Supporting or pre-ordering? : threshold effects in reward-based crowdfunding

Abstract

Reward-based crowdfunding has been increasingly used by thousands of small businesses to raise capital for their creative projects and ideas. To keep the money raised, the total amount of pledge must exceed a pre-specified funding goal. In this paper, we investigate the effect of the threshold on backers' funding behavior. By analyzing a unique data set that records the bi-hour contribution and sharing pattern for Kickstarter projects during a period of 70 days, we find two kinds of threshold-induced effects in reward-based crowdfunding context: a sudden increase in backer number, pledge amount, and Facebook share number during the time when the thresholds are reached; and a higher value of backer number, pledge amount, and Facebook share number before the thresholds are reached than afterward. We show that the first effect is significant in all categories and in all regions, and the second effect varies across project categories and regions.

Date of Award	2016
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology