Crowdfunding models: Keep-It-All vs. All-Or-Nothing

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Crowdfunding models : Keep-It-All vs. All-Or-Nothing. / Cumming, Douglas; Leboeuf, Gaël; Schwienbacher, Armin .

In: Financial Management, Vol. 49, No. 2, 07.2020, p. 331-360.

Research output: Contribution to journalArticlepeer-review

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Author

Cumming, Douglas ; Leboeuf, Gaël ; Schwienbacher, Armin . / Crowdfunding models : Keep-It-All vs. All-Or-Nothing. In: Financial Management. 2020 ; Vol. 49, No. 2. pp. 331-360.

Bibtex

@article{9b967c9818124f19921d6e0cd889243a,
title = "Crowdfunding models: Keep-It-All vs. All-Or-Nothing",
abstract = "Reward‐based crowdfunding campaigns are commonly offered in one of two models via fundraising goals set by an entrepreneur: “Keep‐It‐All” (KIA), where the entrepreneur keeps the entire amount raised regardless of achieving the goal, and “All‐Or‐Nothing” (AON), where the entrepreneur keeps nothing unless the goal is achieved. We hypothesize that AON forces the entrepreneur to bear greater risk and encourages crowdfunders to pledge more capital enabling entrepreneurs to set larger goals. We further hypothesize that AON is a costly signal of commitment for entrepreneurs yielding a separate equilibrium with higher quality and more innovative projects with greater success rates. Empirical tests support both hypotheses.",
author = "Douglas Cumming and Ga{\"e}l Leboeuf and Armin Schwienbacher",
year = "2020",
month = jul,
doi = "10.1111/fima.12262",
language = "English",
volume = "49",
pages = "331--360",
journal = "Financial Management",
issn = "1471-9185",
publisher = "Wiley",
number = "2",

}

RIS

TY - JOUR

T1 - Crowdfunding models

T2 - Keep-It-All vs. All-Or-Nothing

AU - Cumming, Douglas

AU - Leboeuf, Gaël

AU - Schwienbacher, Armin

PY - 2020/7

Y1 - 2020/7

N2 - Reward‐based crowdfunding campaigns are commonly offered in one of two models via fundraising goals set by an entrepreneur: “Keep‐It‐All” (KIA), where the entrepreneur keeps the entire amount raised regardless of achieving the goal, and “All‐Or‐Nothing” (AON), where the entrepreneur keeps nothing unless the goal is achieved. We hypothesize that AON forces the entrepreneur to bear greater risk and encourages crowdfunders to pledge more capital enabling entrepreneurs to set larger goals. We further hypothesize that AON is a costly signal of commitment for entrepreneurs yielding a separate equilibrium with higher quality and more innovative projects with greater success rates. Empirical tests support both hypotheses.

AB - Reward‐based crowdfunding campaigns are commonly offered in one of two models via fundraising goals set by an entrepreneur: “Keep‐It‐All” (KIA), where the entrepreneur keeps the entire amount raised regardless of achieving the goal, and “All‐Or‐Nothing” (AON), where the entrepreneur keeps nothing unless the goal is achieved. We hypothesize that AON forces the entrepreneur to bear greater risk and encourages crowdfunders to pledge more capital enabling entrepreneurs to set larger goals. We further hypothesize that AON is a costly signal of commitment for entrepreneurs yielding a separate equilibrium with higher quality and more innovative projects with greater success rates. Empirical tests support both hypotheses.

UR - http://www.scopus.com/inward/record.url?scp=85062357803&partnerID=8YFLogxK

U2 - 10.1111/fima.12262

DO - 10.1111/fima.12262

M3 - Article

VL - 49

SP - 331

EP - 360

JO - Financial Management

JF - Financial Management

SN - 1471-9185

IS - 2

ER -