Financial returns in reward-based crowdfunding

Victoria Dobrynskaya and Julia Grebennikova
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Julia Grebennikova: Faculty of Economic Sciences, HSE University, Moscow, Russia

Economic Analysis Letters, 2023, vol. 2, issue 3, 1-9

Abstract: We quantify financial returns to backers in reward-based crowdfunding projects on Kickstarter and show that such investments provide profitable opportunities in addition to non-monetary benefits. The average unconditional annualized return is 11.5% and the average return on successful projects is 30%. Hence, backing money near the end of a campaign, when the probability of success is already high, is a profitable strategy. The most attractive is the Design category, where successful projects yield 73%, on average. Short-term projects are more profitable than long-term ones. Financial return is an important type of extrinsic motivation in reward-based crowdfunding, which has generally been neglected in academic literature. Reward-based crowdfunding outperforms other forms of crowdfunding and other common alternative investments.

Keywords: Crowdfunding; investor motivation; alternative investments; alternative finance; entrepreneurial finance (search for similar items in EconPapers)
Date: 2023
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