Abstract

For start-ups, a successful crowdfunding campaign could generate significant opportunities to access additional funding resources. This paper contributes to advancing our understanding of how characteristics of a successful Kickstarter campaign may determine a start-up’s follow-on fundraising performance, with a special focus on future venture capital (VC) financing. We draw on 483 successfully crowdfunded projects on Kickstarter and more than 80 follow-on VC investments throughout the period 2010-2018 to investigate how various venture quality attributes (e.g. high pledged amount, strong social media alliance) and uncertainties (e.g. large number of backers) contribute to the subsequent increase (or decrease) in VC investments. Our results show that larger public investments (i.e. pledge amount) signal greater public confidence, translating into significant rise in the probability and amount of subsequent VC financing. We also find that founders’ professional connections (in LinkedIn) factor in the venture’s future funding success by raising both the probability and number of subsequent VC rounds. Statistically significant results were found supporting our hypothesis that VCs tend to devalue a large crowd of backers, presumably due to future market loss concerns. Both the probability and the number of follow-on VC rounds were negatively affected by a high number of backers. Finally, we show that serial creators with back-to-back crowdfunding successes are more likely to go back to the crowd for future funding needs which translates into higher probability, number and size of subsequent crowdfunding rounds. However this strong association was not found to be negatively affecting the degree of future VC involvement.