Dealing with initial success versus failure in crowdfunding market: Serial crowdfunding, changing strategies, and funding performance
ISSN: 1066-2243
Article publication date: 10 April 2019
Issue publication date: 19 September 2019
Abstract
Purpose
Serial crowdfunding is becoming a common phenomenon as entrepreneurs repeatedly return to online crowdfunding to raise capital. In this study, the authors focus attention on serial crowdfunders, that is, entrepreneurs who experience launching more than one crowdfunding project. The purpose of this paper is to investigate the role of past experience on subsequent crowdfunding performance. This study also examines whether initial success vs initial failure leads serial crowdfunders to engage in more explorative behaviors (i.e. switching industry) and to take exploitative actions (i.e. adjusting campaign strategies in terms of goal setting and funding option).
Design/methodology/approach
Data on serial crowdfunding projects was retrieved from Indiegogo platform. The logistic regression models are estimated to assess the impact of past entrepreneurial experience on subsequent crowdfunding decisions, and to estimate the effects of the three strategies on subsequent funding performance.
Findings
The results show that serial creators who experienced successful initial crowdfunding are more likely to explore a new industry or product category in the crowdfunding market and to set a higher target capital for the subsequent campaign when they change a project category.
Originality/value
Despite the fact that there are a considerably large number of serial crowdfunders in crowdfunding market, relatively little research has been conducted to investigate the presence of learning benefits from a previous to a subsequent crowdfunding project. Two competing hypotheses, drawn from the attribution theory and hubris theory of entrepreneurship, were tested in this study to determine the impact of prior success vs failure experience on both subsequent crowdfunding decisions and funding performance.
Keywords
Acknowledgements
This project is supported by UAE University Research Grant No. G00002617 (Funding No. 31B088).
Citation
Lee, C.H. and Chiravuri, A. (2019), "Dealing with initial success versus failure in crowdfunding market: Serial crowdfunding, changing strategies, and funding performance", Internet Research, Vol. 29 No. 5, pp. 1190-1212. https://doi.org/10.1108/INTR-03-2018-0132
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited