WHAT IS THE RECIPE FOR SUCCESS? AN EMPIRICAL ANALYSIS OF CROWDFUNDING PROJECT PERFORMANCE

Abstract

Crowdfunding is a burgeoning research topic thanks to the explosive rudiment and development of several successful crowdfunding platforms, such as Kickstarter, Indiegogo, and Gofundme. These crowdfunding platforms have raised billions of capital and fostered thousands of innovative projects in the last few years. Some successfully funded crowdfunding projects have grown up into profitable and sustainable enterprises, such as Pebble (E-Watch), Jide (Android Tablet and PC), and Coolest (Cooler Machine). However, not every crowdfunding project can raise enough money to realize their goals, not to mention growing up into promising, large enterprises. Therefore, we hope to figure out a sensible and feasible recipe to guide project founders to achieve their crowdfunding success. In this thesis, we propose a research framework based on the signaling framework and other related theories. An econometric approach is employed to study the effects of different web-feature factors that are considered to be able to signal the success of projects with the data collected from Kickstarter. Our findings uncover the underlying mechanism that the founders? previous reputation, reciprocity history, and embedded video can positively signal the crowdfunding success. These findings are consistent with background theories such as reputation theory, reciprocity theory, as well as media richness theory. Moreover, we carry out an exploratory study to analyze the moderation effect of the variable, project category. The results show that category can only moderate the effect of content related factor, namely narrative richness, but not reputation or reciprocity. Therefore, we conclude that reputation and reciprocity have more stable and steady effects among different categories. This study finds out a feasible recipe for project founders with which they can take actual actions to figure out a plan to achieve their funding goals thus bring their ideas to reality. Specifically, based on the results of our study, we encourage the project founders to be ?high-score students? with good reputation reflected by their previous created projects, ?generous philanthropists? who also act as backers to others? projects rather than just propose their own projects, and ?conscientious artists? who have devotion to make the profile page of their projects more vivid and attractive by adding elements such as pictures or videos. Additionally, we also uncover a very interesting fact about profile embedded pictures, that they are quite complicated, and thus require much more future studies. Last but not least, we hope this study can contribute to the crowdfunding literature, and jumpstart the development of many small-medium nascent entrepreneurships that are making use of crowdfunding platforms to raise money for their projects.