The long-term effects of self pledging in reward crowdfunding

Crowdfunding recently emerged as an alternative funding channel for start-ups, creative artists and social endeavors. While it succeeded in establishing itself a major player entrepreneurial finance, its rather informal setup sparked concerns about resilience to exploitative behavior by project creators. In this paper we explore one form of such opportunistic behavior: self pledging potential effect on the post-campaign development crowdfunded projects. If creators use own funds reach target order collect crowd’s funds, they end up with less fresh capital than needed, might hence face problems delivering promises made. Most reward crowdfunding platforms explicitly prohibit pledges. Startnext, biggest German platform, allows them. We exploit Startnext data shed light effects performance. single out 140 substantially self-funded projects, and, propensity score matching, corresponding sample projects that did not receive any For each these information three or more years after their campaigns ended. Projects may have failed deliver, run into severe delays, delivered but then disappeared, given rise recurring events led founding company/organization. Results indicate no structural long-term impact substantial funding.