Innovating Beyond the Fuzzy Front End: How to Use Reward-Based Crowdfunding to Co-create with Customers

Abstract

Current research suggests that crowdfunding not only serves as an alternative source of capital but also as a flexible tool allowing start-ups to systematically integrate a crowd into their innovation processes. However, an adequate understanding of how start-ups can systematically leverage the co-creation potential of their early customers during crowdfunding is still nascent. Against this background, the aim of this research is to conceptualize and examine the concept of co-creation in the context of reward-based crowdfunding. In doing so, we distinguish it from other methods of user integration in the realm of open innovation and discuss how entrepreneurs can leverage reward-based crowdfunding to engage their customers in the development and deployment of their product and service offerings.

Crowdfunding Platforms as Focal Actors in an Entrepreneurial Ecosystem: An Interdisciplinary Value Perspective

“…Many already individually addressed processes in the literature, such as co-creation, can be better understood by looking at the configuration of interplay and motivation between levels of the individual, organizational and societal in an ecosystem. This also follows research from Lipusch, et al [42] who conceptualize and examine the concept of co-creation in the context of reward-based crowdfunding. With this, we touch on and contribute to research from various disciplines, amongst them entrepreneurship and entrepreneurial finance [1,43], innovation and opportunity formation [13,44,45], but also from sociology and information technology [16,46].…”

Designing for Crowdfunding Co-creation

“…Since crowdfunding shares a lot of functionalities with the above-mentioned tools -for example, it provides backers with functionalities to upload and update their business ideas and to receive feedback on them -we believe that it offers a promising environment for entrepreneurs to collaborate with potential customers on the development of new products. One type of crowdfunding that is particularly conducive to engage potential customers in such co-creational activities is reward-based crowdfunding (Lipusch et al 2018). One of the main reasons for this is reward-based crowdfunding's focus on consumer products as well as its flexible reward and selling agreements allow companies to collect customer preferences before the product goes into mass production.…”

Managing Initial Coin Offerings: Towards a Taxonomy of ICO Processes

“…At the heart of this are information asymmetries between capital seekers and capital givers which usually put capital givers at a higher risk due to holding incomplete information. While crowdfunding platforms formed as a solution to mitigate these problems, the mechanisms used by these platforms sometimes perform very weakly (see [20][21][22][23]. Also, the mechanisms employed by crowdfunding platforms constrain how crowdfunding can be conducted [18].…”