Determinants of Crowdfunding Success in Africa: An Exploratory Perspective on Incentive Rewards and Beyond

Abstract

This study aims to determine the role of reward incentives in crowdfunding success in Africa. Reward incentives seem to play an essential role in the success of a crowdfunding project. Therefore, understanding how distinct types of incentive rewards influence the backer’s engagement and viability of crowdfunding campaigns is essential. Drawing from secondary cross-section data from Kickstarter and Indiegogo, this research uses the probit regression method to analyse and test the hypotheses. The findings revealed that flexible funding negatively influences a crowdfunding campaign, diminishing the probability of success. In contrast, a more significant number of backers positively affects a crowdfunding campaign, boosting its chances of success. Rewards promised to potential backers increase the probability of success. These findings influence how crowdfunding campaigns are launched, allowing them to build and achieve their financing targets. The findings provide knowledge that entrepreneurs could develop far more attractive, culturally appropriate reward schemes to boost their crowdfunding campaigns’ chances of success. It provides a valuable understanding regarding the potential of crowdfunding as an alternative tool for economic development in Africa among policymakers and development agencies. Lastly, it adds to the limited literature on crowdfunding in Africa, especially within the context of reward incentives, and provides a foundation for further studies in this area.

1. Introduction

Crowdsourcing refers to discovering ideas, services, or content by asking for contributions from many people, often through the internet (Howe, 2006). The method uses collective intelligence to address problems, create innovations, or finance projects. Incentive rewards, which may be monetary, symbols, or level rewards, are symbolic or tiered rewards aimed at encouraging people to participate in a certain activity or reach a specific goal (Jiang et al., 2021). Incentive rewards in crowdfunding seem to play a significant role in the overall success of crowdfunding projects. Crowdfunding through online systems has become essential for entrepreneurs and startups to seek financial support for their innovations (Theerthaana & Lysander Manohar, 2021). The kind of reward is also crucial; on crowdfunding platforms, material rewards tend to be appreciated more than symbolic ones, but only at lower reward tiers. In the face of barriers to traditional investment sources such as banks and venture capital, financial assistance can now be raised from online communities of consumer investors, specifically backers or crowdfunders (Yasar, 2021).

In reward-based crowdfunding, rewards of a material or imputed nature are a categorical indicator to possible supporters since this influences their mindset and contribution tendency (Rodríguez-Garnica et al., 2024). Material rewards in distinctive products or one-of-a-kind objects are tangible evidence of the creator’s dedication and talent, decreasing suspicion and gaining credibility. Such assurance is likely to yield contributions since supporters are more confident that the project will be successful. On the other hand, symbolic rewards such as public praise or awards are social markers that appeal to followers’ egos and sense of belonging (George & George, 2023). While such nonmaterial rewards can build communal participation and self-assurance, they are not necessarily as effective in inspiring contributions as their material counterparts (W. D. Chen, 2023). Studies show that symbolic rewards are insufficient to substitute for material rewards offered as motivation for sponsors (Ganguli et al., 2021; Kreilkamp et al., 2023; Bernardino et al., 2021; Elrashidy et al., 2024). Thus, a compelling blend of both reward forms can maximise the appeal of a crowdfunding campaign, activating various supporter motivations.

Crowdfunding has thus become an important alternative source of finance, especially in countries where traditional financial institutions do not serve the entire population (Ngalim & Togan Eğrican, 2023). Crowdfunding in Europe, too, has been on the rise in recent years (Baber, 2021). Since financial inclusion is generally particularly low in Africa, crowdfunding might become a very attractive market for businesses and nonprofits (Chao et al., 2020; Ismaila, 2023; Omenguélé & Mbouolang, 2022). One of the myriad factors likely to play a role in the success of a crowdfunding campaign is the reward incentives employed. However, it is not a given that it will contribute to campaign success (Wessel et al., 2021). In general, these reward incentives are used in other contexts to attract a large number of backers, but their effectiveness in the African context has not been well-researched (Haasbroek & Ungerer, 2020; Gong et al., 2020; Wachira, 2021; Cappa et al., 2019). The relevance of this research is that it describes the response to the primary question of how differences in incentive reward motivations affect the performance of crowdfunding campaigns. This is particularly relevant given the challenge of working with heterogeneous African markets. Given that much of the available literature examining the effect of reward incentives on the performance of crowdfunding concentrates heavily on developed economies (Tian & Zhang, 2023; Regner & Crosetto, 2021; Pinkow, 2022), the research makes an attempt to bridge one critical gap within the literature through consideration of the impacts within the peculiar African case of crowdfunding. This research shall not only widen our understanding of incentive structures but also contribute to the maximisation of effectiveness in crowdfunding interventions in developing economies. The studies conducted by Dos Santos Felipe et al. (2022) and Carbonara (2021) examined the role of rewards in influencing crowdfunding success. This difference highlights the varying factors that influence crowdfunding success across different economic and cultural environments. Therefore, this study may provide a better understanding of how rewards impact crowdfunding in diverse settings.

The effectiveness of incentive rewards in crowdfunding success depends on whether the country is developed or developing and relies on differences in economic conditions, cultural acceptability, and technological infrastructure (Posch et al., 2022). Creative or reserved rewards spur backers in developed economies because they have higher disposable incomes and prefer distinctive products or experiences (Mamaro & Sibindi, 2023). Conversely, in less developed countries, supporters might trend towards utilitarian and cost-constrained incentive rewards since they have low incomes and concerns about short-run functionality. On top of this, trust among online platforms and payment systems is likely to vary, influencing participation in crowdfunding campaigns.

