International Business Research; Vol. 10, No. 11; 2017 ISSN 1913-9004 E-ISSN 1913-9012 Published by Canadian Center of Science and Education 58 Remarkable Funders: How Early-Late Backers and Mentors Affect Reward-Based Crowdfunding Campaigns Francesco Gangi 1 , Lucia Michela Daniele 1 1 Department of Management, University of Campania “Luigi Vanvitelli”, Capua, Italy Correspondence: Francesco Gangi, Department of Management, University of Campania, Capua, Italy. Received: September 4, 2017 Accepted: September 26, 2017 Online Published: September 29, 2017 doi:10.5539/ibr.v10n11p58 URL: https://doi.org/10.5539/ibr.v10n11p58 Abstract In recent years, the growth of the reward-based crowdfunding model has offered new opportunities to meet the funding requirements of start-ups. However, the achievement of the funding target is still a complex goal, given the existence of several information barriers between insiders (project proponents) and outsiders (backers) of a crowdfunding campaign. Within the framework of the information asymmetry and the theory of signals, this study aims to analyse the role of two kinds of previously un-investigated funders in determining the success of crowdfunding campaigns: early-late backers (who are placed at the beginning of the tail of the campaign) and mentors (who are represented by firms acting as more expert backers). The findings indicate that both types of funders are remarkably important for the success of a crowdfunding campaign. Keywords: crowdfunding, information asymmetry, reward-based model, signalling theory 1. Introduction In recent years, crowdfunding has emerged as a financing channel for a wide range of entrepreneurial initiatives, both for and not-for profit. The main feature of this unconventional model of raising capital is the use of Internet platforms that allow proponents of a project (creators) to reach an indefinite set (the crowd) of potential funders (backers) (Note 1). The diffusion of crowdfunding is confirmed by the numbers: worldwide, there are more than 1,200 portals, with the capital collection exceeding 16.2 billion dollars in 2014, which represents a 160% growth from 2013 (Massolution, 2015). In parallel with this growth, scientific interest in the crowdfunding phenomenon has significantly increased, including the search for a taxonomy (Griffin, 2012; Kaartemo, 2017). With reference to the reward-based model, which represents the focus of this paper, crowdfunding can be defined as an open call for providing financial resources in exchange for future products or some form of rewards (Belleflamme, Lambert, & Schwienbacher, 2014). Since the evidence suggests that the legitimacy of a project to be funded is not easy to obtain during crowdfunding (Frydrych, Bock, Kinder, & Koeck, 2014), one of the most salient research topics is the study of determinants of a successful campaign, which is defined as an initiative that reaches its funding target. In this regard, the literature has provided some theoretical and empirical evidence, but the topic is still far from being fully explored. Further investigations on why some projects succeed while others fail are rooted in a well-established conceptual framework represented by the information asymmetry (Akerlof, 1970) and the theory of signals (Spence, 1973). The crowdfunding market shows a mix of specific elements that may exacerbate the distorting effects caused by the informational distance that normally exists between the insiders (creators or proponents) and outsiders (backers) of a project. Some of these elements are the virtual environment of transactions, the absence of personal interaction, the lack of formal procedures for the assessment of project quality, and the participation of backers without expertise at the individual level. All these distinguishing features present the question of which factors can mitigate the information barriers that may hinder the achievement of the funding target. The present paper aims at contributing to fill this knowledge gap. In particular, assuming that the crowd is not a monolithic entity, this study focuses on the ‘certification’ function of some kinds of funders who have not been investigated earlier, such as the backers placed at the beginning of the tail of a crowdfunding campaign and the firms that act as mentors of a project. The theoretical basis here is the social information embedded in others’ funding decisions (Kuppuswamy and Bayus, 2015), that may mitigate the distortions of the information asymmetry.