The Two Sides of Crowdfunding Success: Attributes and Motivations of Backers and Entrepreneurs—Evidence from Israel

Abstract

Using two studies of the same leading Israeli crowdfunding platform—‘Headstart’—various aspects of the fundraising method discussed in this article were explored. The first study identifies the factors that impact the amount of investment in crowdfunding projects. Using data from 517 backers who invested in ‘Headstart’ projects, direct correlations were established between the age of the backers, the minimum tangible reward levels, being friends or family of the entrepreneurs and the level of risk aversion with the investment amount. It is argued that these results are related to more extensive information being available to family and friends. Furthermore, the findings implicate that for different amounts of investment, different factors will have an impact. The second study seeks to identify the crowdfunding entrepreneurs’ unique characteristics that make some of them succeed in funding their projects more than others. According to the responses of 162 crowdfunding entrepreneurs to the ‘Big Five’ questionnaire, their agreeableness and extraversion have a positive impact on the success of campaign funding, but the impact is gender related. Neuroticism and conscientiousness are also factors. These studies contribute to the literature by using rare, first-hand information from entrepreneurs and backers to identify the internal and external factors that lead to success in crowdfunding.