Factors for success in repeat crowdfunding: why sugar daddies are only good for Bar-Mitzvahs

Abstract

ABSTRACTSome see crowdfunding as a potential replacement for existing long-term funding mechanisms, especially in cultural production. We look at the factors that correlate with repeated crowdfunding usage, analyzing data from the popular crowdfunding site Kickstarter. We analyzed data on projects from four of Kickstarter's categories. We found that, generally across the four categories, a higher pledged-to-backers ratio diminished the odds of a second project, a higher number of backers increased the odds of a second project, and funds raised above a project's goal also increased the odds of a second project. A greater number of smaller backers, as opposed to one large backer (thus ‘sugar daddy’), are beneficial. Increasing one's network beyond immediate friends and family is vital to continued crowdfunding efforts, as there are social strings attached to financial support from friends and family. Lastly, raising funds above and beyond the set goal may signal to the project creator the presence of a fan community and convince the creator to use crowdfunding again.