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Crowdfunding Creative Ideas: The Dynamics of Project Backers

  • Venkat Kuppuswamy
  • Barry L. Bayus

Abstract

Entrepreneurs are turning to crowdfunding as a way to finance their creative ideas. Crowdfunding involves relatively small contributions of many consumer-investors over a fixed time period (generally a few weeks). The purpose of this chapter is to add to our empirical understanding of backer dynamics over the project-funding cycle. Publicly available data of two years on projects listed on Kickstarter are used to establish that the typical pattern of project support is U-shaped—in general, backers are more likely to contribute to a project in the first and last weeks as compared to the middle period of the funding cycle. We further establish that this U-shaped pattern of support is pervasive across projects, including both successfully and unsuccessfully funded projects, those with large and small goals, and projects in different categories. We then empirically explore the dynamics associated with several factors, including collective attention effects from platform-sorting options, the role of family and friends in supporting projects, the effects of social influence, and the role of project updates over the project-funding cycle.

Notes

Acknowledgments

Comments from participants in research workshops at the University of North Carolina at Chapel Hill, Duke, University of Illinois, University of Utah, DRUID 2013, Emory, HEC Paris, and University of California at Berkeley helped to improve this chapter. We also thank Atul Nerkar, Page Ouimet, Avi Goldfarb, Tarun Kushwaha, Sri Venkataraman, Rich Bettis, Jennifer Conrad, Amin Sayedi, the book co-editors, for helpful comments on an earlier draft.

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Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Venkat Kuppuswamy
    • 1
  • Barry L. Bayus
    • 1
  1. 1.Kenan-Flagler Business SchoolUniversity of North Carolina at Chapel HillChapel HillUSA

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