Dealing with initial success versus failure in crowdfunding market

Abstract

Purpose Serial crowdfunding is becoming a common phenomenon as entrepreneurs repeatedly return to online crowdfunding to raise capital. In this study, the authors focus attention on serial crowdfunders, that is, entrepreneurs who experience launching more than one crowdfunding project. The purpose of this paper is to investigate the role of past experience on subsequent crowdfunding performance. This study also examines whether initial success vs initial failure leads serial crowdfunders to engage in more explorative behaviors (i.e. switching industry) and to take exploitative actions (i.e. adjusting campaign strategies in terms of goal setting and funding option). Design/methodology/approach Data on serial crowdfunding projects was retrieved from Indiegogo platform. The logistic regression models are estimated to assess the impact of past entrepreneurial experience on subsequent crowdfunding decisions, and to estimate the effects of the three strategies on subsequent funding performance. Findings The results show that serial creators who experienced successful initial crowdfunding are more likely to explore a new industry or product category in the crowdfunding market and to set a higher target capital for the subsequent campaign when they change a project category. Originality/value Despite the fact that there are a considerably large number of serial crowdfunders in crowdfunding market, relatively little research has been conducted to investigate the presence of learning benefits from a previous to a subsequent crowdfunding project. Two competing hypotheses, drawn from the attribution theory and hubris theory of entrepreneurship, were tested in this study to determine the impact of prior success vs failure experience on both subsequent crowdfunding decisions and funding performance.

Understanding the determinants of the intention to innovate with open government data among potential commercial innovators: a risk perspective

“…Maccani et al, 2017;Susha et al, 2015). Indeed, entrepreneurs are seen as innovators who generate new ideas and implement them (Lee and Chiravuri, 2019). Based on our review, we synthesized and identified the forms of uncertainty for our context.…”

Social media engagement and crowdfunding performance: The moderating role of product type and entrepreneurs' characteristics

“…In a similar vein, entrepreneur characteristics have the potential to mitigate information asymmetry by signaling useful information about the quality of crowdfunding projects. The entrepreneurship literature stresses the importance of entrepreneur characteristics—such as gender, founding experience, social capital—as a key factor in predicting success or financial performance of new ventures (Kleinert & Mochkabadi, 2021; Lee & Chiravuri, 2019; Stuart & Abetti, 1990). Stuart and Abetti (1990) found evidence that the entrepreneurial experience, namely the number of past start‐up involvements, is one of the most significant antecedents contributing to a successful venture.…”

Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals

“…Like crowdfunding campaigns, ICOs cause low transaction costs, 1 have almost no documentation requirements but enable start-ups to raise substantial funds comparable to expensive and highly regulated venture capital transactions or IPOs (Chen 2018;Howell et al 2019). Moreover, ICOs, as well as crowdfunding campaigns, can overcome geographical barriers to funding and promote global dissemination at an early stage of the project as communication via the Internet is fast and cost-effective (Danmayr 2013; Lee Chang 2019). However, both crowdfunding campaigns and ICOs suffer from strong information asymmetry between emitters and investors (Albrecht et al 2020).…”