Determinants of overfunding in rewards-based crowdfunding

Abstract

This study analyses the impact of the determinants of the level of overfunding in reward crowdfunding campaigns. In particular, we analyse the characteristics of projects launched on the Spanish platform, Verkami, that manage to raise more funding than the initially set target (overfunded projects). The results of our empirical analysis suggest a significant positive impact of factors that provide information and reduce the risk perceived by backers: updates and videos that communicate the idea and purpose of the project, and the characteristics of the entrepreneurs such as their experience in launching previous projects or their participation in other crowdfunding campaigns. Finally, the degree of sectorial heterogeneity of the sample is analysed. The results indicate that projects belonging to sectors such as Entertainment and Literature attract a higher number of backers, which shows the diversity in the preferences and motivations of backers when participating in crowdfunding campaigns.