Learning for success: understanding crowdfunding relaunch performance after initial failures

Abstract

Purpose Fierce competition in the crowdfunding market has resulted in high failure rates. Owing to their dedication and efforts, many founders have relaunched failed campaigns as a second attempt. Despite the need for a better understanding, the success of campaign relaunches has not been well-researched. To fill this research gap, this study first theorizes how founders’ learning may enhance their competencies and influence investors’ attribution of entrepreneurial failure. The study then empirically documents the extent and conditions under which such learning efforts impact campaign relaunch performance.Design/methodology/approach This study examines 5,798 Kickstarter-relaunched campaigns. The founders’ learning efforts are empirically captured by key changes in campaign design that deviate from past business practices. Word movers’ distances and perceptual hashing algorithms (pHash) are used separately to measure differences in campaign textual descriptions and pictorial designs.Findings Differences in textual descriptions and pictorial designs during campaign failure–relaunch are positively associated with campaign relaunch success. The impacts are further amplified when the previous failures are more severe.Originality/value This study is one of the first to examine the success of a campaign relaunch after an initial failure. This study contributes to a better understanding of founders’ learning in crowdfunding contexts and provides insights into the strategies founders can adopt to reap performance benefits.