Reward-based Crowdfunding in a Pandemic

Abstract

How the COVID-19 pandemic has impacted entrepreneurship in America is a critical question. Despite the pandemic, entrepreneurs have been, and still are, looking to finance their ongoing, established businesses, as well as finance new ventures. Reward-based crowdfunding has filled an important gap in alternative finance since the 2008 financial crisis, and many are wondering if it can do the same for the current crisis. By examining 114,838 Kickstarter projects spanning more than a decade, including through the COVID-19 pandemic, this paper tries to answer the following questions: how has the COVID-19 pandemic impacted crowdfunding campaigns in America, and how have different product categories been affected? The analyses show that reward-based crowdfunding campaigns on Kickstarter have reached a global maximum in terms of success rates. Furthermore, the number of backers, the ratio of a campaign’s funds raised to its goal, and the average funds pledged per campaign, have also increased during the pandemic. Furthermore, some product categories have performed dramatically better than others. Each of these findings alone would contribute towards an increased understanding of the effects of the pandemic on crowdfunding; however, taken together, these results contribute substantially towards an understanding of the dynamics of crowdfunding with implications for academics as well as practitioners.