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


Univ. Lille - SKEMA Business School

September 27, 2014

Paris December 2014 Finance Meeting EUROFIDAI - AFFI Paper

Abstract:     
Rewards-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 giving a risk to the crowd that 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. Entrepreneurs that deviate from these strategies tend to be less successful in meeting their fundraising goals.

Number of Pages in PDF File: 37

Keywords: Crowdfunding, Entrepreneurial Finance, Internet, Signaling, Indiegogo

JEL Classification: G21, G24, G32, L26

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Date posted: June 11, 2014 ; Last revised: November 20, 2014

Suggested Citation

Cumming, Douglas J. and Leboeuf, Gaël and Schwienbacher, Armin, Crowdfunding Models: Keep-It-All vs. All-or-Nothing (September 27, 2014). Paris December 2014 Finance Meeting EUROFIDAI - AFFI Paper. 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://www.venturecapitalprivateequitycontracting.com/
Gaël Leboeuf
Univ. Lille Nord de France - Skema Business School ( email )
Lille
France
HOME PAGE: http://www.ecccs.eu/
Armin Schwienbacher (Contact Author)
Univ. Lille - SKEMA Business School ( email )
Lille
France
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