The Determinants of a favorable crowdfunding project

Abstract

Crowdfunding has recently emerged as a new source of capital for businesses that do not have access to traditional sources of financing. However, due to the online nature of crowdfunding, information asymmetry can arise in crowdfunding campaigns, and it can hold specific negative impacts on both the project funder and the project creator. To diminish the problem of information asymmetry, the project creator can signal various information about the crowdfunding project to their potential project funder. Drawing on the signalling theory, the study assesses how different information content related to the crowdfunding project is favourable to the overall outcome of a crowdfunding project. The study examined this using a mixed-method approach that applies quantitative and qualitative analysis. The quantitative analysis analyses the publicly available data of 763 crowdfunding projects on the Kickstarter platform by using binary logistic regression. Results from the quantitative provide a descriptive finding that help to identify the success factors that positively impact the crowdfunding funding outcome. The qualitative analysis includes interviews with respondents who have participated in a crowdfunding project as a project creator or a project funder. Results from the qualitative analysis in the form of semistructured interviews provide a set of exploratory findings that support and explain the findings from the quantitative analysis. Both analyses' findings align with the theoretical framework developed by the signalling theory literature. It suggests that signals sent by the entrepreneur to the potential funder can reduce the level of information asymmetries, increasing the chance of a project's success. The work makes contributions to both theory and practice. One of the main implications of this work is to provide a crowdfunding information content checklist, which can benefit both the project creator and the project funder

Date of Award	2023
Original language	English
Awarding Institution	Aberystwyth University
Supervisor	Sarah Lindop (Supervisor) & Ian Birchmore (Supervisor)