Publikasjonsdetaljer

År
2011
Forfattere
Agrawal, A.
Catalini, C.
Goldfarb, A.
Nr
No. 16820
Næring
Land
Canada
Type
Working Paper
Nøkkelord
Entrepreneurial finance, Crowdfunding, internet, Family and friends, Local bias, Social networks
Abstrakt / Utdrag

Due to internet facilitates instant and inexpensive communication, online crowdfunding generates a broad dispersion of investors in small and early-stage projects. This contrasts with existing theories that predict entrepreneurs and investors will be co-located due to distance-sensitive costs. This study examines the crowdfunding platform Sellaband, which finances early stage musical projects. 

The average distance between artists and investors is about 5,000 km, suggesting a reduced role for spatial proximity. Still, within a single round of financing, local investors invest relatively early, and they appear less responsive to decisions by other investors. This geography effect is driven by investors who likely have a personal connection with the artist-entrepreneur (“family and friends”). Although the online platform seems to eliminate most distance-related economic frictions such as monitoring progress, pro-viding input, and gathering information, it does not eliminate social-related frictions.