New research on crowdfunding provides shocking new success rate claims

Novel and useful crowdfunding ideas don’t work together, reveals new research

New research on crowdfunding carried out by HEC Paris, the University of Technology Sydney, Singapore Management University and INSEAD has revealed that funding efforts are weakened if ideas are deemed to be both novel and useful.

The study is the first evidence of how the Kickstarter community – those backing crowdfunding projects on the world’s largest online crowdfunding portal – values projects that pursue innovation.

“We found that both novelty and usefulness increase project funding separately, but when these two are together they cause a noticeable decrease”, says Cathy Yang, Assistant Professor at HEC Paris. “This is deeply disappointing as the premise of crowdfunding is to support creativity and innovation”, adds Anirban Mukherjee, Assistant Professor of Marketing at Singapore Management University.

“When projects make both claims, backers either assume a product’s benefits are inflated, that it carries a high risk of failure or that it divides the crowd between believers and sceptics, making it hard for backers to pick a side”, says Amitava Chattopadhyay, Professor of Marketing at Insead.

“Entrepreneurs therefore might be advised to frame a project as only novel or only useful, rather than both”, underlines Dr Ping Xiao of the University of Technology Sydney (UTS).