Crowdfunding and Entrepreneurship

Crowdfunding and Entrepreneurship

This stream of research is an extension of the research on open innovation platforms.  With the maturity of open innovation approaches and platforms, the domain of open innovation has expanded to encourage innovation-based entrepreneurship.  For instance, open/crowd-based early stage start-up financing models (e.g., reward-based crowdfunding at are prominent examples.  Among different crowdfunding business models (e.g., equity-, donation-, lending-, and reward-based crowdfunding), my research group has mostly focused on the reward-based crowdfunding models and platforms (e.g.,, as the reward-based crowdfunding model is most relevant to innovation and entrepreneurship.  

Our early work in the crowdfunding domain began by trying to make sense of the business model and platform dynamics.  Using data collected from, we studied the patterns of backers’ backing activities to identify different archetypes of crowdfunders based on backing frequency and concentration in backing categories and what types of crowdfunders a project is able to appeal to has a significant association with project fundraising success. 

Entrepreneurial Learning Effects

Once we realized that there were many interesting behavioral and market dynamics to be studied in online crowdfunding, we started collecting crowdfunding project data more systematically.  First, we realized that online crowdfunding could provide a digital trace of serial entrepreneurship activities.  Given that entrepreneurship is more prone to failure, it is important to better understand how entrepreneurs become successful across a series of entrepreneurial ventures.  The entrepreneurship literature, due to challenges in longitudinal data collection, has primarily focused on cross-sectional snapshots of entrepreneurs and entrepreneurial ventures or rely on small samples of serial entrepreneurs when investigating serial entrepreneurship.  The online crowdfunding context allowed us to observe serial entrepreneurship at a large scale.  We studied the unique learning curve effects of serial entrepreneurs and how various heterogeneous aspects of experiences (e.g., direct vs. indirect experiences, failure vs. successful experiences etc.) would influence the entrepreneurs’ success.  

Crowdfunding Campaign Design and Management

Given that backers on reward-based crowdfunding platforms serve two roles – as consumers as well as supporters / investors, the design and management of crowdfunding campaigns need to be carefully considered and implemented.  This motivated us to study how the value propositions embedded in online crowdfunding reward schemes influences campaign success and how different marketing strategies (e.g., product scarcity strategy) also influence the dynamics of backer pledging behaviors and ultimately fundraising campaign success.  Finally, using micro-level daily data of on-going campaigns, we also studied how the management of the campaign progress in terms of various exploratory campaign redefinition and exploitative campaign refinement activities influence campaign success.  

Crowdfunding Market Dynamics – Blockbuster Effects

There are many interesting market dynamics that can be observed on online crowdfunding platforms.  One of them is the blockbuster effect – i.e., the spillover effects of overwhelmingly successful projects.  For example, when the Pebble e-paper watch was launched on in April 2012 with a modest fundraising goal of $100K USD, no one had anticipated that it would raise over $10M USD.  Such crowdfunding projects allowed the general public to become more aware of crowdfunding platforms such as  However, despite the increasing size of the backer pool brought about by such highly salient blockbuster projects, the presence of such overwhelmingly successful projects can also have a negative cannibalization effect on concurrently running other campaigns.  Using the theory of network effects, we formulate hypotheses concerning both the positive spillover and negative cannibalization effects of blockbuster projects and empirically resolved the tension and examined the blockbuster effects using both campaign level and campaign-day level data. 

Crowdfunding and Early-Stage Entrepreneurial Finance

The recent success of online crowdfunding platforms has led many to wonder if the crowdfunding model will be able to disrupt early-stage entrepreneurial financing (i.e., financing of start-ups by angel investors and venture capitalists).  Whether such disruption is possible is extremely important for policy makers of innovation-oriented nations such as Singapore. 

Although one might presume that online crowdfunding simply democratizes access to early-stage financing, this may not necessarily be the case as there are many structural differences across the two sources of early-stage financing (i.e., angel investors vs. crowdfunding).  We examined how crowdfunding (relative to angel investing) influences subsequent venture capital (VC) investments for startups from a signaling theory perspective.  We find that crowdfunded startups and angel-backed startups have no statistically significant difference in receiving subsequent venture capital investments. But, corporate venture capitalists (CVCs) tend to favor crowdfunded startups, while independent venture capitalists (IVCs) prefer angel-funded startups.