The Determinants of Crowdfunding Success: Evidence from Technology Projects

Abstract

Crowdfunding is a potentially disruptive way to finance new ventures. At the crossroad of micro-finance and social networking, crowdfunding is undergoing intense scrutiny from scholars and policymakers to understand where it positions in the chain of start-up funding. By studying 1127 technology projects posted on four distinct crowdfunding platforms, we highlight the factors explaining fundraising success over failure and the determinants of overfunding. We find that an increase in the project funding goal is correlated with a lower probability and extent of success, that project duration increases the chances of success, and that chances of success are positively related to the dollar amount contributed per day. The latter results supports the view according to which the crowdfunding patter follows the so-called “reinforcement model”, as opposed to the substitution one (Shang and Croson, 2009)