Venture financing through social networks has become a global phenomenon. The processes and drivers of crowdfunding require careful study to identify similarities and distinctions from traditional venture finance. The demonstration of project legitimacy is especially interesting because online crowdfunding limits investors' access to the entrepreneur and organisation. How do rewards-based crowdfunding projects establish and demonstrate legitimacy in this virtual, impersonal context? We employ a novel data-set collected from the Kickstarter crowdfunding platform to explore the characteristics of successful projects, including legitimating signals and content. The data reveal numerous findings linking project characteristics to legitimacy and success. First, lower funding targets and shorter duration signal legitimacy by setting modest, achievable expectations. Rewards structures, such as traditional equity investment terms, appear to generate a sense of legitimate investment returns. Finally, narrative legitimacy in the online crowdfunding context may derive more from the online platform community than the visual pitch. Our study reveals a more nuanced picture of legitimacy formation during rewards-based crowdfunding, with implications for theories of resource assembly and the practice of venture finance.

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This study reports the first multi-year, longitudinal crowdfunding case study. We use multiple data sources to explore micro-processes before, during, and after a crowdfunding campaign. We focus on the entrepreneur’s experience to generate micro- and meso-level theories about a crowdfunding process. A crowdfunding campaign is more than the sum of platform and site characteristics. Entrepreneurial behavior, informed by role-identity development, drives campaign outcomes. Role-identity may be fluid as the entrepreneur strives to generate a campaign syndicate. We propose three strategies for syndicate-based identity formation. The results significantly extend knowledge on the crowdfunding process by revealing the unique activities and choices during role-identity adaptation. Entrepreneurs planning crowdfunding campaigns should recognize the importance of role-identity in the formation of a syndicate that will support the campaign. An external website accompanies this article to make the extensive case data transparent and accessible.

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