The Geography of Crowdfunding

Agrawal, Ajay; Catalini, Christian; Goldfarb, Avi

doi:10.2139/ssrn.1692661

Cited by 116 publications

(105 citation statements)

References 22 publications

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“…While theory predicts that investors in early-stage firms will tend to be local, because the costs of gathering information, monitoring progress, and providing input are sensitive to distance (Tribus 1970, Florida and Kenney 1988, Florida and Smith 1993, Lerner 1995, Sorenson and Stuart 2001, Powell, Koput, Bowie, and Smith-Doerr 2002, Zook 2002, Mason 2007, Agrawal et al (2010) show that the availability of online platforms tends to eliminate most distance-related economic frictions. In fact, a mean distance between entrepreneur and investor of approximately 3,000 miles is found, as opposed to an average of 70 miles between lead VC and target firm (Sorenson and Stuart, 2005), which suggests there is no significant difference between the number of local and distant investors.…”

Section: Literature Reviewmentioning

confidence: 99%

“…the product which is going to be developed by the crowfounder if the fundraising campaign is successful or financial compensations, such as revenue/profit-sharing arrangements) or equity shares. In this scenario and thanks to the evolution of the Web 2.0 technologies (Agrawal et al 2010), crowdfunding platforms have emerged as a new innovative channel to raise capital for new ventures. This new phenomenon encompasses now about 450 platforms in the world and is growing at a very rapid pace: $1.5 billion of capital was raised in 2011, 2.7 billion in 2012 (more than 1 million projects were funded) and an expected 5.1 billion will be raised in 2013 (Massolution 2012(Massolution , 2013.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Determinants of Crowdfunding Success: Evidence from Technology Projects

Cordova

Dolci²,

Gianfrate

2015

Procedia - Social and Behavioral Sciences

238

212

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Crowdfunding is a potentially disruptive way to finance new ventures. At the crossroad of micro-finance and social networking, crowdfunding is undergoing intense scrutiny from scholars and policymakers to understand where it positions in the chain of startup funding. By studying 1127 technology projects posted on four distinct crowdfunding platforms, we highlight the factors explaining fundraising success over failure and the determinants of overfunding. We find that an increase in the project funding goal is correlated with a lower probability and extent of success, that project duration increases the chances of success, and that chances of success are positively related to the dollar amount contributed per day. The latter results supports the view according to which the crowdfunding patter follows the so-called "reinforcement model", as opposed to the substitution one (Shang and Croson, 2009)

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Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Determinants of Crowdfunding Success: Evidence from Technology Projects

Cordova

Dolci²,

Gianfrate

2015

Procedia - Social and Behavioral Sciences

238

212

View full text Add to dashboard Cite

show abstract

“…This creates contractual relationships and instruments between the entrepreneur and stakeholders comparable to those in traditional venture capital. (Ley and Weaven 2011;Agrawal, Catalini, and Goldfarb 2011). Crowdfunding also provides an ecosystem facilitating broader resource exchange between stakeholders (Lambert and Schwienbacher 2010).…”

Section: Crowdfunding As Transaction Mechanismmentioning

confidence: 99%

Exploring entrepreneurial legitimacy in reward-based crowdfunding

et al. 2014

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Venture financing through social networks has become a global phenomenon. The processes and drivers of crowdfunding require careful study to identify similarities and distinctions from traditional venture finance. The demonstration of project legitimacy is especially interesting because online crowdfunding limits investors' access to the entrepreneur and organisation. How do rewards-based crowdfunding projects establish and demonstrate legitimacy in this virtual, impersonal context? We employ a novel data-set collected from the Kickstarter crowdfunding platform to explore the characteristics of successful projects, including legitimating signals and content. The data reveal numerous findings linking project characteristics to legitimacy and success. First, lower funding targets and shorter duration signal legitimacy by setting modest, achievable expectations. Rewards structures, such as traditional equity investment terms, appear to generate a sense of legitimate investment returns. Finally, narrative legitimacy in the online crowdfunding context may derive more from the online platform community than the visual pitch. Our study reveals a more nuanced picture of legitimacy formation during rewards-based crowdfunding, with implications for theories of resource assembly and the practice of venture finance.

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“…Consequently, they often fail to successfully communicate with conventional financiers (Lehner, 2013), who regard expected yields, security of the investment and accounting liquidity as the most important investment criteria (O'Rourke, 2010). Furthermore, conventional financiers might consider the legal and organisational structures of some environmental ventures as unprofessional (Agrawal et al, 2011;Gundry et al, 2011).…”

mentioning

confidence: 99%