Dancing to Multiple Tunes: Establishing Legitimacy with First-Time and Repeat Backers in Crowdfunding Campaigns

Abstract

Using 14,108 crowdfunding campaigns with diverse topics from Kickstarter’s “on our radar” section, we examine three different mechanisms used to establish legitimacy and test their relative effectiveness in gathering support from first-time versus repeat backers. Suited narrative distinctiveness that aligns with backers’ expectations of novelty, endorsement from Kickstarter staff, and campaign leadership’s funding of other campaigns. While an endorsement from Kickstarter staff is more important for first-time backers, a campaign leadership’s funding of other campaigns is relevant only for repeat backers. The most pronounced differences between first-time and repeat backers exist in their evaluation of narrative distinctiveness, where campaigns face a dilemma. While a narrative that is distinct from past campaigns helps to attract repeat backers and to gather more resources, it simultaneously harms their efforts to attract first-time backers and subsequently grow the community. Those, in turn, can be attracted by narratives distinct from live campaigns, yet such narratives secure less funding. Our findings highlight and conceptualize the difference between first-time and repeat backers’ evaluative processes that are critical in determining the effectiveness of a campaign’s legitimization efforts and offer relevant insights into the trade-off between legitimizing and differentiating that entrepreneurs face when they seek funding from crowdfunding audiences. By not exclusively focusing on technology-based campaigns, our results also showcase how past findings on legitimacy in crowdfunding generalize to additional campaign topics, such as cultural and civic ones.