How Crowdfunding Influences Innovation

Abstract

Crowdfunding is changing how entrepreneurs bring new products to market. It has allowed thousands of innovating entrepreneurs to raise money, build brand awareness, and join a broader conversation with large numbers of potential backers, all while still in the product development process. Examples of crowdfunded products include the Glif, whose creators raised more than $137,000 for the device. The more than 200 Kick-starter alumni providing data for our study collectively raised more than $17 million from roughly 239,000 backers during their Kickstarter campaigns. Since we were primarily interested in product innovations, our research focused on four categories: technology, product design, hardware, and video games. Of the product innovations in the study, 15% were created by individuals or organizations that were crowdfunding their third (or subsequent) campaign.

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