Crowdfunding as Donations to Entrepreneurial Firms

Kevin Boudreau, Lars Bo Jeppesen, Toke Reichstein () and Francesco Rullani ()

Research Policy, 2021, vol. 50, issue 7

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.

Keywords: crowdfunding; entrepreneurship; public goods; motivations (search for similar items in EconPapers)
JEL-codes: G02 G2 H41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:50:y:2021:i:7:s0048733321000676

DOI: 10.1016/j.respol.2021.104264

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