Entrepreneurial Crowdfunding without Private Claims

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

    Research output: Working paperResearch

    Abstract

    Today's crowdfunding raises funds for tiny, private entrepreneurial ventures without granting funders private claims to a project's future value. Rather than “investments,” these are “contributions.” This paper argues that for such crowdfunding neither producer nor consumer surplus – i.e., project quality, in traditional terms – will play a role in determining funding. Private gifts to funders create typically weak incentives to contribute. Specific kinds of non-pecuniary motivations provide main incentives to contribute. We confirm predictions in time-series observational data set on gross contributions, communications and announcements, new version releases and policy changes, and product use from a representative project.
    Today's crowdfunding raises funds for tiny, private entrepreneurial ventures without granting funders private claims to a project's future value. Rather than “investments,” these are “contributions.” This paper argues that for such crowdfunding neither producer nor consumer surplus – i.e., project quality, in traditional terms – will play a role in determining funding. Private gifts to funders create typically weak incentives to contribute. Specific kinds of non-pecuniary motivations provide main incentives to contribute. We confirm predictions in time-series observational data set on gross contributions, communications and announcements, new version releases and policy changes, and product use from a representative project.
    LanguageEnglish
    PublisherSSRN: Social Science Research Network
    Number of pages41
    DOIs
    StatePublished - 23 Aug 2017
    SeriesHarvard Business School Strategy Unit Working Paper
    Number16-038

    Keywords

    • Online platforms
    • Crowdfunding
    • Entrepreneurial finance
    • New ventures
    • Public goods

    Cite this

    Boudreau, K. J., Jeppesen, L. B., Reichstein, T., & Rullani, F. (2017). Entrepreneurial Crowdfunding without Private Claims. SSRN: Social Science Research Network. Harvard Business School Strategy Unit Working Paper, No. 16-038, DOI: 10.2139/ssrn.2669545
    Boudreau, Kevin J. ; Jeppesen, Lars Bo ; Reichstein, Toke ; Rullani, Francesco. / Entrepreneurial Crowdfunding without Private Claims. SSRN: Social Science Research Network, 2017. (Harvard Business School Strategy Unit Working Paper; No. 16-038).
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    Boudreau, KJ, Jeppesen, LB, Reichstein, T & Rullani, F 2017 'Entrepreneurial Crowdfunding without Private Claims' SSRN: Social Science Research Network. DOI: 10.2139/ssrn.2669545

    Entrepreneurial Crowdfunding without Private Claims. / Boudreau, Kevin J.; Jeppesen, Lars Bo; Reichstein, Toke; Rullani, Francesco.

    SSRN: Social Science Research Network, 2017.

    Research output: Working paperResearch

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    Boudreau KJ, Jeppesen LB, Reichstein T, Rullani F. Entrepreneurial Crowdfunding without Private Claims. SSRN: Social Science Research Network. 2017 Aug 23. Available from, DOI: 10.2139/ssrn.2669545