In recent years, reward-based crowdfunding has emerged as an alternative financing channel for entrepreneurs, creative artists, and social projects. Besides simply asking people to donate money, project creators often offer rewards, that is, products or services promised in exchange for people pledging a certain amount. Although crowdfunding in Africa is still in its infancy, it could significantly contribute to financial inclusion and entrepreneurial support (Chao et al., 2020). It has been estimated that Sub-Saharan Africa’s market can grow to approximately USD 2.5 billion by 2025 (Omenguélé & Mbouolang, 2022). Activities of influential stakeholders such as policymakers, industry players, and platform owners to facilitate the development of crowdfunding ecosystems must be directed towards policy formulation, innovation in technology, public sensitisation campaigns, and strategic use of incentives (Chao et al., 2020). Crowdfunding is emerging as a transformative financing method for African entrepreneurs, providing them with opportunities that traditional funding sources often fail to offer (Durojaiye et al., 2024). However, this innovative approach comes with its own set of challenges.

Practically, this study may improve understanding of the role of incentive rewards in crowdfunding performance and guide project creators in using incentives to enhance crowdfunding success. Unfortunately, there is a paucity of empirical evidence examining the role of incentive rewards in influencing the success of crowdfunding campaigns (Y. Chen et al., 2023; Regner & Crosetto, 2021). In an attempt to help remedy this, the study examines the role of incentive rewards in crowdfunding performance and success. Incentives can play a varied role in crowdfunding success. Depending on the kind of campaign, they can be crucial, irrelevant, or even detrimental. The number of backers secured is the most consistent indicator of success across studies. The following questions are important: What is the impact of different kinds of incentive rewards, in other words, tangible products, exclusive experiences, and recognition, on the performance of crowdfunding campaigns in Africa? This question thus seeks to explore the relationship between various reward structures in securing backers and achieving campaign goals. To what extent do cultural, economic, and social factors play a role in the varying effect of incentive rewards on the performance of crowdfunding campaigns across different regions in Africa? This question addresses how regional and contextual issues affect the success of incentive-based crowdfunding strategies.

The rest of the paper is structured as follows: Section 2 provides the literature review and the theoretical framework. Section 3 is a discussion of the research method and material, while Section 4 and Section 5 present the research findings and discussion and the implications of the study, respectively. Section 6 is the conclusion.

2. Literature Review and the Theoretical Framework

This first section presents the theoretical background in relation to crowdfunding success.

2.1. Information Asymmetry Theory

Based on information asymmetry theory, comments can be implemented as a communication tool between backers and project creators. Supporters and/or contributors can communicate with fundraisers using comments on crowdfunding websites. This tool provides an opportunity for questions, answers, demonstrations of gratitude, and clarifications (Ho et al., 2021; Jiang et al., 2021). Comments seem to be an essential communication tool that has a positive impact on crowdfunding.

Furthermore, positive comments contribute to the success of a crowdfunding campaign (Wu et al., 2023). According to Wu et al. (2023), entrepreneurs who emphasise factors such as verbal or non-verbal cues that can affect their project’s overall appeal may be able to improve the success and efficacy of their crowdfunding campaigns. Guaranteeing investment decisions from potential sponsors may also reduce the information gap between project owners and potential sponsors (Bukhari et al., 2020).

2.2. Signalling Theory

Signalling theory was initially put forward by Michael Spence in 1973 as a labour market theory. According to Spence, an individual can signal his unobservable attributes (such as education or skills) to employers through observable action (such as obtaining a degree). Signalling theory was subsequently used to describe how the parties communicate in information asymmetry situations in finance, marketing, and entrepreneurship (Connelly et al., 2011). Signalling theory assists in understanding the mechanism by which project initiators (entrepreneurs) communicate project quality and credibility to possible backers (donors or investors) as a method of avoiding information asymmetry and realising funding prospects (Zhai & Shen, 2024).

2.3. Expectancy Theory

The expectancy theory formulated by Victor Vroom in 1964 generally distinguished between extrinsic and intrinsic motivation. The model explains the association between individual effort and performance, arguing that people are motivated to act if they expect a favourable outcome. Hackman and Porter (1968) advanced the theory by including additional variables that emphasise the role of intrinsic and extrinsic rewards as motivating factors. The expectancy theory, which explains motivation in light of the expected outcomes, is increasingly applicable to crowdfunding, and especially to reward-based models (Jiang et al., 2021). In other words, when for backers their contribution may result in meaningful rewards, it may contribute to a crowdfunding campaign’s success. In crowdfunding, backers typically evaluate projects based on three components derived from expectancy theory (Costello & Lee, 2022). First, expectancy is the belief that one’s contribution will lead to rewards; second, instrumentality refers to the belief that promised rewards will actually materialise; third, valence is defined as the value placed upon those rewards (Camilleri, 2018).

Studies also highlight that backers are most likely to fund projects when they feel that their contribution makes a difference in whether the project is funded or not (Liang et al., 2019; Sauermann et al., 2019). For instance, crowdfunding projects that establish clear, realistic funding goals and prioritise backer-oriented rewards tend to enhance backers’ perceptions of expectancy (the belief that their contribution will help achieve the goal) and instrumentality (the belief that achieving the goal will lead to desired outcomes) (Aideyan, 2023; Soltani Delgosha et al., 2024). On the other hand, there is a delicate balance, given that overtly complicated rewards or vague reward fulfilment processes may erode the backers’ trust and hence diminish the chances of the campaign’s success (Y. Li et al., 2022).

2.4. Attribution Theory

One useful lens to view backer behaviour in crowdfunding has been the attribution theory, first developed by Heider in 1958 and later further developed by Kelly in 1973. In crowdfunding, attribution theory describes how a potential backer decides about the causes of the success or failure of a campaign and bases their decision to support the project on such judgments.

When a crowdfunding project is successful, backers often ascribe it to internal factors related to the quality of the idea itself, the competence of the creator, or even effort from their side (Shen et al., 2021). If a campaign is structured properly, potential contributors might consider the creators capable of delivering promised rewards, and thus they could become more likely to invest. On the other hand, a campaign may be perceived to struggle due to external factors, such as poor timing, market conditions, or the lack of visibility of the platform. Suppose backers attribute a campaign’s performance to external factors beyond the project creator’s control. In that case, they may be less likely to pledge, perceiving the outcome as uncertain or independent of the creator’s efforts. Figure 1 below illustrates the relationship between the project creator (SMEs), crowdfunding platform and backers or investors.

