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The dynamics of crowdfunding: An exploratory study

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  • Mollick, Ethan
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    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S088390261300058X
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 29 (2014)
    Issue (Month): 1 ()
    Pages: 1-16

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    Handle: RePEc:eee:jbvent:v:29:y:2014:i:1:p:1-16

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    Web page: http://www.elsevier.com/locate/jbusvent

    Related research

    Keywords: Crowdfunding; New ventures; Entrepreneurial finance; Startups; Geography;

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    Cited by:
    1. Parker, Simon C., 2014. "Crowdfunding, Cascades and Informed Investors," IZA Discussion Papers 7994, Institute for the Study of Labor (IZA).
    2. Pitschner, Stefan & Pitschner-Finn, Sebastian, 2014. "Non-profit differentials in crowd-based financing: Evidence from 50,000 campaigns," Economics Letters, Elsevier, vol. 123(3), pages 391-394.
    3. Fung, Jane M.Y. & Au, Wing-tung, 2014. "Effect of inequality on cooperation: Heterogeneity and hegemony in public goods dilemma," Organizational Behavior and Human Decision Processes, Elsevier, vol. 123(1), pages 9-22.

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