Distance in Reward-Based Crowdfunding

Ludovic Vigneron

Finance, 2023, vol. 44, issue 1, 154-194

Abstract: This paper questions the impact of the distance between backers and entrepreneurs has on the success of reward-based crowdfunding campaigns. Using a unique dataset provided by the Ulule platform, we show that those attracting more distant backers succeed more frequently and more intensively. Successful campaigns attracting the most distant backers (the more numerous ones) are also those for which the supports average amount is the smallest and those with more numerous backers. Successful campaigns that attract less distant backers collect supports with a higher average amount from fewer ones. This pattern is in line with the double hypothesis that ?broad scope? campaigns rely more on entrepreneurs? weak ties to succeed and that ?local? ones rely more on entrepreneurs? strong ties. We also find evidences that successful campaigns attract more distant backers from the beginning than failed ones. This findings contradict the classical view of campaigns reaching progressively a broader public (farer backers) with time.

Keywords: reward-based crowdfunding; campaign’s success; entrepreneur’s social capital; geographic distance; weak ties versus strong ties (search for similar items in EconPapers)
Date: 2023
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