How High-performance Outliers Affect Entrepreneurial Entry on Crowdfunding Platforms
34 Pages Posted: 9 Apr 2014 Last revised: 10 Nov 2023
Date Written: September 24, 2023
Abstract
Entrepreneurs are increasingly choosing to enter digital crowdfunding platforms as one of the first steps toward establishing new ventures. In this paper, I study how that decision is affected by the presence of high-performance outliers—that is prior projects that raised substantial amounts of capital. I look at the early period of rewards-based crowdfunding, where there were two predominant platforms, Kickstarter and Indiegogo. I find that regardless of which platform an outlier appears on, subsequent entry is relatively higher on Indiegogo. This relative increase is stronger for low-quality entrepreneurs. The results suggest that the impact of high-performance outliers depends on the differentiated features of the two platforms. I discuss implications for understanding entrepreneurial entry and crowdfunding platform competition and governance.
Keywords: platforms, two-sided markets, crowdfunding, entry
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