Crowdfunding: Geography, Social Networks, and the Timing of Investment Decisions

By Ajay Agrawal, Christian Catalini, Avi Goldfarb. Journal of Economics & Management Strategy, 2015

961 citations recorded by the source corpus.

type="main"> We examine a crowdfunding platform that connects artists with funders. Although the Internet reduces many distance-related frictions, local and distant funders exhibit different funding patterns. Local funders appear less responsive to information about the cumulative funds raised by an artist. However, this distance effect appears to proxy for a social effect: it is largely explained by funders who likely have an offline social relationship with the artist (“friends and family”). Yet, this social effect does not persist past the first investment, suggesting that it may be driven by an activity like search but not monitoring. Thus, although the platform seems to diminish many distance-sensitive costs, it does not eliminate all of them. These findings provide a deeper understanding of the abilities and limitations of online markets to facilitate transactions and convey information between buyers and sellers with varying degrees of social connectedness.

Subfields: Accounting, Economics and Econometrics, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/1e7cee84b3ca02ea4dbe59bd13ad622a4aa189bd

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Citations in the corpus

Market mechanisms and funding dynamics in equity crowdfunding (2017, positive): “Agrawal et al. (2016) show that syndicates help well-informed lead investors in equity crowdfunding extend their knowledge to a less well-informed crowd that is consequently willing to invest in a company. In a similar vein, Vismara (2017) evidences that founders have a greater chance of reaching th”
Social identity and signalling success factors in online crowdfunding (2016, background): “Research suggests that general funders consider the identity of prior funders, and potentially discount investments made by friends and family (Agrawal, Catalini, and Goldfarb 2015).”
Reward-based crowdfunding of entrepreneurial projects: the effect of local altruism and localized social capital on proponents’ success (2017, positive): “…of the crowdfunding research, which has documented the existence of a home bias, i.e., the tendency of financial transactions to occur between parties that are geographically close (Lin and Viswanathan 2016), even for entrepreneurs who seek capital on the Internet (Agrawal et al. 2011, 2015).”
Is the crowd sensitive to distance?—how investment decisions differ by investor type (2017, positive): “The average amount invested within those successful campaigns was only US$89 (see Agrawal et al. 2014).”
Crowdfunding models: Keep‐It‐All vs. All‐Or‐Nothing (2019, neutral): “While most of these studies focus on crowd and project characteristics, such as gender (Greenberg and Mollick, 2014) or geographical origin (Agrawal et al., 2015, Lin and Viswanathan, 2014), our contribution lies in examining the drivers of the entrepreneurial decision in the design of the…”
Digital Finance and FinTech: current research and future research directions (2017, neutral): “The seven papers that were mostly referred to by the other publications of this category are: Agrawal et al. (2015), Ahlers et al. (2015), Belleﬂamme et al. (2014), Burtch et al. (2013a), Lin et al. (2013), Mollick (2014), and Zheng et al. (2014).”
Crowdfunding and social capital: A systematic review using a dynamic perspective (2021, background): “…including a slow-growth Length of project description, questioning backers ’ perceived shared value with the campaign fund disproportionately early in campaigns (Agrawal et al., 2015); however, the journal the article is published in does not fit our selection criteria (it is a Q3 journal).”