Analysis of Successful High-Funded Projects on Japanese Reward-Based Crowdfunding Platforms－Implications for Fundraising by Startups and SMEs as Evidenced through the Share of CF Projects by Overseas Firms and Large Corporation

Abstract

Crowdfunding (CF), a method of raising small amounts of money on the Internet for development of new products and services, as well as solutions to regional development, was introduced in Japan some time ago. Expectations have remained high especially for reward-based CF (in which the payer receives goods or services in exchange for their funding) to bolster innovation by startups and other small and medium-sized enterprises, and thereby to revitalize rural areas, but so far, there have been few analyses on the actual impact of reward-based CF toward these goals. In the present paper, we analyze the highest-funded projects on major Japanese reward-based CF platforms, finding that a high percentage were imported projects that succeeded on overseas reward-based CF platforms. We also find that tie-in projects by large corporations have a large impact on revenues of these Japanese reward-based CF platforms. Such imported projects and corporate tie-in projects maximize the profitability of these platforms and contribute to improvement in the overall quality of their listed projects. The business approach by these platforms of laying weight on such projects implies that startups and SMEs might be expected to deliver products of similar quality to those on regular e-commerce platforms in order to meet customer demands, and thus the hurdle for startups to use CF for fundraising may be higher than before.

Keywords: Reward-Based Crowdfunding, Startups, Small and Medium-Sized Enterprises (SMEs), e-Commerce, Enterprise Crowdfunding

JEL Classification: R11, R58, M13, M38, O18, O31, O35, O38