdfunding campaigns. In contrast to the stated preferences of prospective donors, we document that crowdfunding campaigns can achieve their fundraising goal regardless of the disease characteristics. Scientists could therefore request funding for any kind of project, including therapies for rare diseases and diseases with lower mortality rates.

Introduction

Rapid developments in medical research have opened new possibilities in the treatment of human disorders. Over decades, medical innovations have resulted in higher life expectancy for citizens and generated enormous economic value for nations [1]. As a result, governments in developed countries invest heavily in medical research. For example, the USA alone spent US$3.5 trillion on healthcare in 2017, out of which US$34.2 billion was spent on medical research by the government-supported National Institutes of Health (NIH), the largest source of funding for medical research in the world 2, 3. Despite the crucial role that medical innovation plays in the life of individuals and in the well-being of societies, since 2003 available NIH funds have been constantly decreasing in real terms [4]. The lower amount of inflation-adjusted funds has been coupled with a fierce competition for funding. As a result, the percentage of successfully funded medical research projects decreased from ∼33% in 1997 to ∼20% in 2016 [5].

The high level of competition for government funds and the limited funding from the private sector prompted researchers to look for alternative financing options. One such option is crowdfunding which has gained popularity in various fields, such as technology and art, and enabled campaign initiators to raise funds from a large number of contributors. Crowdfunding in healthcare in general and in medical research in particular is becoming more widespread among needy individuals and scientists as well [6]. In medical research, crowdfunding campaigns are usually donation-based; some campaigns nevertheless offer rewards to donors, such as lab T-shirts, signed copies of research papers and/or meetings with scientists [7]. The motives for crowdfunding in medical research are diverse. Researchers can turn to crowdfunding as a result of an unsuccessful grant application for government funding, for obtaining some additional funding for an ongoing research, for funding an early-phase research project where preliminary results serve as a precondition for grant applications or to raise the awareness of the general public about an important healthcare issue.

Considering the positive effect of medical research and innovation on individuals and society as a whole, more-widespread crowdfunding by medical researchers might significantly improve welfare and benefit the economy in the long term. In this study, we investigate the determinants of successful crowdfunding campaigns in medical research, with success being measured by the success rate – the ratio of actual funding raised to the fundraising target. The determinants identified in this research might serve as guidance for designing and implementing successful crowdfunding campaigns in medical research. In particular, we assess the impact of four groups of determinants on the success of medical research crowdfunding campaigns. First, we look at the characteristics of the disease. We expect the crowd to fund more common diseases, diseases that are deadlier, diseases that have severe impacts on the quality of life of patients and diseases where the need for a new treatment is high. Second, we investigate the peculiarities of medical research and the potential medical innovation. We hypothesize that highly innovative research approaches and proposals resulting in more effective treatment are prioritized by contributors. Third, we assess the impact of organizational details on the success rate to see whether donors consider factors such as the type of organization, the qualifications of the researchers and the availability of additional funding. Finally, we investigate whether the design of the crowdfunding campaign and communication with the crowd affects the success rate. Previous literature on crowdfunding in other domains unambiguously delineates the importance of communicating efficiently with potential donors 8, 9, 10, 11, 12.

This research sheds light on the most important factors influencing the success of crowdfunding campaigns in medical research. To the best of our knowledge, this is the first time in the literature when factors affecting the success of crowdfunding campaigns in medical research have been identified in a systematic way. Previous literature on crowdfunding either investigated success factors of campaigns in fields other than medical research such as art and technology 8, 11; assessed specific aspects of medical crowdfunding campaigns, such as the importance of building an audience [9]; or described cases of successful crowdfunding campaigns in medical research without systematically assessing the factors 10, 13, 14, 15, 16. At the same time, this study allows comparison of the stated preferences of prospective donors as documented by Dragojlovic and Lynd [17] with the revealed preferences of contributors as identified in this research. Dragojlovic and Lynd [17] conducted an online survey of potential donors in North America to determine the characteristics of drug development research projects that are most likely to appeal to donors. To enable comparison of stated preferences with actual donation purposes, we incorporate 11 out of the 14 attributes [17]. The attribute list of Dragojlovic and Lynd [17] is complemented with several additional variables found to influence the success of crowdfunding campaigns in domains other than medical research.

