Crowdfunding as Donations to Entrepreneurial Firms

Kevin J. Boudreau, Lars Bo Jeppesen*, Toke Reichstein, Francesco Rullani

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

The bulk of today's (“preorder-,” “reward-,” “gift-,” and “donation-based”) crowdfunding raises funds for small, private entrepreneurial ventures without granting funders private claims to the projects’ income or the ability to guarantee the realization and delivery of project outcomes. We theorize and show empirically – via a mixed-method approach applied to a representative and remarkably informative case – that the payoff structure for crowdfunders, akin to a public good contribution problem, leads to the tangible value of main project outputs exerting little influence on contributions to crowdfunding. This then raises the question of which funder motivations fund seekers may have to address to crowdfund their projects. We demonstrate the especially large role of non-pecuniary motivations and pinpoint three particular motivations that profit-seeking entrepreneurs may stimulate to be financed through crowdfunding. The findings hold important implications for entrepreneurs’ crowdfunding strategies, platform design, and our understanding of how this funding institution works in general. The study also adds to emerging research on the implications of the public good nature of crowdfunding.
Original languageEnglish
Article number104264
JournalResearch Policy
Volume50
Issue number7
Number of pages16
ISSN0048-7333
DOIs
Publication statusPublished - Sep 2021

Keywords

  • Crowdfunding
  • Entrepreneurship
  • Public goods
  • Motivations

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