The various components of a crowdfunding project include the entrepreneur’s or SME’s idea, the crowdfunding platform, and potential backers (investors). Entrepreneurs create a crowdfunding campaign with a capital amount needed for a project. The potential backers evaluate the project via the platform. If interested, backers contribute money via the platform to the entrepreneur. In exchange for compensation, the entrepreneur may provide updates, rewards, or equity (based on the model). This relationship is signalling- and trust-based; entrepreneurs need to properly signal credibility and project viability, and the platform needs to offer a trustworthy setting for the two parties to engage.

Numerous rather diverse factors play a role in the success or not of reward-based crowdfunding. For instance, team members’ experience enhances their project’s fundraising credibility (Z. Huang et al., 2021). In reward-based crowdfunding, the reward scheme is an important element that can contribute to the crowdfunding performance (Cai et al., 2021). In providing information about the quantity and value of the rewards and the time of reward delivery in the reward scheme, founders seek to attract backers to choose the reward tier or product they are interested in, which in turn could make the project succeed and bring creative projects to life. Signalling theory posits that incentives and rewards can send useful information to potential backers regarding the quality and viability of a crowdfunding campaign, which can affect their funding choices. Expectancy theory posits that people would be inclined to give based on anticipated rewards they would obtain, but attribution theory also offers some understanding of how donors would see the causes of incentive design and what its effects would mean for campaign success. In reward crowdfunding, backers should be capable of obtaining some forms of returns on a tailored range of a product or sole access to a service by only a gratitude note for supporting the campaign (Hohen et al., 2025).

Some scholars conducted an exploratory study of existing research on how reward information influences crowdfunding performance from different perspectives. For example, Yang et al. (2020) examined the impact of different types of scarce rewards on the performance of crowdfunding, while Posch et al. (2022) and Verschoore and Araújo (2020) studied the influence of a reward incentive on the backers’ decision to invest or contribute to a crowdfunding campaign. These rewards often create a stronger emotional connection and perceived value for backers, leading to higher investment levels. Several scholars investigated the influence of limited rewards or reward tiers on crowdfunding performance (e.g., Posch et al., 2022; Q. Li & Wang, 2024; Ma et al., 2022). Petit and Wirtz (2022) wrote that rewards might be considered incentives to attract first-time pledgers. In crowdfunding, rewards are the key to convincing first-time pledgers. Having an understanding of how incentives can work could be of great assistance in turning a crowdfunding campaign into a successful one. Based on these arguments, we formulated the various research hypotheses as follows:

H₁. 

The presence of promised rewards significantly increases the likelihood of crowdfunding success.

If an entrepreneur has a good digital reputation, as measured by the number of projects they have created previously, it could have a positive impact on crowdfunding performance in terms of the number of investors, the probability of campaign success, and the funding rate (Zribi, 2022). An entrepreneur’s experience and effective management of their company can also have a positive influence on the credibility of their displayed passion in equity crowdfunding campaigns (Di Pietro & Tenca, 2024). Entrepreneurial traits and preparedness, enhanced by experience, are important factors in crowdfunding success (Woods et al., 2020). Therefore, an entrepreneur’s past experience, good reputation and communication skills, and overall preparedness can definitely contribute much to the success of their crowdfunding campaign. An entrepreneur’s experience is thus a signal of credibility to potential backers, which will increase the likelihood of crowdfunding success. Signalling theory suggests that an entrepreneur’s experience can serve as a signal to potential investors of their ability and the prospects of project success, thus generating confidence and interest in the business (Bafera & Kleinert, 2023). At the same time, expectancy theory states that older entrepreneurs tend to have clearer expectations about the result of their work, and this may influence their strategic choice, while attribution theory explains to what stakeholders attribute their past successes or failures and how this will probably impact future possibilities and assistance.

H₂. 

An entrepreneur’s prior experience has a positive effect on their crowdfunding campaign, increasing the likelihood of successful funding outcomes.

Several studies confirm that creator experience seems to play a significant role in crowdfunding success (Cai et al., 2021). Past creation and supporting experiences form a credible track record which bodes well for someone’s future performance in crowdfunding (Gregoriades & Themistocleous, 2025; S. Huang et al., 2022). Therefore, with experience earned from prior crowdfunding projects, entrepreneurs can usually accurately determine the investment threshold, investment levels, and target financing amount. Fang (2024) also suggests that entrepreneurs can invest in the crowdfunding projects of other entrepreneurs. Thus, existing project performance can majorly determine the financing performance and the crowdfunders’ experience. Accordingly, it is required that crowdfunding creators learn about the role of entrepreneurial learning and serial crowdfunding interaction in financing performance when initiating new projects.

H₃. 

Frequently asked questions (FAQs) have a positive impact on a crowdfunding campaign, increasing the likelihood of successful funding outcomes.

The frequently asked questions (FAQs) are measured by the number of questions asked on the crowdfunding campaign page. The presence and quality of FAQs can possibly make a huge difference in the success or failure of a crowdfunding campaign (Telve, 2019). FAQs are regarded as an important communication tool with the power to enhance the likelihood of trust and engagement through providing answers to some of the possible questions potential backers might have (Mosca et al., 2019; Ribeiro-Navarrete et al., 2021). FAQs can thus clarify some of the doubts and concerns potential backers might have in relation to the project. Clear and concise answers to the FAQs will reduce the information asymmetry that usually prevents potential backers from contributing to a campaign. This transparency can build trust in the campaign and make a backer more receptive to the pledge.

