Abstract
We explore the effects of the quantity of information on the tendency to contribute to crowdfunding campaigns. Using the crowdfunding platform Kickstarter, we analyze the campaign descriptions and the performance of over 70,000 projects. We look empirically at the effect of information quantity (word count) on funding success (as measure by amount raised and number of backers). Within this empirical approach, we test whether an excessive amount of information will affect funding success. To do so, we test for the non-linearity (quadratic) effect of our independent variable (word count) using regression analysis. Consistent with the hypothesis that excess information will negatively affect funds raised and number of contributors, we observe a consistent U-shaped relationship between campaign text length and overall success which suggest that an optimal number of words exists within crowdfunding texts and that going over this point will reduce a project’s chance of fundraising success.
Highlights
Our analysis is guided by one primary research question: Does the amount of information provided by the creator influence the funding outcome? Using a large empirical dataset from Kickstarter.com that encompasses almost 80,000 projects, we identify an inverted U-shaped relation between project description length and number of funders or amount raised
Our estimations use a multivariate OLS regression of funds raised and number of backers contributing on total word count of the description. We include both the linear and squared term of word count to assess the potential non-linear relationship with the outcome variables
This finding suggests that having more words in the project description increases both the overall amount raised and the number of contributors but with a diminishing or even negative effect once the text becomes too long
Summary
We anticipate an inverted U-shaped relation between project text length and funding success; that is, that an overabundance of information, quantified by number of words, will decrease the amount raised and the number of project contributors. Each observation records project-related information, such as outcome of the funding campaign in terms of the number of ‘backers’ (individuals who supported the campaign financially), and the amount of funds raised, full text of the campaign description, main category and sub-category of the project, funding goal, project’s geographic location, campaign launch date and end date, and project and creator identifier.
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