This study investigates characteristics of crowdfunded projects and drivers of success. In line with the community view of crowdfunding, results indicate that much of the funds provided are either donations or are entitled to receive a final product created by the project, rather than equity or cash payments. Moreover, crowdfunding initiatives that are structured as non-profit organizations tend to be significantly more successful than other organizational forms, even after controlling for various project characteristics. This finding is in line with theoretical arguments developed by the contract failure literature (e.g., Glaeser and Shleifer, 2001) that postulates that not-for-profit organizations may find it easier to attract money for initiatives that are of interest for the general community due to their reduced focus on profits.
Gender dynamics in crowdfunding (Kickstarter): evidence on entrepreneurs, investors, deals and taste based discrimination
The authors investigate gender dynamics and biases in the process of raising funding to new projects via the leading crowdfunding platform - Kickstarter. They find women made up about 35% of the project leaders and 44% of the investors on the platform. On average, men seek significantly higher levels of capital than women for their projects, and also raise more funds than women. However, women enjoy higher rates of success in funding their projects, even after controlling for category and goal amount. Multivariate analysis indicated significant positive correlation between the gender of the project leader and the percentage of the same gender investors.
The contribution patterns of equity-crowdfunding investors: gender, risk aversion and observational learning
In this paper authors investigate whether there are gender-differences in the behavior of investors in firms seeking equity financing in comparison with other settings (e.g. stock market, pension saving). Using data from Swedish equity crowdfunding platform, they find that only 20% of investors are female. They also find female investors are less likely to invest in the equity of younger firms, high-technology firms, and those firms with higher percentage of equity offerings. This pattern seems consistent with more risk- aversion of female investors compared to male ones. Furthermore, women are more likely to invest in projects in which proportion of male investors is higher. Overall results show that there are not major in pattern of investment between equity crowdfunding and other traditional investment settings.
Author examines 2.101 crowdfunded projects that match characteristics of more traditional Venture Capitalists (VCs)-backed seed ventures. Despite the radical differences in selection environments, he finds that entrepreneurial quality is assessed in similar ways by both VCs and crowdfunders, but that crowdfunding alleviates some of geographic and gender biases associated with the way that VCs look for signals of quality.
This paper provides an overview of the crowdfunding literature, classified by the main actors (capital seekers, capital providers, and intermediaries), and presents important research questions for future research.
The authors examine the relationship between investment behavior of individual investors on crowdfunding platforms and the fundraising outcomes in crowdfunded ventures. They focus on investment characteristics of a network of co-investors in a focal venture on its crowdfunding growth at three stages - early, middle, and late. Using data on crowdfunding of music artists’ ventures, they find that in addition to the factors identified in previous research, network characteristics such as the cliquishness of co-investors as well as the breadth of their co-investments in other artists play a significant role in determining the growth of investments in crowdfunded music ventures. Authors also show that this role is particularly important in the late phase, as compared to the early phase, of investment growth.
The value of crowdsourcing: Can users really compete with professionals in generating new product ideas?
This document is not directly linked with crowdfunding, but explains how interesting can be to let people participate in generating ideas for new products, which used to be the exclusive domain of marketers, engineers, and/or designers. The authors present a real-world comparison of ideas actually generated by a firm’s professionals with those generated by users in the course of an idea generation contest. The study reveals that the crowdsourcing process generated user ideas that score significantly higher in terms of novelty and customer benefit, and somewhat lower in terms of feasibility.
This paper investigates public good and informational advertising issues in crowdfunding. When discussing public good aspect of crowdfunding, with reward-based platforms with minimum pledge threshold, such as Kickstarter, two goods need to be considered: reaching the pledge threshold, and rewards. This paper argues that, for reaching pledge threshold, the public can contribute either in financial pledges, or advertising effort. Because advertising effort is not rewarded, nor is it recoverable, it suffers problems related to private provision of public goods, with implications to contribution patterns. This paper also makes an initial foray into empirically estimating the effects of advertising on Kickstarter projects, and constructs a database recording the frequency of media mentions, backer updates, Kickstarter feature, and Twitter mentions.
The aim of the present study is to analyze crowdfunding experiences in the cultural sector as models of a type of collaborative behavior which makes use of the potential offered by new technologies in order to benefit everyone. The analysis of the structure of the relationships between actors who get involved in crowdfunding is approached with the primary objective of finding out which are the factors that explain balance situations.
Models of social movements indicate that when conformity is a concern, high initial participation can lead to herding behavior. In contrast, if backers are only interested in a project’s success, then others’ contributions will encourage free riding. Results based on data collected daily from two months of Kickstarter projects show that funds raised in the first day of a campaign are positively related to the percentage of the funding goal raised at the campaign’s end. However, when controlling for a project’s total backers, first day backers are negatively associated with measures of success.
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