Download this Paper Open PDF in Browser

Entrepreneurial Crowdfunding without Private Claims

41 Pages Posted: 6 Oct 2015 Last revised: 23 Aug 2017

Kevin Boudreau

Northeastern University - Innovation & Entrepreneurship; Dept. of Economics; College of Computer & Information Sciences; Harvard University - Institute for Quantitative Social Science; National Bureau of Economic Research (NBER)

Lars Bo Jeppesen

Copenhagen Business School - Department of Innovation and Organizational Economics

Toke Reichstein

Copenhagen Business School - Department of Innovation and Organizational Economics

Francesco Rullani

LUISS Guido Carli - Department of Business and Management; Copenhagen Business School - Department of Innovation and Organizational Economics

Date Written: August 23, 2017

Abstract

Today's crowdfunding raises funds for tiny, private entrepreneurial ventures without granting funders private claims to a project's future value. Rather than “investments,” these are “contributions.” This paper argues that for such crowdfunding neither producer nor consumer surplus – i.e., project quality, in traditional terms – will play a role in determining funding. Private gifts to funders create typically weak incentives to contribute. Specific kinds of non-pecuniary motivations provide main incentives to contribute. We confirm predictions in time-series observational data set on gross contributions, communications and announcements, new version releases and policy changes, and product use from a representative project.

Keywords: Online platforms, crowdfunding, entrepreneurial finance, new ventures, public goods

JEL Classification: G2, G02, H41

Suggested Citation

Boudreau, Kevin and Jeppesen, Lars Bo and Reichstein, Toke and Rullani, Francesco, Entrepreneurial Crowdfunding without Private Claims (August 23, 2017). Harvard Business School Strategy Unit Working Paper No. 16-038. Available at SSRN: https://ssrn.com/abstract=2669545 or http://dx.doi.org/10.2139/ssrn.2669545

Kevin Boudreau (Contact Author)

Northeastern University - Innovation & Entrepreneurship; Dept. of Economics; College of Computer & Information Sciences ( email )

Harvard University - Institute for Quantitative Social Science ( email )

1737 Cambridge St.
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lars Bo Jeppesen

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Toke Reichstein

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Francesco Rullani

LUISS Guido Carli - Department of Business and Management ( email )

Viale Pola 12
Rome, 00198
Italy

Copenhagen Business School - Department of Innovation and Organizational Economics

Kilevej 14A
Frederiksberg, 2000
Denmark

Paper statistics

Downloads
573
Rank
38,204
Abstract Views
1,932