Planning and Experimentation Approaches to Entrepreneurship on a Funding Platform

Abstract

This study examines activities described by early-stage entrepreneurs on a crowdfunding platform. In these early-stage projects, we argue that systematic approaches to entrepreneurial decision-making – both planning and especially experimentation-based systems – will be valued by resource providers as a signal of the quality and the feasibility of new ventures. We conduct text analysis of 59,358 project descriptions of entrepreneurs seeking funds on Kickstarter to provide initial evidence of the impact of planning and experimentation activities described by entrepreneurs on resource providers. While we find that resource providers value systematic approaches to new venture creation such as planning or experimentation, we also find that entrepreneurs that describe experimental activities are more likely to obtain funding. More specifically, activities that invite co-creation lead to higher likelihood of resources elicited. These results suggest that resource providers value cues that reassure them of the feasibility of new ventures and that community engagement is a particularly important aspect of experimentation in this context.