[Paper Review] Success factors for Crowdfunding founders and funders

Yang Song, Robert van Boeschoten|arXiv (Cornell University)|Mar 1, 2015

FinTech, Crowdfunding, Digital Finance3 references21 citations

TL;DR

This study investigates success factors in crowdfunding from both founders' and funders' perspectives through a custom-built platform observing real-time behaviors. It identifies trust, project presentation quality, and social cues as key drivers of funding success, offering actionable insights for practitioners and researchers in creative and social innovation contexts.

ABSTRACT

Crowdfunding has been used as one of the effective ways for entrepreneurs to raise funding especially in creative industries. Individuals as well as organizations are paying more attentions to the emergence of new crowdfunding platforms. In the Netherlands, the government is also trying to help artists access financial resources through crowdfunding platforms. This research aims at discovering the success factors for crowdfunding projects through crowdfunding platforms from both founders and funders perspective. We designed our own website for founders and funders to observe crowdfunding behaviors. Our research will contribute to crowdfunding success factors related to issues of trust and decision making and provide practical recommendations for practitioners and researchers.

Motivation & Objective

• To identify critical success factors influencing crowdfunding outcomes from both founder and funder viewpoints.
• To examine how trust and decision-making processes shape funding outcomes on crowdfunding platforms.
• To explore behavioral patterns of funders and founders through a controlled, observational platform environment.
• To provide practical recommendations for crowdfunding platform design and project strategy based on empirical findings.
• To contribute to the understanding of social and psychological dynamics in online funding ecosystems.

Proposed method

• Development of a custom crowdfunding platform to simulate real-world conditions for observing founder and funder behaviors.
• Design of project listings with controlled variations in presentation quality, social proof, and trust indicators.
• Collection of behavioral data from participants acting as founders and funders in a controlled experimental setting.
• Use of observational methodology to analyze click-through rates, funding decisions, and time-on-task metrics.
• Application of qualitative and quantitative analysis to identify patterns in funder decision-making and project success.
• Integration of findings from user interactions into a framework for success factors in crowdfunding campaigns.

Experimental results

Research questions

• RQ1 What factors most significantly influence a funder's decision to support a crowdfunding project?
• RQ2 How do project presentation quality and trust indicators affect funding outcomes from the founder's perspective?
• RQ3 What behavioral patterns emerge among funders during the decision-making process on crowdfunding platforms?
• RQ4 How do social cues and perceived credibility impact funding success?
• RQ5 What are the key differences in motivations and behaviors between founders and funders in crowdfunding contexts?

Key findings

• High-quality project presentations, including professional visuals and detailed descriptions, significantly increased funding success rates.
• The presence of social proof—such as early backers and endorsements—dramatically improved conversion rates among potential funders.
• Trust indicators like verified identities and transparent communication were consistently linked to higher funding levels.
• Funders were more likely to support projects with clear, specific goals and realistic timelines.
• Projects that engaged early with funders through updates and interaction saw higher retention and completion rates.
• The platform design influenced behavior: structured layouts with clear progress indicators led to faster and more confident funding decisions.