Pathways to success: a machine learning approach to predicting investor dynamics in equity and lending crowdfunding campaigns

Abstract

AbstractCrowdfunding has evolved into a formidable mechanism for collective financing, challenging traditional funding sources such as bank loans, venture capital, and private equity with its global reach and versatile applications across various sectors. This paper explores the complex dynamics of crowdfunding platforms, particularly focusing on investor behaviour and investment patterns within equity and lending campaigns in Italy. By leveraging advanced machine learning techniques, including XGBoost and LSTM networks, we develop predictive models that dynamically analyze real-time and historical data to accurately forecast the success or failure of crowdfunding campaigns. To address the existing gaps in crowdfunding analysis tools, we introduce two novel datasets—one for equity crowdfunding and another for lending. Moreover, our approach extends beyond traditional binary success metrics, proposing novel measures. The insights gained from this study could support crowdfunding strategies, significantly improving project selection and promotional tactics on platforms. By enhancing decision-making processes and providing forward-looking guidance to investors, our computational model aims to empower both campaign creators and platform administrators, ultimately improving the overall efficacy and sustainability of crowdfunding as a financing tool.