 Entrepreneurial risk-taking in crowdfunding campaignsSmall Business Economics, 2018, vol. 51, issue 4, No 4, 843-859 Abstract: Abstract This paper examines how different sources of risk in reward-based crowdfunding campaigns influence the entrepreneur’s choice of targeted crowdfunding goal. This form of crowdfunding helps entrepreneurs to obtain feedback on market demand (next to raising money), since the pre-purchase decision of the crowd generates useful public information about product demand. However, it may also lead to project discontinuation if not enough money is raised during the campaign. We therefore derive conditions under which the entrepreneur sets a higher target. At other times, this leads entrepreneurs to raise sometimes even more money than necessary when there is a risk that the idea is quickly replicated by others, leading to even larger campaigns but also to fewer projects offered on platforms. Conversely, the increased presence of professional investors (business angels, venture capitalists) on platforms reduces the entrepreneurs’ incentives in their crowdfunding campaign, which leads to more but on average smaller crowdfunding campaigns. Keywords: Entrepreneurship; Crowdfunding; Risk-taking; Entrepreneurial finance; Idea stealing; Business angels (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:51:y:2018:i:4:d:10.1007_s11187-017-9965-4 Ordering information: This journal article can be ordered from DOI: 10.1007/s11187-017-9965-4 Access Statistics for this article Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch More articles in Small Business Economics from Springer |
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