Financial Returns in Reward-Based Crowdfunding
16 Pages Posted: 14 May 2020 Last revised: 10 Jun 2020
Date Written: April 21, 2020
We quantify financial returns to backers in reward-based crowdfunding projects on Kickstarter and show that such investments provide profitable opportunities in addition to non-monetary benefits. The average unconditional annualized return is 11.5% and the average return on successful projects is 30%. Hence, backing money near the end of a campaign is a profitable strategy. The most attractive is the Design category, where successful projects yield 73%, on average. Short-term projects are more profitable than long-term ones. Financial return is an important type of extrinsic motivation in reward-based crowdfunding, which has generally been neglected in academic literature.
Keywords: Crowdfunding, Investor Motivation, Alternative Investments, Alternative Finance, Entrepreneurial Finance
JEL Classification: D14, G11, G5
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