Reward-based crowdfunding success: decomposition of the project, product category, entrepreneur, and location effects

Chan, C.S. Richard; Park, Haemin Dennis; Patel, Pankaj C.; Gomulya, David M.

doi:10.1080/13691066.2018.1480267

Cited by 54 publications

(33 citation statements)

References 56 publications

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“…For future studies, we highlight the possibility of investigating the impact of the (recent) CVM legislation over the ECF market, e.g., models of the natural experiment type and DID (difference-in-differences) models, or even other success metrics (Chan, Park, Patel, & Gomulya, 2018). Finally, it warrants mentioning that the literature on startup financing via ECF in Brazil is still scarce (Felipe et al, 2019), revealing the relevance of this study and its role as a way of incentivizing the production of research on the topic addressed here.…”

Section: Discussionmentioning

confidence: 99%

Determinants of the success of equity crowdfunding campaigns

Felipe

Ferreira

2020

Rev. contab. finanç.

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Given that equity crowdfunding has grown significantly in Brazil and that this market has been frequently sought by startups as an alternative to scarce credit, this study investigated the elements that determine the success of their financing campaigns. The article fills the gap related to the absence of studies analyzing the probability and time of success of startup financing. In Brazil, the research on this is still in its infancy and there has been little discussion regarding what can determine the success of this type of financing. The findings presented here provide managerial contributions for different stakeholders, ranging from platform managers and entrepreneurs to the ordinary citizen, who ultimately acts as an inducer of change in society, without the need for financial intermediaries. The discussion around the elements that influence the success of startup financing has revealed that the characteristics of the venture profile have been able to determine the success of the financing. This information applied to the dynamic of resource allocation in this market can generate more financial efficiency for private agents as an investment performance parameter and, for public agents, as an input for monitoring. The logistic regression with marginal effects and a dummy for time fixed effects were used. The time of success analysis was carried out via survival models. The sample covers 99 startup financing campaigns from 2014 to 2017. The study identified that the financial goal, the venture category, advisor participation, the campaign duration, and the type of equity offered to the investor positively affect both the probability and speed of success of the startup financing. Its contribution lies in the use of these findings to formulate strategies geared toward estimating success, which enable an appropriate allocation of financial resources.

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Section: Discussionmentioning

confidence: 99%

Determinants of the success of equity crowdfunding campaigns

Felipe

Ferreira

2020

Rev. contab. finanç.

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“…An emerging literature on reward-based crowdfunding mainly focus on two aspects, one is the static factors driving a campaign's success. Such factors include both project-level signals, for instance project funding goal [1], project design [2], product categories [3] and other project preparedness [4,5] and individual-level signals, such as creator's gender [6], experience of creator [7] and social capital of creator [8]. The other one is the influence of backers' decision behavior on dynamic information factors.…”

Section: Introductionmentioning

confidence: 99%

Backers investment behavior on explicit and implicit factors in reward-based crowdfunding based on ELM theory

2020

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The aim of this study is to identify the dynamic explicit and implicit information factors which displayed on the webpage of platforms that influence backers' investment decision-making behavior. We analyze the connections among these factors by collecting the longitudinal dataset from reward-based crowdfunding platform. Based on ELM model, we establish Fixed Estimation Panel Data Model respectively according to explicit and implicit factors and take Funding Status (crowdfunding results) as the moderating variable to observe the goal gradient effect. Results indicate that most variables in the central route affect backers' investment behavior positively, while most variables in the periphery route have a negative impact on backers' investment behavior. The Funding Status has a significant negative moderating effect on the explicit variables, and has no significant moderating effect on the implicit information variables of the project. In addition, we upgrade the econometric method used by previous scholars, which could improve the accuracy of the FE model. Furthermore, we find strong support for the herding effect in reward-based crowdfunding and the intensity tends to decrease before the funding goal draws near.

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“…Other works have explored the behaviour of the backers, that is, the contributors of the crowdfunding campaigns (Agrawal et al, 2015; Burtch et al, 2013; Cholakova and Clarysse, 2015; Kuppuswamy and Bayus, 2015; Mollick and Nanda, 2016; Ordanini et al, 2011). Although evidence exists that local characteristics affect entrepreneurs’ ability to attract external financing (Guiso et al, 2004a, 2004b), only few studies in the crowdfunding literature have explored the role of geography in the crowdfunding of early-stage entrepreneurial projects, showing that geographical proximity between proponents and backers helps attract contributions as it reduces information asymmetries between the two parties (Agrawal et al, 2015; Chan et al, 2018; Mollick, 2014; Mollick and Robb, 2016). However, despite the previous works have certainly enhanced our understanding of the crowdfunding phenomenon, less attention has been paid to the intriguing relationship between the success of the crowdfunding campaign and the founder’s location within a geographical cluster, where geographical clusters can be defined as geographical agglomerations of firms in particular, related, and/or complementary, activities, sharing a common vision, and exhibiting horizontal, vertical intra- and/or inter-sectoral linkages, embedded in a supportive socio-institutional setting, and cooperating and competing in national and international markets (Pitelis, 2012).…”

Section: Introductionmentioning

confidence: 99%

The role of geographical clusters in the success of reward-based crowdfunding campaigns

Carbonara

2020

The International Journal of Entrepreneurship and Innovation

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Crowdfunding is a relatively new phenomenon, which disrupted the classic way to fund a venture. It consists in retrieving the capital needed to start an entrepreneurial activity drawing funds from a large base of small investors – generally common people – rather than from the traditional financial sources. Although many studies have been conducted on this topic, little focus has been put on the geography of this phenomenon. This article addresses this issue analysing whether regions characterized by the presence of geographical clusters are able to raise the probability of a successful crowdfunding campaign for projects located there. Drawing on a data set of 792 crowdfunded projects, we conduct an empirical study aimed at studying the role played by geographical clusters in fostering the crowdfunding of new entrepreneurial ventures. The results offer insights into the phenomenon of crowdfunding and shed light on the role of geographical clusters in the success of reward-based crowdfunding campaigns of early-stage entrepreneurial projects.

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Reward-based crowdfunding success: decomposition of the project, product category, entrepreneur, and location effects

Cited by 54 publications

References 56 publications

Determinants of the success of equity crowdfunding campaigns

Determinants of the success of equity crowdfunding campaigns

Backers investment behavior on explicit and implicit factors in reward-based crowdfunding based on ELM theory

The role of geographical clusters in the success of reward-based crowdfunding campaigns

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