According to Ho et al. (2021) and Dambanemuya and Horvát (2021), the presence of a well-articulated FAQS section is an indirect signal that the fundraiser has given enough thought to the needs of their audience. According to evidence from various studies, those campaigns with thoughtful and detailed FAQs fare relatively better compared to those that do not have such FAQs (Scaife, 2023; Shneor & Vik, 2020). The campaigns that provide far-reaching information, including FAQs, have a tendency to acquire more backers and raise significantly higher amounts than their counterparts that do not provide such information. Signalling theory is used to describe how entrepreneurs deliberately reveal information (e.g., project information, previous success, and incentives) in crowdfunding campaigns’ FAQs to reduce information asymmetry and establish trust with potential backers (Spence, 2002). Expectancy theory (Vroom, 1964) and attribution theory (Weiner, 1985) similarly inform these FAQs through examination of motivators on the part of supporters; expectancy theory captures reward and success influencing contribution selection, and attribution theory informs response through explanations supporting the justification of project credibility and possibility on past accomplishment and on contingencies from outside the team.

Moreover, FAQs tend to prove even more effective when they are revised with the latest information or changes in the status of the campaign. This builds donor confidence. Being better prepared can build better rapport with potential donors throughout the campaign and also raise the level of its possible success rate.

H₄. 

The flexible funding mechanism has a negative effect on potential crowdfunding success.

Flexible crowdfunding, primarily through such popular platforms as Indiegogo, may even have a negative influence on the outcome of the campaign, though it seems to present a lot of advantages (Silva et al., 2020; Demiray et al., 2019). The mechanism in question allows creators to retain the funds raised for the project without necessarily achieving a funding goal; this may be fraught with a number of disadvantages, touching on backer confidence and general campaign success. Flexible funding makes backers feel that it is less urgent to contribute since there is no definitive funding goal that must be reached to further the project. Since there is no deadline for achieving a specific target, fewer contributions may come through since people stop engaging. Flexible funding may be less effective in Africa due to lower trust levels in online transactions, limited enforcement mechanisms, and higher perceived risks among backers. Additionally, cultural and economic factors, such as communal values, preference for tangible rewards, and sensitivity to financial constraints, influence the types of rewards preferred. For example, symbolic rewards resonate strongly with backers seeking social recognition, while tangible or tiered rewards appeal to those motivated by value-for-money considerations in resource-constrained environments.

Potential backers feel less compelled to act quickly when they are assured that the campaign will still receive their money. The signalling theory postulates that project creators employing flexible funding in crowdfunding initiatives have to send credible signals—for example, history of success or good campaign content to recipient backers to ensure their credibility since the funds are raised even if targets are not met (Spence, 2002). At the same time, expectancy theory (Vroom, 1964) and attribution theory (Heider, 1958) describe backers’ choice: supporters judge chances for campaign success in terms of their effort and project quality perceived (expectancy), and attribute results to internal resources (e.g., creator skill) or external resources (e.g., market need), affecting their willingness to contribute.

Knowing that they will receive funds regardless of whether they meet a specific goal may diminish the motivation for campaign creators to promote their projects or strive actively to obtain more funding. This can result in less effort in marketing and outreach, which are crucial for attracting backers. Projects that do not meet their goals may struggle to attract future investments or partnerships. Backers and investors often look for signs of success and viability before committing further resources; a campaign that fails to meet a specific target might be perceived as less promising, hindering future fundraising efforts (Deng et al., 2022).

Campaigns that utilise flexible funding may be viewed as less credible than those with fixed funding goals. Backers often associate a clear target with a more serious commitment from the creator. Without this benchmark, potential contributors might question the project’s viability and the creator’s dedication, leading to decreased trust and subsequent lower amounts of funding (Zhang et al., 2024).

H₅. 

A large number of backers has a significant and positive effect on a crowdfunding campaign, increasing the likelihood of successful funding outcomes.

A higher number of backers serves as a form of social proof, indicating to potential contributors that the project has garnered interest and support from others (Soublière & Gehman, 2020). This can create a bandwagon effect, encouraging more individuals to back the project as they perceive it to be popular and trustworthy (Zhang et al., 2024). Campaigns with more backers also tend to receive greater visibility on crowdfunding platforms. Many platforms use algorithms that promote popular projects, which can lead to further exposure and attract additional backers. According to signalling theory, crowdfunding campaign creators can obtain more supporters by signalling project quality and reliability appropriately through descriptive narratives, open funding targets, and prior success using crowdfunding (Spence, 2002). Expectancy theory (Vroom, 1964) and attribution theory (Heider, 1958) postulate that prospective donors will make an estimate of whether a project will succeed or fail as a function of the effort made and history of the campaign initiator. A well-structured campaign producing good strong signals is likely to be assigned a higher probability of success, which will affect the donor’s decision to donate.

This visibility is crucial for maintaining momentum throughout the funding period. A larger backing base enhances the perceived credibility of a campaign. As said, potential backers are more likely to invest in projects that have already received substantial support, which signals that others believe in the project’s viability and possible success. Many backers also foster a sense of community around the project. This community can engage in discussions, provide feedback, and share the campaign within their networks, amplifying outreach efforts and increasing overall contributions.

H₆. 

The presence of spelling errors in presenting a crowdfunding project has a detrimental effect on its possible success.

Spelling mistakes usually indicate a campaign of low quality and a lack of professionalism. They are indicative of a lack of preparedness and commitment from the fundraiser and thus could result in potential backers finding the campaign not quite trustworthy (Baber, 2021; Wang et al., 2022). The spelling errors on the crowdfunding campaign page could imply that the project is not professional or credible and reduce the potential supporters’ trust in the project in line with signalling theory. Both expectancy theory and attribution theory also describe the effect, where the supporters view such mistakes as evidence of low effort or incompetence, hence expecting an incompetently executed project and risks of failure by the creator. Fundraisers should be meticulous when it comes to the wording and careful editing and proofreading of the description of their campaign as this could have a big impact on the campaign.

H₇. 

Regular updates have a significant and positive effect on the success of a crowdfunding campaign.

