Searching for angels: Identifying effective characteristics of successful crowdfunding campaigns

Online crowd-funding is getting increasingly important to kick-start businesses and incubate innovations. While there are ample successful examples of crowd-funded campaigns, numerous fund-raising initiatives have failed. Evidence suggests that potential backers are typically deterred by information asymmetry, which naturally limits backers developing reliable understanding on crowd-funding campaigns. As a result, due to the highlighted uncertainty, backers are often dissuaded to commit support to projects. Drawing on the elaboration likelihood model (ELM) and the justice framework, this study identifies four information cues that impact on the formulation of risk perceptions, namely return tangibility, ease of identifiability, information relevance, and pitch transparency. Additionally, following ELM, this study proposes that the effect of informational cues on risk perception is moderated by risk propensity. This study proposes to conduct a scenario-based experiment to investigate the impact of various informational cues on risk perception formulation, which in turn influence likelihood to invest. Expected contributions are discussed.