All posts by Niek A. van der Horst

Fan Funding – Let’s retake charge!

Through crowdsourcing of many kinds, people can support causes they are passionate about and, in the case of equity crowdfunding, even buy shares with voting shares, such that they gain a say in the operations of the organization or project they support. However, can people really fund and take charge of the things they are most passionate about?
“Amongst all unimportant subjects, football is by far the most important.”  – Pope John Paul II
The amount to which a large share of habitants of European countries, and many more worldwide, care about their favorite football club can hardly be overestimated. Though how often do we read about mismanaged clubs in severe financial problems? Opportunistic behavior of the top management of clubs unfortunately is rather rule than exception in the industry of football, often resulting in a short term focus, immense amount of debts and, in turn, the decay or even the liquidation of a club. Whereas the often very rich board members and owners are simply replaced after such disasters and move on with their comfortable lives, the fans are left in grief over the loss of their great pride and passion.
There is hope. In the last years, some highly interesting and promising initiatives have taken place to redistribute a part of the control of a club to its fans. Due to financial mismanagement, from the 2009/2010 season onwards, the former British Premier League side Portsmouth Football Club was relegated three times in a row and the club found itself on the brink of extinction. But, in 2013, the fans injected 2.5 million pounds in their club, through a community share issue with partial ownership rights for each shareholder. The fans, essentially a club’s customers as they buy tickets and merchandise, saved Portsmouth and made ‘Pompey’ the largest fan-owned football club in the UK. The investing fans are united in the Portsmouth Supporter Trust (PST), which has to approve any major decision of the club’s board, such as the issuing of loan capital or venturing in acquisitions. While this yet is a beautiful example of what consumer involvement can do, last year a crowdfunding campaign backed by Portsmouth fans went a step further even. On, a newly established platform with the aim to stimulate active supporter backings and decision rights, raised 270,000 pounds for Portsmouth to construct its first-ever club-owned academy, right in the heart of the city of Portsmouth.
The video below tells the great story of the Portsmouth fans’ actions.
Two fans of 3rd Bundesliga side FC Fortuna Köln had an even greater ambition. The plan they launched last year proposed that any Fortuna supporter could fund its beloved club and, in turn, gained a vote on a wide array of possible decisions, including whether or not to buy a particular player, realize an investment to the clubs premises or even to sack the first squad’s manager. Every pound invested represents one vote, and the fan opinions alltogether would decide which actions the club had to take. Unfortunately, this highly democratic, wisdom-of-the-crowd enabling, crowdfunding campaign did not reach its funding goal, but the idea might very well turn out an industry changing one in the long run.
The organization Supporters Direct promotes and researches the cause of the so-called Supporters Share Ownership. In their extensive 2013 report on this topic, the authors identify a rapidly increasing interest of both fans and politicians, whereas club owners and board members, the incumbent agents in this industry, display a fierce reluctance to venture in this kind of acquiring funds. To overcome this deadlock, the authors recommend policy makers to establish a Community Football Fund which would be created as a social investment intermediary capable of securing various forms of social investment to assist supporter ownership. Supporters Direct is paving the way for widespread supported ownership of football clubs, giving hopes to all those fans opposing the modern reality of football, where clubs are subject to the dangers of the few elite owners spending billions, those of the short term oriented, opportunistic board members and the investors who view players and clubs as mere investment vehicles.
Sooner than expected, we might witness crowdfunding radically transform yet another industry; the highly conservative, but yet so deeply cherished industry of football. Let’s make it happen!
– Niek A. van der Horst
Crawley Town v Portsmouth - npower Football League One



Buy this team, April 2012, The Economist, accessible at:

Crowdfunding: Football’s 12th Man!, April 3rd 2014, FC Business, accessible at:!

Is fan ownership the answer to struggling football clubs?, November 27th 2013, The Guardian, accessible at:

Portsmouth FC Academy campaign successfully raised £270,000, August 16th, Tifosy, accessible at:

Start-up-Netzwerk für Fortuna Köln, April 8th 2014, Kölner Stadt Anseiger, accessible at:,15187530,28071496.html

Supporter Share Ownership, 2013, Supporters Direct, accessible at:

Loan-based Crowdfunding : Money for Each Other.


Crowdfunding has become a popular topic for authors in both academia and journalism, as well as on this webpage. Commonly, crowdfunding platforms allows entrepreneurs to gain capital for their operations through either donations or by offering partial ownership of their companies, resembling venture capital. Over the last years, the number of participants in crowdfunding campaigns greatly increased. One of the explanation for the sudden popularity of this form of acquiring funds for one’s business venture is that commercial banks have become very reticent when it comes to providing loans for entrepreneurs and small businesses. While the bank has traditionally been the first party entrepreneurs-to-be turned to, the credit crisis and the subsequent stricter legislation installed by governments resulted in the situation that banks hardly provide any commercial loans below 500.000 euro.

While the rise of crowdfunding is thus partly explained as an answer to the changed world wherein banks are highly reticent to provide loans below half a million euro’s, the types of financing that are commonly collected through crowdfunding platforms, donation-based and venture capital-like financing, are rather different from the common financing type collected through a bank, the loan.

