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An empirical investigation of signaling in reward-based crowdfunding

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Abstract

Start-ups often face the challenge of a shortage of capital, the so-called funding gap, which can be overcome by raising small amounts of money from a large number of individuals. As crowdfunding suffers from a continuous rise in failure rates, the aim of this article is to contribute to the research concerning success factors in reward-based crowdfunding campaigns by focusing on signaling theory. Based on data retrieved from the crowdfunding platform Kickstarter, our results indicate that social ties, investment preparation and presentation, the supply of multiple rewards as well as endeavors to communicate and interact with the crowd positively influence the probability of success of a reward-based crowdfunding campaign. In contrast, the funding goal, a campaign’s runtime and the estimated time of delivery for the rewards have a negative impact on the successful completion of a campaign.

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Notes

  1. Based on the conversion rates of 13 October 2014 and 14 October 2014.

  2. Following terms and symbols were looked upon for the filtering: Facebook, LinkedIn, Twitter, YouTube, Twitch, Flickr, Tremblor, Imbd, Soundcloud, iTunes, Vimeo, Instagram, WordPress, BlogSpot, Myspace, Deviantart, about.me, etsy, @, Wikimedia, Wikipedia, Bandcamp, Reverbnation, Blog, youtu.be, Google, google.com, plus.google, docs.google, picasaweb.google, profiles.google, Aboutme, bit.ly, user,/profile, Reddit, Yahoo, Amazon.

  3. Where the notations are: b = Payment amount for the reward level; L (b) = Delivery time for amount b; P (b) = Willingness to pay amount b.

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Authors and Affiliations

  1. Information Systems, University of Kassel, Pfannkuchstr. 1, 34121, Kassel, Germany

    Michael Marcin Kunz, Ulrich Bretschneider, Max Erler & Jan Marco Leimeister

  2. Institute of Information Management (IWI), University of St. Gallen, Müller-Friedberg-Strasse 8, 9000, St. Gallen, Switzerland

    Jan Marco Leimeister

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  1. Michael Marcin Kunz
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Correspondence to Michael Marcin Kunz.

Appendices

Appendix 1

See Table 6.

Table 6 Literature review on success factors in reward-based CF (own elaboration)
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Appendix 2

See Figs. 2, 3 and 4.

Fig. 2
figure 2

Variables from project website [49]

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Fig. 3
figure 3

Variables from initiator bio [49]

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Fig. 4
figure 4

Variables from staff picked webpage [48]

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Appendix 3

See Table 7.

Table 7 Descriptive data for successful and unsuccessful projects (own illustration)
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Appendix 4

See Table 8.

Table 8 Correlation matrix (own illustration)
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Kunz, M.M., Bretschneider, U., Erler, M. et al. An empirical investigation of signaling in reward-based crowdfunding. Electron Commer Res 17, 425–461 (2017). https://doi.org/10.1007/s10660-016-9249-0

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