Crowdfunding: examining the user motivation for funding as the basis for designing improved funding allocation strategies

Abstract

The emerging crowdsourcing paradigm, the social web and the practices of open innovation are generating many economic and social benefits. Crowdfunding is derived from crowdsourcing, and is driven by “the crowd” of online communities. They engage and interact using socio-technical systems, and help innovators and entrepreneurs create new ventures. Innovation leads to new businesses and stimulates the economy through the increase in jobs, products and services. Crowdfunding systems such as Kickstarter and IndieGogo have helped to increase the available funding for startups; and have played a role in strengthening the economy. Weaknesses in crowdfunding systems have limited the numbers of successfully funded projects due to the suboptimal mechanism design. Rules about “success” of projects means that invested funding is not utilised. The success of crowdfunding projects relies on backers pledging enough money to achieve their funding goal. Using a mixed-methods approach, this research examines user motivation for funding in association with the funding amount. Our findings suggest that there are statistically significant differences among age groups in the amount pledged based on their motivations for funding, in which this research drew a number of positive and negative associations between them. The findings presented tell project creators who (gender and age group) pledge high/low funding amount based on what motivations (e.g. reward, support, social good).

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ORCID for Leslie Carr: orcid.org/0000-0002-2113-9680

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