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Why are rewards not delivered on time in rewards-based crowdfunding campaigns? An empirical exploration

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  • Appio, Francesco Paolo
  • Leone, Daniele
  • Platania, Federico
  • Schiavone, Francesco

Abstract

Crowdfunding is an alternative way to seek capital for new projects. However, it can also be a danger for entrepreneurs facing the post-campaign phase delays in the delivery of the promised rewards. Crowdfunding campaigns require months of preparation and meeting delivery deadlines seems to be a real problem. With this study, we try to explain why this is the case. By drawing on a dataset of 1,567 successfully funded new technological projects in the period 2009–2017, and by means of a text mining routine, this study presents a comprehensive description of the causes of delay in rewards delivery in crowdfunding campaigns. Our findings reveal that perceived incompetence, fraud, and funding cancellation, are the main causes of delay in rewards delivery. Furthermore, controlling for the presence of serial project creators, project appeal (% of new backers), project complexity (number of FAQs, days of funding, number of updates, number of comments), project financial size (% funded, amount raised, financial goal, average pledge per backer), as well as time, mitigate but does not eliminate the problem. Results provide a thorough contribution and implications for both the agents of the crowdfunding industry (e.g., creators, backers), platform managers, and the academic community.

Suggested Citation

  • Appio, Francesco Paolo & Leone, Daniele & Platania, Federico & Schiavone, Francesco, 2020. "Why are rewards not delivered on time in rewards-based crowdfunding campaigns? An empirical exploration," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:tefoso:v:157:y:2020:i:c:s0040162519309187
    DOI: 10.1016/j.techfore.2020.120069
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    References listed on IDEAS

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    Cited by:

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    2. Seyb, Stella K., 2022. "Red flags and rave reviews: Explaining too-good-to-be-true crowdfunding campaigns," Business Horizons, Elsevier, vol. 65(1), pages 69-78.
    3. Zhao, Liang & Shneor, Rotem & Sun, Zhe, 2022. "Skin in the game: Self-funding and reward crowdfunding success," Business Horizons, Elsevier, vol. 65(1), pages 89-100.
    4. Bollaert, Helen & Lopez-de-Silanes, Florencio & Schwienbacher, Armin, 2021. "Fintech and access to finance," Journal of Corporate Finance, Elsevier, vol. 68(C).

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    More about this item

    Keywords

    Crowdfunding campaigns; Causes of delay; Technology projects; Perceived incompetence; Fraud; Cancelled funding;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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