Abstract

http://ssrn.com/abstract=2447567
 


 



Crowdfunding Models: Keep-It-All vs. All-Or-Nothing


Douglas J. Cumming


York University - Schulich School of Business

Gaël Leboeuf


Univ. Lille Nord de France - Skema Business School

Armin Schwienbacher


Université Lille - SKEMA Business School

May 31, 2015


Abstract:     
Reward-based crowdfunding campaigns are commonly offered in one of two models. The “Keep-It-All” (KIA) model involves the entrepreneurial firm setting a fundraising goal and keeping the entire amount raised, regardless of whether or not they meet their goal, thereby allocating the risk to the crowd when an underfunded project goes ahead. The “All-Or-Nothing” (AON) model involves the entrepreneurial firm setting a fundraising goal and keeping nothing unless the goal is achieved, thereby shifting the risk to the entrepreneur. We show that small, scalable projects are more likely to be funded through the KIA scheme, while large non-scalable projects are more likely to be funded through the AON scheme. Overall, KIA campaigns are less successful in meeting their fundraising goals, consistent with a risk-return tradeoff for entrepreneurs, where opting for the KIA scheme represents less risk and less return for the entrepreneur.

Number of Pages in PDF File: 41

Keywords: Crowdfunding, Internet, Signaling

JEL Classification: G21, G24, G32, L26


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Date posted: June 11, 2014 ; Last revised: June 2, 2015

Suggested Citation

Cumming, Douglas J. and Leboeuf, Gaël and Schwienbacher, Armin, Crowdfunding Models: Keep-It-All vs. All-Or-Nothing (May 31, 2015). Available at SSRN: http://ssrn.com/abstract=2447567 or http://dx.doi.org/10.2139/ssrn.2447567

Contact Information

Douglas J. Cumming
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
HOME PAGE: http://booksite.elsevier.com/9780124095373/
Gaël Leboeuf
Univ. Lille Nord de France - Skema Business School ( email )
Lille
France
HOME PAGE: http://www.ecccs.eu/
Armin Schwienbacher (Contact Author)
Université Lille - SKEMA Business School ( email )
Lille
France
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