Crowdfunding: Designing an effective reward structure

Savannah Wei Shi

Many crowdfunding platforms allow developers maximum flexibility in terms of the number and types of rewards offered in a project.

Introduction

Crowdfunding has grown immensely popular in recent years. It is defined as "an open call, essentially through the Internet, for the provision of financial resources either in form of donation or in exchange for some form of reward and/or voting rights to support initiatives for specific purposes" (Belleflamme, Lambert, & Schwienbacher, 2010, p. 8). In contrast to the mainstream business financing through banks, angel investors, and venture capital firms, crowdfunding provides entrepreneurs a platform to showcase their pitch resources (prototypes or ideas) to large numbers of people who are interested in contributing to the projects in exchange for equity,...

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