Abstract
In recent years, the growth of the reward-based crowdfunding model has offered new opportunities to meet the funding requirements of start-ups. However, the achievement of the funding target is still a complex goal, given the existence of several information barriers between insiders (project proponents) and outsiders (backers) of a crowdfunding campaign. Within the framework of the information asymmetry and the theory of signals, this study aims to analyse the role of two kinds of previously un-investigated funders in determining the success of crowdfunding campaigns: early-late backers (who are placed at the beginning of the tail of the campaign) and mentors (who are represented by firms acting as more expert backers). The findings indicate that both types of funders are remarkably important for the success of a crowdfunding campaign.
Highlights
In recent years, crowdfunding has emerged as a financing channel for a wide range of entrepreneurial initiatives, both for and not-for profit
Within the framework of the information asymmetry and the theory of signals, this study aims to analyse the role of two kinds of previously un-investigated funders in determining the success of crowdfunding campaigns: early-late backers and mentors
Since the evidence suggests that the legitimacy of a project to be funded is not easy to obtain during crowdfunding (Frydrych, Bock, Kinder, & Koeck, 2014), one of the most salient research topics is the study of determinants of a successful campaign, which is defined as an initiative that reaches its funding target
Summary
In recent years, crowdfunding has emerged as a financing channel for a wide range of entrepreneurial initiatives, both for and not-for profit. Since the evidence suggests that the legitimacy of a project to be funded is not easy to obtain during crowdfunding (Frydrych, Bock, Kinder, & Koeck, 2014), one of the most salient research topics is the study of determinants of a successful campaign, which is defined as an initiative that reaches its funding target. In this regard, the literature has provided some theoretical and empirical evidence, but the topic is still far from being fully explored. Further investigations on why some projects succeed while others fail are rooted in a well-established conceptual framework represented by the information asymmetry (Akerlof, 1970) and the theory of signals (Spence, 1973)
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