Dragojlovic and Lynd [17] reported that potential donors are comparatively more inclined to support campaigns that aim to treat common diseases, diseases with early age of onset and projects where the proposed treatment will probably cure the disease. Moreover, potential donors are comparatively also more likely to support non-profit organizations, projects where the university of the lead researcher had an excellent reputation and where other funding was available. Stated preferences, however, might deviate from revealed preferences. Research in other domains shows that preferences estimated from survey experiments do not consistently overlap with the choices made in the real world. For example, the inconsistency between survey-based choices (stated preference) and actual choices (revealed preference) has been shown when consumers were selecting alternative-fuel vehicles [18]; picking organic or cloned milk [19]; or when young parents had to decide whether to vaccinate their newborn child [20]. Stated behavioral intentions might be inconsistent predictors of future decisions in medical research crowdfunding as well, especially as several factors increase the likelihood of inconsistency between the agent interests and observed actions in crowdfunding medical research [21]. For example, owing to limited personal experience with the complex medical peer-review process, limited skills in the field, as well as high costs associated with monitoring the projects [22], donors might prefer supporting the scientists they either know personally or professionally or from the media. Scientists and universities with strong reputations might also be preferred by donors – their reputations serve as an effective marketing tool. Public profiles of previous investors might also influence donor behavior. Many crowdfunding platforms, such as experiment.com, allow investors to create a personal profile. Empirical evidence shows that such public information can have a signaling effect for potential investors – it helps them to assess the quality of the projects [22]. Moreover, donors might have acquaintances who suffer from the disease and they are eager to provide financial support for campaigns focusing on the disease of their loved ones. Finally, information asymmetry, captured by the level of uncertainty in the information provided in the campaign description, might also exert influence on the actual behavior of the donors [23].

To preview our results, we find that establishing and maintaining professional contacts through social media is of major importance for successful crowdfunding campaigns; an additional tweet or retweet increases the success rate of a crowdfunding campaign by almost two percentage points. Our results suggest that researchers should carefully consider the platform on which they plan to launch their crowdfunding campaign; platforms with large numbers of users might pay off, even if they are profit-oriented and charge a fee. The fundraising goal should be realistic and attainable; we find empirical evidence that the higher the fundraising goal the lower the probability of succeeding. Moreover, we report that crowdfunding campaigns might achieve their fundraising goal regardless of the disease characteristics. Scientists thus could request funding for any kind of project, including therapies for rare diseases, diseases with early age of onset and diseases with low mortality rate. At the same time, when comparing the actual donation behavior documented in this research with the stated preferences of prospective donors as reported by Dragojlovic and Lynd [17], we find empirical evidence of inconsistency between stated and revealed preferences in crowdfunding. In this research, none of the attributes found previously influential [17] were useful in predicting the success rate of crowdfunding campaigns. Stated charitable attitudes and behavior alone thus cannot be used to forecast actual donation behavior in crowdfunding medical research.

Section snippets

Crowdfunding campaigns

Data about crowdfunding campaigns in medical research are obtained from https://consano.org and https://experiment.com, two crowdfunding platforms specialized in funding scientific research. These two platforms were chosen after assessing the content and suitability of the crowdfunding platforms listed in references 15, 24. The main criteria for inclusion were as follows:

  • i

    The platform is among the largest crowdfunding platforms in the USA focusing on scientific (medical) research. The

Determinants of successful campaigns

Table 2 describes the characteristics of crowdfunding campaigns. For binary variables, the mean value provides information about the proportion of observations having a value of 1. Descriptive statistics of the categorical variables used in the second model are shown in Table S2 (see supplementary material online). OLS regression results of the first model are shown in Table 3. Similar conclusions can be drawn from the second model (Table S3, see supplementary material online).

Communication

Concluding remarks

Central funding agencies should keep on fostering fundamental discoveries, innovative research approaches and their application as a basis for improving the health and wealth of nations. These funding agencies should continue ensuring efficient allocation of resources and prioritize research that delivers the highest total value to society, considering the quality and the quantity of life lived, summed up across all individuals. Crowdfunding has the potential to complement but not to replace

Acknowledgments

We thank the faculty members at Stockholm School of Economics in Riga for helpful comments and suggestions on earlier versions of this paper.

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