Success Criteria for Reward-based Crowdfunding Campaigns
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A challenge early stage startups face is attracting outside capital, given the lack of collateral and sufficient cash flows and the presence of significant information asymmetry with investors (Cosh et al., 2009). In recent years, crowdfunding has emerged as a new way for entrepreneurial ventures to secure funds without having to seek out venture capital or other traditional sources of venture investments (Mollick, 2014). The aim of this master thesis is to understand how hardware startups can successfully launch a product on the leading reward-based crowdfunding platforms, Kickstarter and Indiegogo. Further, to see if success criteria for different elements of a crowdfunding campaign existed. Lastly, the impact of social capital on such a campaign was analysed. A theoretical and empirical study were performed, in addition to a multiple case study exploring the unconventional campaigns of six different companies, as a basis for the analysis and discussion of the thesis. Data regarding the campaigns were mainly collected through in-depth interviews. The findings from each case were then linked to the theory presented. Some of the findings challenge existing theory. Even though it is not possible to set definite and quantifiable success criteria within all the key elements, the authors have found guidelines which can help campaign creators develop successful reward-based crowdfunding campaigns. These guidelines are summarized here: (1) A project page should contain a project video, preferably made by a professional film producer. (2) The project page should include sufficient information regarding descriptions, images and illustrations, and FAQs. (3) If similar campaigns exist, one should study these comments to understand the backer s needs. (4) The campaign duration should be approx. 30 days. (5) Reaching the funding goal within 24 hours can create more traffic to the campaign. Set the funding goal accordingly. (6) Communicate with the community to build trust. (7) Responding quickly to comments from backers during the campaign is vital to achieving success. (8) Send out updates regularly during the campaign and after. (9) Keep the reward tiers straightforward and understandable. (10) Focus on spreading the campaign, through personal networks on social media. (11) PR is a key factor in succeeding with a campaign. Allocate resources to contact the press. (12) Negotiating embargos with the media will enable articles released at the same time as a campaign launch. This thesis can serve as a guidebook for entrepreneurs who wants to launch a new physical product on a reward-based crowdfunding platform.