A Text-Based Analysis of Crowdfunding Innovation

Innovation plays a crucial role in enabling crowdfunding campaigns to establish distinctive competitive advantages and in enabling backers to assess the investment potential of the campaign. The alignment of potential backers’ innovation preferences with the innovation of micro-campaigns will significantly impact their investment decisions and, consequently, the performance of crowdfunding. However, assessing the degree of innovation as an implicit evaluation factor is more challenging compared to explicit evaluation factors such as titles, comments, and pictures directly presented on the platform. Furthermore, corporate innovation measurement methods based on patents, R&D expenditures, and new product indicators are not applicable to micro-campaigns within the crowdfunding domain. Consequently, the accurate measurement of innovation in micro-campaigns within crowdfunding presents an urgent issue to be addressed in the examination of backers’ innovation preferences and the campaign innovation mechanism. We present a novel approach for measuring innovation by integrating topic modeling and word embedding to assess text similarity. The study involved analyzing the textual content of 15,761 crowdfunding campaigns on Indiegogo. The findings indicate that the text-based innovation measurement method is capable of capturing a wide range of innovations, including those that fall within the scope of patent disclosure and innovation description. The study suggests that text-based innovation proxy indicators are effective and outperform traditional innovation indicators in comprehensively capturing innovation practices in crowdfunding campaigns. Furthermore, this study identified an empirical “inverted U”-shaped correlation between innovation and crowdfunding performance. This article presents concepts and criteria for investigating innovation mechanisms and influential factors in the realm of crowdfunding, focusing on methods for measuring innovation.