Studies indicate that posting regular updates during a crowdfunding campaign positively impacts the number of investments and the total amount raised (Mamaro & Sibindi, 2023; Eisenbeiss et al., 2023). Specifically, campaigns that provide regular updates see a marked increase in backer participation as updates maintain interest and engagement throughout the campaign (Dehdashti et al., 2022). Updates that inform backers about new funding developments or promotional efforts are particularly impactful (Foster, 2019). In contrast, updates focused on team changes or general business information tend to have less influence on funding success (Efrat et al., 2020; Baah-Peprah & Shneor, 2022). The frequency of updates on a crowdfunding campaign can be explained based on signalling theory, in which frequent updates are good signals of project legitimacy and dedication to mitigating information asymmetry among potential supporters (Spence, 2002). In addition, expectancy theory further contends that supporters will give more if progress reports confirm their expectation of the success of the project (Vroom, 1964), while attribution theory posits that regular updates make supporters believe that the creator is competent and diligent, which enhances their trust and interest (Weiner, 1985).

Empirical studies of Jáki et al. (2022), Solodoha (2024), and Mamaro and Sibindi (2023) have demonstrated that the presence of any update can increase the probability of success by approximately 5%, while the absence of updates can reduce the chances of success by around 13%. This highlights the critical role of communication in fostering trust and credibility among potential backers. Thus, the presence of updates in crowdfunding projects will reduce information asymmetry and can positively influence the decision of prospective backers.

In the next conceptual model, Figure 2, we summarise the proposed hypotheses.

In line with the attribution theory, an entrepreneur might share specific reasons for their commitment to completing the project (Abbasi et al., 2024). This tends to enhance the trustworthiness of both the project creator and the funding process (S. Huang et al., 2022). Entrepreneurs can lessen the perceived distance from their backers by presenting themselves in a very human and personable way. Video presentation is crucial for crowdfunding success, as numerous studies have demonstrated that a video can significantly influence a campaign’s fundraising effectiveness (Liang et al., 2019; Deng et al., 2022; M.-Y. Chen et al., 2022). Based on attribution theory and signalling theory, which describe how people perceive information and writers signal credibility, characteristics like frequent updates, reward incentives, and previous experience on a crowdfunding platform are linked with more tremendous success for crowdfunding campaigns (Jáki et al., 2022).

3. Research Method and Materials

To explore the issue of rewards in crowdfunding, secondary data were collected from the following crowdfunding platforms: Kickstarter and Indiegogo as the popular, reliable, and biggest crowdfunding platforms, as well as fundraised platforms consisting of various crowdfunding projects in Africa. The study follows a unique collection method using cross-country data collection of crowdfunding projects in all categories. The study purposively sampled crowdfunding projects on the African continent. Completed campaign projects were considered as a final sample (successful or unsuccessful) as of December 31, 2020. Those projects lacking metadata, i.e., amount funded, backer count, or campaign description, were removed. Logistic regression is an appropriate method for measuring hypotheses because the dependent variable, in this case, is binary. Independent variables also include binary variables; thus, logistic regression would be an appropriate method for measuring hypotheses (7). In logistic regression, it would be possible to identify what variables directly influence the proposed event, that is, the coefficients of regressions are odds ratios, to examine the variables’ impacts and build models to predict these effects on a proposed event. The logistic regression used in this research is as follows:

$$\begin{array}{ll}Success={\beta }_0+& {\beta }_1\mathit{Reward}\mathit{incentive}+{\beta }_2\mathit{Prior}\mathit{experience}\\ & +{\beta }_8\mathit{Frequently}\mathit{asked}\mathit{questions}+{\beta }_3\mathit{Flexible}\mathit{funding}\\ & +{\beta }_4\mathit{Large}\mathit{number}\mathit{of}\mathit{backers}+{\beta }_4\mathit{Spelling}\mathit{errors}\\ & +{\beta }_5\mathit{Regular}\mathit{updates}+\epsilon \end{array}$$

Table 1. The measurement of variables.

Dependent Variables	Measurements
Success (SC)	The binary variable of 1 if the target amount was obtained and 0 otherwise.
Independent variables
Reward incentive (REW)	The binary variable of 1 if a campaign provides rewards, and 0 otherwise.
Prior experience (EXP)	The dummy variable is 1 if the project creator has created more than two crowdfunding campaigns and 0 otherwise.
Frequently asked questions (FAQs)	Number of frequently asked questions on the project between the entrepreneur and the backers (transformed into a log).
Flexible funding (FXF)	The binary variable of 1 if it is flexible funding and 0 if it is fixed funding.
Large number of backers (BCK)	The number of supporters who contributed to the project (transformed into a log).
Spelling errors (SPRs)	The dummy variable is 1 if there are spelling errors on the website and 0 otherwise.
Regular updates (UPDs)	The number of days for a campaign to raise funds (transformed into a log).

Source: author’s own compilation.

below illustrates the measurement of dependent and independent variables.

4. Research Findings and Discussion

Table 2. Descriptive statistics.

Variables	Obs	Mean	Median	SD	Minimum	Maximum	Skewness	Kurtosis
Success	854	0.1604	0.0000	0.7334	0.0000	14.5850	12.6177	216.6589
Reward	854	0.8665	1.0000	0.3403	0.0000	1.0000	−2.1553	5.6453
EXP	854	0.1967	0.0000	0.3978	0.0000	1.0000	1.5259	3.3282
FAQ	854	0.0995	0.0000	0.9114	0.0000	13.000	10.5589	120.6652
FXF	854	0.7611	1.0000	0.4266	0.0000	1.0000	−1.2248	2.5001
BCK	854	19.581	0.0000	118.2678	0.0000	2438.000	13.6361	235.6418
SPR	854	0.2810	0.0000	0.4498	0.0000	1.0000	0.9743	1.9492
UPD	854	0.91803	0.0000	3.1530	0.0000	36.0000	5.60325	42.0437

Source: EViews, version 12, IHS Markit: Irvine, CA, USA, 2020.

below presents a descriptive statistic which includes mean, median, standard deviation, minimum, maximum, skewness, and kurtosis.

