Sometimes You Win, Sometimes You Learn – Success Factors in Reward-Based Crowdfunding

Abstract

Crowdfunding has enabled various entrepreneurs, artists and other individuals and organisations to bring projects to life. Despite all success stories, 63% of all projects initiated on the biggest crowdfunding platform kickstarter.com and 46% of all projects initiated on the biggest German crowdfunding platform startnext.com, do not raise enough money to be realised. This study investigates which factors beyond project quality and personal network impact the success of a crowdfunding campaign. Using data collected from startnext.com, we analyse the impact of six factors on the probability of success and provide practical recommendations for initiators. The six factors we analyse are: inclusion of a video, length of project description, communication with backers, curation by a third party, crowdfunding activity of the project initiator and number of rewards. In particular, we show that the inclusion of a video, an intensive communication with backers via blog posts, a history in supporting projects and the creation of a variety of rewards can significantly increase the likelihood that a project succeeds.