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Skin in the game: Self-funding and reward crowdfunding success

Liang Zhao, Rotem Shneor and Zhe Sun

Business Horizons, 2022, vol. 65, issue 1, 89-100

Abstract: This article focuses on entrepreneurs’ self-funding behavior in the reward crowdfunding context and its relation to crowdfunding success. Theoretically anchoring our discussion in signaling theory, we argue that self-funding sends similar information to that conveyed by quick-fix bootstrapping efforts. Accordingly, we hypothesize that self-funding behavior is positively associated with crowdfunding success as it can help alleviate uncertainties around a fundraiser’s intent and quality as perceived by prospective backers. To show this, we use a sample of 1,583 campaigns collected from Zhongchou, the largest Chinese reward-based crowdfunding platform, to test our hypotheses. Our results demonstrate that entrepreneurs' direct self-funding is positively associated with crowdfunding success. Moreover, this effect is partially mediated by the quality of campaigns’ content elements.

Keywords: Self-funding; Crowdfunding success; Signaling theory; Reward crowdfunding (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bushor:v:65:y:2022:i:1:p:89-100

DOI: 10.1016/j.bushor.2021.09.007

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