The mean completion ratio is small, 0.1605; hence, most of the data points are close to zero. The very high values for the skewness of 12.61770 and kurtosis of 216.6589 suggest that this distribution contains a few extremely high values (outliers), giving it a long right tail. The reward incentive has a mean of 0.8665, with a negative value of skewness, −2.1553, indicating that this is a left-skewed distribution with most values falling around 1. Kurtosis of 5.6453 points to some outliers on the left side. Prior experience has a mean of 0.1967, indicating that most values lie close to zero. The positive skewness 1.5259 implies that the distribution is right-skewed, given that it has a few higher values. Also, the kurtosis stands at 3.3282, meaning that it is moderately high in kurtosis.

Frequently asked questions have a mean of 0.0995, meaning most values are close to zero. The large values of skewness and kurtosis, 10.5589 and 120.6652, respectively, confirm that this is a right-skewed distribution with some extreme outliers. Flexible funding has a mean value of 0.7611, but the negative value of the skew, −1.2248, indicates that it is left-skewed, with many values close to 1. It has a relatively low kurtosis value, 2.5001, indicating few extreme outliers. The large number of backers has a relatively high mean, 19.5820. However, the huge skewness value, 13.6361, and kurtosis value, 235.6418, indicate this is a highly right-skewed distribution with many significant outliers.

Spelling errors have a low mean value of 0.2810; most values are close to zero. This moderate skewness of 0.9743 and lower kurtosis of 1.949213 support that the distribution is somewhat flat, with fewer extreme outliers. The mean of updates equals 0.9180, which can be interpreted as most values being closer to 1. A skewness of 5.6033 and kurtosis of 42.0437 also reveal a right-skewed distribution with very high peak and fat tails, indicating outliers or extreme values in the data. Furthermore, the study of frequent updates shows that campaigns offering frequent updates perform better because they are transparent and establish confidence among backers.

Table 3. Correlation matrix.

Observations	VIF	CR	REW	EXP01	FAQ	FXF	BCK	SPR	UPD
SC	DV	1.000
REW	1.1123	0.077 **	1.000
EXP	1.1077	0.0958 **	0.194 ***	1.000
FAQ	1.0841	0.151 ***	0.0429	0.0591 *	1.000
FXF	1.0910	−0.209 ***	−0.058 *	−0.098 ***	−0.195 ***	1.000
BCK	1.23132	0.422 ***	0.059 *	0.175 ***	0.195 ***	−0.147 ***	1.000
SPR	1.08411	−0.0278	0.245 ***	0.077 **	−0.025	0.0936 **	−0.0463	1.000
UPD	1.36362	0.4765 ***	0.1143 ***	0.241 ***	0.296 ***	−0.231 ***	0.4160 ***	−0.027	1.000

Note: *** p < 0.001 ** p < 0.01 * p < 0.05. Source: EViews output.

below explains the correlation matrix among the variables.

Table 3 presents the association of variables on a model-free basis. Though a correlation matrix is a model-free result, it also serves as a good benchmark for detecting one major econometric problem in multiple regression models: multicollinearity. It is suspected that if any two independent variables are correlated above the threshold point, usually 0.80, then researchers suspect multicollinearity, proving devastating for any regression model. Multicollinearity was checked through the variance inflation factors, all of which were below the threshold of 5 recommended by Hair et al. (2011), as presented in Table 3; hence, there were no multicollinearity issues. Firstly, the full collinearity test that Kock (2015) suggested was performed, where all factor-level VIFs were below 3.3, thus supporting no standard method bias (CMB).

The R-squared is within the range of 0.10 to 0.50; hence, it is regarded as an acceptable goodness of fit, which means it is acceptable to report most of the statistically significant explanatory variables (Ozili, 2023). The current model depicted a 59% goodness fit, indicating generally the explanatory data included in the model.

The analysis of the regression results of

Table 4. Probit regression analysis.

Hypothesis Variables	Coefficient (β)	Std. Error	Prob
H1: Reward incentive	0.202971	0.381730	0.5949
H2: Prior experience	0.218184	0.218931	0.3190
H3: Frequently asked questions	−0.034899	0.088288	0.6926
H4: Flexible funding	−0.634501	0.192368	0.0010 ***
H5: Large number of backers	0.030202	0.003268	0.0000 ***
H6: Spelling errors	−0.2145	0.01777	0.3429
H7: Regular updates	0.033746	0.027196	0.2147
C	−1.958281	0.372702	0.0000
$\mathit{Pseudo}{R}^2$	0.586165
Number of observations	856
Prob(LR statistic)	0.00000

Note: *** p < 0.001. Source: EViews output.

is as follows: The results show that reward incentives play a positive role in crowdfunding success; however, the degree of influence is insignificant (β₁ = 0.203). This seems to indicate that while reward incentives can signal value to potential backers, in accordance with the signalling theory by Spence (2002), its effect alone may not be strong enough to influence a campaign’s success. This concurs with the previous literature, Verschoore and Araújo (2020), and Bilau and Pires (2018), who found that to drive contributions effectively, a signal must be credible and contextually relevant. This would suggest that other underlying drivers may come from factors such as campaign quality, social capital, or the funding mechanism employed in determining crowdfunding success. Therefore, reward-based signals may inspire interest; however, to magnify project outcomes, it would be important to supplement them with other types of signalling or strategies in designing effective campaigns.

The project creator’s prior experience positively increases the likelihood of success (β₂ = 0.218); however, it is also not significant. This would suggest that, although past experiences may signal competence to potential backers and, therefore, may indeed provide useful knowledge, consistent with signalling theory, it is not a sufficient condition to guarantee success. This result corroborates Shneor et al. (2023), who provide arguments that prior experience reduces uncertainty for backers but needs complementing with other relevant signals, such as high-quality campaign content or social capital. This finding would, therefore, suggest that a creator’s prior experience, while valuable, may thus be diluted in competitive crowdfunding environments in which backers weigh multiple signals, including reward structure, funding model, and social endorsements, when deciding whether to contribute. Therefore, project developers might need to trust their experience as well as supporting methodologies, which could bring up the probability of reaching funding objectives.

