It's never too late: Funding dynamics and self pledges in reward-based crowdfunding

Crowdfunding recently emerged as an alternative funding channel for entrepreneurs. We use pledge-level data from Startnext, the biggest German platform, to gain insights on funding dynamics and pledgers' motivations. We find that the majority of projects that eventually succeed are not on a successful track at 75% of their funding period. These late successes are boosted by information cascades during the final 25% of the funding duration. We conclude - in contrast with earlier literature - that project success is only partially path-dependent. While early pledges do anticipate project success, a lack of them does not necessarily mean that projects will fail. Interviews and questionnaire responses indicate that projects' communication efforts play a role in making severely under track projects succeed eventually. Moreover, our dataset uniquely allows us to quantify the extent of self funding. Self pledges account for about 10% of all initial pledges and 9% of all pledges that secure funding. Nonetheless, the late surges at severely under track projects are mostly driven by external funders. Furthermore, we find no evidence of subsequent herding triggered by self pledges.