Start Date
10-12-2017 12:00 AM
Description
Recently, the phenomenon of crowdfunding has surfaced as an innovative way to raise capital for venture opportunities online. Using data from a unique crowdfunding platform, we examine whether opting for “prefunding”, or raising awareness prior to fund-raising, increases the likelihood of a campaign meeting its fund-raising goal. We also examine how prefunding activities influence fundraising dynamics to show that prefunding activities significantly increase the likelihood of a campaign meeting its fund-raising goal, and that the relationship between prefunding and project success is mediated by the number of backers and quality of backers. We take an in-depth look at projects that use prefunding and find that it is effective when entrepreneurs keep potential backers informed and ensure that they are engaged.
Recommended Citation
Garimella, Aravinda; Fan, Ming; Kotha, Suresh; and You, Weijia, "Launch on a High Note: How Prefunding Strategies Affect Crowdfunding Outcomes" (2017). ICIS 2017 Proceedings. 15.
https://aisel.aisnet.org/icis2017/Peer-to-Peer/Presentations/15
Launch on a High Note: How Prefunding Strategies Affect Crowdfunding Outcomes
Recently, the phenomenon of crowdfunding has surfaced as an innovative way to raise capital for venture opportunities online. Using data from a unique crowdfunding platform, we examine whether opting for “prefunding”, or raising awareness prior to fund-raising, increases the likelihood of a campaign meeting its fund-raising goal. We also examine how prefunding activities influence fundraising dynamics to show that prefunding activities significantly increase the likelihood of a campaign meeting its fund-raising goal, and that the relationship between prefunding and project success is mediated by the number of backers and quality of backers. We take an in-depth look at projects that use prefunding and find that it is effective when entrepreneurs keep potential backers informed and ensure that they are engaged.