What problems does crowdfunding solve?

California Management Review

Volumn 58, Issue 2, 2016, Pages 20-43

  Younkin, Peter ^a   Kashkooli, Keyvan ^b  

^a MCGILL UNIVERSITY   (Canada)

^b SANTA CLARA UNIVERSITY   (United States)

Author keywords

Business to Consumer (B2C); Crowd funding; Disruptive Technology; Entrepreneurship

Indexed keywords

EID: 84961954142     PISSN: 00081256     EISSN: 21628564     Source Type: Journal    
DOI: 10.1525/cmr.2016.58.2.20     Document Type: Article

References (58)

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16. Early research on these models has focused primarily on the success of projects on reward-based sites. For example, see E. Mollick, "The Dynamics of Crowd funding: An Exploratory Study," Journal of Business Venturing, 29/1 (2014): 1-16
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20. We do not intend to critique the work done by researchers using either approach. There is great academic and practical value in understanding the internal dynamics of individual CF platforms and in clearly distinguishing between, for example, donation-based, rewards-based, debt-based, and equity-based CF platforms. For a similar approach to the broader phenomenon of crowd-sourcing of which crowdfunding is a subset, see A. Afuah and C.L. Tucci, "Crowdsourcing as a Solution to Distant Search," Academy of Management Review, 37/3 (July 2012): 355-375.
21. Interview with Anthony Privitelli, Patreon, on June 25, 2015.
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26. Homophily is one reason venture capital firms with female partners are more than twice as likely to support companies with a female member of their executive team. At the same time, the percentage of female partners in the venture capital community dropped from ten percent in 1999 to six percent in 2014. See, for example, Brush et al., op. cit.;M. Ruef, H.E. Aldrich, and N.M. Carter, "The Structure of Founding Teams: Homophily, Strong Ties, and Isolation among U.S. Entrepreneurs," American Sociological Review, 68/2 (April 2003): 195-222.
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34. Bruce Rogers, "Ryan Caldbeck's CircleUp Democratizes Funding Process for Start-Ups and Investors," Forbes, January 6, 2014.
35. For an interesting discussion of the innovation in this sector, see A. Agrawal, C. Catalini, and A. Goldfarb, "Are Syndicates the Killer App of Equity Crowd funding?" California Management Review, 58/2 (Winter 2016).
36. For instance DealFlicks appeared on both Crowdfunder and WeFunder.
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40. Forbes Interview with Andrea Lo, July 3, 2013.
41. Cialdini describes "social proof" as using the actions of others to determine what is the correct behavior. Here, as we see other people donate we are more likely to believe that we too should donate. See, for example, R. Cialdini, Influence: Science and Practice (New York, NY: Harper Collins, 1985).
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46. In fact, while we are not aware of any site that is exclusively political, many sites feature political campaigns and the Obama 2012 campaign was often featured as a triumph of CF. See for instance, K. Lawton and D. Marom, The Crowd funding Revolution (New York, NY: McGraw-Hill, 2012).
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48. Gneezy and Rustichini famously showed how introducing "late fees" at a daycare, rather than relying on parental guilt, induced more people to come late. See, U. Gneezy and A. Rustichini, "A Fine is a Price," Journal of Legal Studies, 29/1 (January 2000): 1.
49. Nicole Perlroth, "Crowdfunders of the Maker of Oculus Rift Denounce a Facebook Buyout," The New York Times, March 27, 2014.
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53. R. Chao, "The Secret to that Potato-Salad Kickstarter Campaign's Success," The Atlantic, July 24, 2014.
54. The first article mentioning "crowdfunding" to appear in either the New York Times or Wall Street Journal was in 2008. The first to mention Kickstarter specifically was in March 2010. The two papers published 70 more articles on Kickstarter over the next two years.
55. A. Morse, "Peer-To-Peer Crowd funding: Information and the Potential for Disruption in Consumer Lending," Annual Review ofFinancial Economics, 7 (2015).
56. G. Lewis-Kraus, "ZPM Espresso and the Rage of the Jilted Crowdfunder," The New York Times, April 30, 2015).
57. J. Surowiecki, The Wisdom ofCrowds (New York, NY: Anchor, 2005).
58. D. Drake, "Advancing Forward: The Top 60 US Real Estate Crowd funding Platforms," December 24, 2014, available at .