The results reveal that the frequency of asked questions has a negative impact on crowdfunding success (β₃ = −0.035). This finding aligns with signalling theory (Spence, 2002), which emphasises the importance of clear, unambiguous signals in reducing information asymmetry between project creators and potential backers. On the contrary, the research indicates a negative impact of FAQs on successful crowdfunding, with the suggestion that higher frequencies of FAQs in a campaign may suggest higher uncertainty or ambiguity on the part of potential supporters (Hopp et al., 2022; Moy et al., 2018). This is consistent with the contention that having too many FAQs can indicate a poorly crafted campaign description or suboptimal first communication by the creator because this will lead to lower confidence and lower contribution rates. Past studies highlight the importance of well-designed and well-defined campaigns because uncertainty is a fund-suppressing force (Zheng et al., 2018; Moy et al., 2018). A higher number of questions might indicate a lack of sufficient or clear information in the campaign, raising concerns about the project’s feasibility or credibility. Consequently, such ambiguity could erode trust and discourage potential backers from contributing, thereby reducing the campaign’s likelihood of success.

Flexible funding too has a negative influence and here the results show that it significantly affects the probability of crowdfunding success (β₄ = 0.634). The results confirm flexible funding structures are useful in the success of crowdfunding, as anticipated by research (G. Li & Wang, 2019; Steigenberger, 2017). In contrast to fixed funding where there is only money in the event of goal success, flexible funding allows creators to retain contributions regardless of goal failure or success, thereby minimizing failure. The model is best applicable for projects in which even short-fall funds can be taken along, and thus it is just as much a prized option by creators as patrons. However, recent research also cautions that flexible funding may make supporters less trusting because they have no assurance that the project will be fulfilled as they have been assured. This leads to the justification of the signalling theory, where the usage of flexible funding gives weaker signals about the commitment of the project creator and their confidence in attaining the funding goal. Fixed funding, on the other hand, requires the entire target amount to be raised, after which funds can be dispersed; in flexible funding, a creator is allowed to keep partial funds even if the target is not fully achieved, and this may make flexible funding projects seem less accountable. Such ambiguity would make the project outcome more concerning to the backers, further reducing the amount of trust and willingness to invest, leading to a lower probability of success.

Backers make a critical economic contribution to the success of crowdfunding as the origin of funds contributing to campaign thresholds. The (β₅ = 0.030) coefficient and 0.00 p-value verify that backers make a positive and statistically significant contribution to crowdfunding success. The effect is relatively small, but not marginal because every additional supporter will contribute to a campaign’s likelihood of success. This aligns with earlier studies that discovered the network effect for crowdfunding whereby the more pledgers, the higher the visibility and reputation, which will lead to further pledges (Mollick, 2014). This result also supports the fundamental ideas of signalling theory since a higher number of backers conveys a more credible signal concerning the value and legitimacy of the campaign. In a crowdfunding context, potential contributors may consider the presence of a large number of backers as a signal of confidence and social proof that reduce levels of uncertainty, thereby potentially raising additional investments. This result was expected since early or high backer signals tend to increase the visibility of a project and, therefore, its credibility, leading to a higher chance of success.

Spelling errors in presenting a crowdfunding campaign have a negative influence on the campaign, diminishing its chances of success (β₆ = −0.214) but not significantly so. This too can be understood from the perspective of the signalling theory as developed by Spence (2002), whereby while clear, error-free communication provides a positive signal with respect to the competence, attention to detail, and professionalism of the creator, spelling errors are perceived as a negative signal, which may raise doubts over the credibility of the creator and hence the quality of the project. These spelling errors erode trust and scare away would-be supporters since it implies laziness or a lack of preparation. If these sorts of mistakes are pervasive, then, in effect, that diminishes the capability of the campaign to attract contributions, reducing the possibility of success. Regular updates on the crowdfunding campaign page increase the likelihood of success (β₇ = 0.033) but not significantly. This finding also aligns with the signalling theory (Spence, 2002) since regular updates are positive signals of the campaign creator’s involvement, transparency, and commitment. Timely information, responses to concerns by backers, and project updates decrease uncertainty and increase trust among potential contributors. Such behaviour on the creator’s part signals that they are involved and responsive, increasing perceived credibility and campaign reliability. Further support is therefore gained by regular updates, increasing the crowdfunding campaign’s probability of success.

Table 5. Summary of hypothesis testing.

Hypothesis	Support
H1: A reward incentive has a positive effect on a crowdfunding campaign, increasing the probability of its success.	Not supported
H2: An entrepreneur’s prior experience has a positive effect on their crowdfunding campaign, increasing the probability of its success.	Not supported
H3: Frequently asked questions have a positive impact on a crowdfunding campaign, increasing the possibility of its success.	Not supported
H4: The flexible funding mechanism has a negative effect on potential crowdfunding success.	supported
H5: A large number of backers has a significant and positive effect on a crowdfunding campaign, increasing the probability of its success.	Supported
H6: The presence of spelling errors in presenting a crowdfunding project has a detrimental effect on its possible success.	Not supported
H7: Regular updates have a significant and positive effect on the success of a crowdfunding campaign.	Not supported

Source: author’s own compilation.

below describes the summary of the hypotheses and the decisions.

The findings of this research determine the central role of reward incentives in successful crowdfunding and offer efficient suggestions to entrepreneurs and policymakers. Entrepreneurs need to structure rewards in a way that creates maximum attractiveness and interaction. They must highlight tangible rewards (e.g., limited productions or priority access) to build trust, distinctive incentives to develop a sense of urgency, and symbolic rewards (e.g., credits or merit credits) to gain community support and social confidence. According to the research findings that flexible funding is harmful to success, platform operators ought to reconsider their application. Instead of discouraging its application in its entirety, they can utilise controls such as partial refunding options or extra project milestones to provide backer confidence.

