The Dynamics of Crowdfunding: An Exploratory Study

Abstract

Crowdfunding allows founders of for-profit, artistic, and cultural ventures to fund their efforts by drawing on relatively small contributions from a relatively large number of individuals using the internet, without standard financial intermediaries. Drawing on a dataset of over 48,500 projects with combined funding over $237M, this paper offers a description of the underlying dynamics of success and failure among crowdfunded ventures. It suggests that personal networks and underlying project quality are associated with the success of crowdfunding efforts, and that geography is related to both the type of projects proposed and successful fundraising. Finally, I find that the vast majority of founders seem to fulfill their obligations to funders, but that over 75% deliver products later than expected, with the degree of delay predicted by the level and amount of funding a project receives. These results offer insight into the emerging phenomenon of crowdfunding, and also shed light more generally on the ways that the actions of founders may affect their ability to receive entrepreneurial financing.


Full Article

• Ethan Mollick (2014), The Dynamics of Crowdfunding: An Exploratory Study, Journal of Business Venturing, 29 (1), 1 - 16. 

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The Wharton School of the University of Pennsylvania

World's first collegiate business school, established in 1881. Largest and one of the most published business school faculty, with 225+ standing and associate members.

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