In response to this contrast, a young Dutch crowdfunding platform called Geldvoorelkaar (Dutch for ‘Money for each other’) introduced an alternative way of crowdfunding. Money is not collected by gifts or transferring parts of the ownership of the firm, but by requesting a loan. Loans can not only be requested by firms or people with a business plan, but also individuals who look to buy for example a car or new kitchen, but lack needed money needed for these purchases at the present moment.

Geldvoorelkaar operates differently than the well-known crowdfunding platforms. An individual or firm can file a request on the website of Geldvoorelkaar with the desired amount of the loan and the interest rate they are willing to pay on the loan. Geldvoorelkaar then checks the credit worthiness of the person or firm which filed the request. Apart from doing their own assessment on the risk of borrowing money the person or firm, Geldvoorelkaar assesses the creditworthiness of individuals and firms in cooperation with the Dutch credit assessor Graydon by a Probability of Default (PD) score and uses the Dutch Central Credit Information System to calculate a BKR-score, such that people considering providing a loan through Geldvoorelkaar can assess the creditworthiness and connected risk of the particular loan with three different, independent ratings. Geldvoorelkaar accept only the files with a PD score of B or higher. The maximum probability of default, as assessed by Graydon, allowed is 4.99%.

The way in investors can contribute is similar to the common crowdfunding platforms. Investors can choose the amount which they want to provide, and have full control of their privacy options. The default privacy option is an anonymous contribution. An important difference though is that when the requested loan amount is reached, it is not possible for people to contribute more anymore.

The loans made take the form of an annuity. When an individual or firm successfully collects its loan, every month it has to pay both the interest and a redemption sum, such that at the end of the term of the loan, the loan is fully paid back. This form greatly decreases the risk of default and provides investors with a steady income on their loaned money.

It is extremely interesting to see this new form of crowdfunding unfolding. People can invest in exactly those people and projects they believe in, with a clear indication of the risk through various ratings and their reward, through the interest rates. This puts the ordinary man back in charge of what goes on with its savings, as opposed to the opaque ways banks and trust funds use the savings of the consumer they control.

And on the other hand, I believe it is greatly promising to see that this new form of crowdfunding provides a solution to the problem that individuals and small firms are not able to get a loan at a bank. Overcoming this problem may very well turn out to be a great stimulus for entrepreneurship, innovation and, in the end, healthy economic growth figures. Earning money by providing some of your savings to an individual who wants to make an impact on your local society, how could one oppose such a beautiful thing!

Searching in Choice Mode: the faster and superior way?

good bad choice

With the rise of the internet, consumers can consider an ever growing amount of alternatives of a certain product they intend to buy.  Sequentially, recommendation systems have become a widely observed phenomenon in electronic commerce. Much is known about the effect of these product recommendation on the outcome of the purchase decision of the consumer, but research now also concludes that the process of the product search is transformed in the presence of recommendation systems. EUR Professor Benedict Dellaert  and Gerard Haubl from the University of Alberta explain how we traditionally approach searching for a product and how RAs transform the way we search. We trade in the well documented normative model of consumer search (i.e. Hauser & Wernerfelt, 1990), where we continue to search for additional alternatives until we believe that the potential improvement of our product selection, which the newly examined alternative might represent, does not weigh up against the effort of search we need to put in, for a model where we search in choice mode. In choice mode, we let the recommendations guide us on which alternatives to consider and we continuously compare the alternatives we have assessed among each other. Furthermore, we consider a smaller set of alternatives than we would without the RAs and consider these in more depth. The higher the variability in the (perceived)  attractiveness of the alternatives, the stronger this effect becomes, a finding that contrasts the prediction of normative search theory (see Weitzman, 1979). grfiek Luckily for us, the research indicates that the choices we make using the choice mode match our preferences a lot better than the normative model search, following the average match of 82% with the RA versus a mere 47% without the RA. On top of that, we save time as we do so. Though, there might be a fly in the ointment; more recent research from Adomavicius, Bockstedt, Curley & Zhang (2013) reports that the recommendation system can manipulate consumer preferences and can give rise to a bias. The consumer may choose for a particular alternative, because he believes that its high position on the recommendation system means that that particular alternative is a ‘correct’ answer to the uncertainty he faces. Whether that is true depends greatly on the quality of the recommendations. Also, the consumer might be biased when reporting its satisfaction with the product, as subconsciously he adapts his preferences to the product characteristics of the product bought using a recommendation system. In the end, it seems we can make truly better and more time-efficient product choices with the help of recommendation systems, on the conditions that we critically asses the quality of these systems and remain loyal to our original preferences.


Resources :

Adomavicius, G., Bockstedt, J. C., Curley, S. P., & Zhang, J. (2013). Do recommender systems manipulate consumer preferences? A study of anchoring effects. Information Systems Research, Vol. 24, No. 4, pp. 956-975.

Dellaert, B. G.C.,  Häubl, G., (2012) Searching in Choice Mode: Consumer Decision Processes in Product Search with Recommendations. Journal of Marketing Research, Vol. 49, No. 2, pp. 277-288.

Hauser, J.R., & Wernerfelt, B ., An Evaluation Cost Model of Consideration Sets,  Journal of Consumer Research, Vol. 16, No. 4 (Mar., 1990), pp. 393-408 Weitzman, M., Optimal Search for the Best Alternative, (1979), Econometrica, Vol.  47, No. 3, pp. 641–54.