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Financial returns in reward-based crowdfunding

Author

Listed:
  • Victoria Dobrynskaya

    (School of Finance, HSE University, Moscow, Russia)

  • Julia Grebennikova

    (Faculty of Economic Sciences, HSE University, Moscow, Russia)

Abstract

We quantify financial returns to backers in reward-based crowdfunding projects on Kickstarter and show that such investments provide profitable opportunities in addition to non-monetary benefits. The average unconditional annualized return is 11.5% and the average return on successful projects is 30%. Hence, backing money near the end of a campaign, when the probability of success is already high, is a profitable strategy. The most attractive is the Design category, where successful projects yield 73%, on average. Short-term projects are more profitable than long-term ones. Financial return is an important type of extrinsic motivation in reward-based crowdfunding, which has generally been neglected in academic literature. Reward-based crowdfunding outperforms other forms of crowdfunding and other common alternative investments.

Suggested Citation

  • Victoria Dobrynskaya & Julia Grebennikova, 2023. "Financial returns in reward-based crowdfunding," Economic Analysis Letters, Anser Press, vol. 2(3), pages 1-9, May.
    • Handle: RePEc:bba:j00004:v:2:y:2023:i:3:p:1-9:d:94
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    References listed on IDEAS

    as
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