Threshold Effects on Backer Motivations in Reward-Based Crowdfunding

Abstract

Reward-based crowdfunding has been increasingly used by entrepreneurs and small businesses to raise capital for their creative projects. To keep the money raised, most platforms require that the total amount of pledged money must exceed a pre-specified funding goal. In this study, we aim to gain a better understanding of backer motivations by empirically investigating their pledging and sharing patterns at different stages of achieving the funding threshold. By analyzing a unique dataset that records the bi-hourly backer support for 1,058 successful Kickstarter projects, we find two threshold-induced effects. First, there is a sharp increase in the number of backers and Facebook shares during the few hours when the project approaches its funding threshold. Second, the numbers of backers and Facebook shares are substantially higher in the few days before the threshold is reached than in the few days afterward. We show that both effects are more pronounced in public-good than in private-good project categories. Our findings provide clear evidence for a strong effect of prosocial motivation in driving backer behaviors. In addition, the results support that both goal proximity and project prosociality have a positive impact on the prosocial motivation of backers.