Success Factors of Crowdfunding Projects on the Kickstarter Platform

Abstract

Since the mid‐2000s, we have witnessed the rise of a novel approach to funding innovative projects and start‐ups called crowdfunding. The core idea of crowdfunding is to pool small amounts of funds provided by a very large number of potential backers, the crowd, via specialized, appropriately designed websites (Leimeister 2012). To entrepreneurs and founders seeking funding, these websites provide a platform to present their project to an interested audience – potentially on global scale. To potential backers, these websites offer a convenient way to find and explore a vast number of alternative projects. And finally, crowdfunding platforms offer an efficient infrastructure for handling payments from the backers to the entrepreneur and for facilitating the later payout of rewards, be it money or benefits in kind, to the backers. Thus, the key value provided by crowdfunding platforms lies in the reduction of information deficits and processing frictions, both of which are essential for the viability of crowdfunding.