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Crowdfunding Creative Ideas: The Dynamics of Project Backers in Kickstarter

A shorter version of this paper is in "The Economics of Crowdfunding: Startups, Portals, and Investor Behavior" - L. Hornuf and D. Cumming (eds.), 2017 Forthcoming

42 Pages Posted: 17 Mar 2013 Last revised: 6 Oct 2017

Venkat Kuppuswamy

University of North Carolina Kenan-Flagler Business School

Barry L. Bayus

University of North Carolina Kenan-Flagler Business School

Date Written: November 2, 2015

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 paper is to add to our empirical understanding of backer dynamics over the project funding cycle. Two years of publicly available data on projects listed on Kickstarter is 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 week as compared to the middle period of the funding cycle. We further establish that this U-shape 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.

Keywords: Entrepreneurship, Innovation, Venture Financing, Strategy, Crowdfunding

JEL Classification: O31, L26, L17

Suggested Citation

Kuppuswamy, Venkat and Bayus, Barry L., Crowdfunding Creative Ideas: The Dynamics of Project Backers in Kickstarter (November 2, 2015). A shorter version of this paper is in "The Economics of Crowdfunding: Startups, Portals, and Investor Behavior" - L. Hornuf and D. Cumming (eds.), 2017 Forthcoming. Available at SSRN: https://ssrn.com/abstract=2234765 or http://dx.doi.org/10.2139/ssrn.2234765

Venkat Kuppuswamy (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Chapel Hill, NC 27599
United States

Barry Bayus

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599
United States
919-962-3210 (Phone)

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