5. Implications of the Study

This study contributes in three ways to the literature on the role of specific reward incentives in crowdfunding success. The study investigates the concept of crowdfunding success, focusing on the role of reward incentives and other factors that influence it, as these aspects have been underexplored in the African context.

Although considerable effort has been devoted to the determinants of crowdfunding success, much of that research focused on signalling theory and analysed the various signals that could project and convey the impression of quality to potential backers (Liu et al., 2023; Zhang et al., 2023; Song et al., 2019; Badrova et al., 2024; Šimić Šarić, 2021). However, the role of incentive rewards in crowdfunding success has received very little attention in Africa. Most previous studies have focused on the factors driving crowdfunding success, but they often concentrate on single platforms or primarily examine developed countries (Jáki et al., 2022; Šimić Šarić, 2021; Mamaro & Sibindi, 2023).

In this study, we investigated the role of reward incentives on fundraising success in Africa using multiple theories applicable to crowdfunding. Attribution theory and expectancy theory come in handy in the context of crowdfunding in Africa. Attribution theory explains how potential backers may perceive cues about reward incentives in a crowdfunding campaign; for example, high levels of project engagement and visibility can be attributed to a project’s potential success.

Second, this research provides valuable insights into the performance of crowdfunding projects by specifically examining how project founders’ strategies for designing incentives influence their success. In reward structures, there had been earlier studies; most of these, however, were limited to extrinsic versus intrinsic rewards (Verschoore & Araújo, 2020; Tian & Zhang, 2023; Jiang et al., 2021; W. D. Chen, 2023). In many instances, the results of such studies could not consider the peculiar context of reward-based crowdfunding in which, generally, the reward to the backers was non-monetary. The present study is indeed one of the very first attempts to research the influence of reward incentives on crowdfunding success in the African context. The study’s findings highlight the significant roles played by reward levels and the participation of potential backers in contributing to a campaign’s success. Additionally, the study makes a methodological contribution by analysing data from multiple crowdfunding platforms consisting of crowdfunding projects from African countries, unlike previous studies that often focused on a single platform or were limited to developed nation.

The results from our study provide a practical understanding for entrepreneurs seeking to optimise reward schemes to enhance the probability of crowdfunding success. For instance, regular crowdfunding project updates may encourage backers to support those projects. In pricing rewards, founders should set moderate prices for rewards and strategically use discounts to attract more backers. The project creator must provide various levels of rewards to suit various backer interests. Adequate balance in the number of limited rewards must also be maintained to generate scarcity without frustrating prospective backers. Emphasising errors in the project presentation, such as spelling mistakes, can be disappointing to backers. Although expanding the range and availability of reward levels can stimulate backers’ motivation, bad presentation can also contribute to the collapse of a project. Crowdfunding platforms can contribute to the success of projects by providing forums where founders can be advised on developing an effective reward scheme.

At the policy level, however, for crowdfunding to become a viable alternative source of financing in Africa, governments would have to establish regulatory frameworks that facilitate investor protection, enable easier transparency, and have robust payment systems. Institutional facilitation through tax concession, financial literacy programs, and interaction with traditional financial institutions would go a considerable way to establishing the platform for crowdfunding to be more investor- and entrepreneur-friendly.

The following future research would embrace experiential research by actively designing, implementing, and tracking a marketing plan within a crowdfunding campaign. This experiential research would fill the knowledge gap regarding the effect of reward incentives on the success of crowdfunding. Close interaction with project creators for several months would be critical in understanding campaign processes and decision-making first-hand. Additionally, there needs to be follow-up studies from campaign participants after a campaign to experiment with reward-based customer acquisition’s long-term effects, especially on the extent of resource cost within crowdfunding campaigns. Determining how backers turn into repeat buyers would give crucial data regarding the sustainability of reward-based engagement. Additional research could also further investigate the use of professional networks for crowdfunding in a study of the relational implications of seeking economic assistance from professional contacts. Discovering how social capital affects crowdfunding success can provide campaign creators with strategic recommendations.

Finally, since the current study is limited to multiple nations and platforms, subsequent studies must use a single country and platform to determine the overall effect of reward incentives across different markets and cultural settings. Comparative analysis would provide insight into the effectiveness of different reward schemes across different crowdfunding environments.

6. Conclusions

This article investigated reward incentives regarding successful crowdfunding, especially in Africa, where online crowdfunding has increasingly become popular for new ventures seeking financial support to realise their creative ideas. Whereas setting up projects remains relatively easy on these crowdfunding platforms, reaching the funding targets remains a big challenge. This places enormous pressure on project founders to establish key drivers for success. Although prior research in entrepreneurship pointed out that the role of reward incentive design could be the key to success (W. D. Chen, 2023; Ganguli et al., 2021; Kreilkamp et al., 2023; Bernardino et al., 2021), studies that specifically explore these factors within the context of crowdfunding campaigns are few, especially in African markets. Our study is among the first to test whether reward incentive design plays a role in the success of crowdfunding projects on the continent.

Our results revealed a strong relationship between backers and project creators on crowdfunding success. Furthermore, the flexible funding model is seen to be weaker than the fixed funding model. While multiple levels of rewards enhance crowdfunding performance, the contribution level of the highest reward level does not bear significance to the project outcome. Also, film festival participation projects have greater contributions linked to them, and that boosts their overall performance. That is, having a project related to major events or platforms can be beneficial to its success. However, since this problem was not yet solved previously in the study, perhaps it would be something to look into more in future studies. Overall, the results confirm most of our hypotheses and thus suggest that the tactical use of reward incentives increases the chances of crowdfunding success across Africa. It is critical that future research examines the digital community-building approaches and context-specific reward design processes applicable to African crowdfunding platforms to better understand the determinants of success.