Crowdfunding Innovative Ideas: How Incremental and Radical Innovativeness Influence Funding Outcomes

Abstract

We investigate the effect of innovativeness on crowdfunding outcomes. Because crowdfunding campaigns characterized by greater incremental innovativeness are more comprehensible and generate more user value for typical crowdfunders, incremental innovativeness may result in more favorable funding outcomes. By comparison, campaigns that feature greater radical innovativeness are riskier to develop, harder for crowdfunders to understand and result in less favorable funding outcomes. This negative effect of radical innovativeness may be mitigated by incremental innovativeness, which may help crowdfunders to understand and appreciate radical innovativeness more. A sample of 334 Kickstarter campaigns provides support for our hypotheses.

Crowdfunding as a tool to support sustainability‐oriented initiatives: Preliminary insights into the role of product/service attributes

“…Such considerations have been developed in the broader context of consumer purchasing behavior but we argue that they could also be applied in the context of CF (specifically, reward based ). Indeed, Chan and Parhankangas (, p. 238) claim that in reward‐based CF, “(…) crowdfunders mainly contribute in exchange for future products or services, meaning that they behave like general consumers ” (emphasis added). Therefore, reward‐based CF can be viewed as a channel for early access to products and a form of presale.…”

“I Invest by Following Lead Investors!” The Role of Lead Investors in Fundraising Performance of Equity Crowdfunding

“…Second, we contribute to the signaling theory by highlighting the signaling role of lead investors in the context of equity crowdfunding. Signaling theory has been widely used in crowdfunding research (e.g., Carter and Manaster, 1990;Connelly et al, 2011;Migliorati and Vismara, 2014;Judge et al, 2015). However, the signaling role of lead investors has not been explored.…”

“…Firms can use signals to decrease the information asymmetry between the firm and the investors (Beatty and Ritter, 1986). Signaling theory (Spence, 1973), therefore, becomes one of the main research frameworks for studying entrepreneurial finance (e.g., Carter and Manaster, 1990;Connelly et al, 2011;Migliorati and Vismara, 2014;Judge et al, 2015). The signaling theory originates from the works of Spence (1973).…”

“…While the research applying the signaling theory in equity crowdfunding context has predominantly focused on signals of venture (Chan and Parhankangas, 2017), entrepreneurs (Ahlers et al, 2015), equity retention (Vismara, 2016), and so on, little is known about how signals of lead investors influence the funding decision of subsequent investors. This limits our understanding on how lead investors can be managed to increase the fundraising performance of equity crowdfunding projects.…”

Consumer Protection on Kickstarter

“…We explicitly focus on the consequences (rather than the antecedents) of PAC usage, adding to the sparse crowdfunding literature that investigates phenomena after successful funding. Extant articles have mainly focused on phenomena before successful (or unsuccessful) funding of the campaign (e.g., Agrawal et al 2015, Chan and Parhankangas 2017, Kuppuswamy and Bayus 2017b, Younkin and Kuppuswamy 2017. Only three articles look at what happens after campaign funding.…”