The role of geographical distance for investment decisions in crowdinvesting

Moritz Sefried and Kristina Uhl

Journal of Small Business Management, 2025, vol. 63, issue 3, 1022-1062

Abstract: Startups rely on alternative forms of financing, such as crowdinvesting, as they usually miss reliable credit ratings and bank loans. We explore the role of geographical distance between investors and startups, and analyze the role of signals and the investor-startup-relationship in investment decisions. Using a unique proprietary dataset from the largest crowdinvesting platform in Mexico, we show that distance between investors and startups negatively affects the investment probability and investment amount. An investor-startup-relationship only diminishes this correlation in specific instances while observable signals do in any case. Evidence is in line with the idea that investors with a close relationship to a startup should be used as fallback options instead of exclusive investors in startups’ early development stage. Furthermore, it underscores that signals are of high importance in modern forms of financing.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00472778.2024.2369790 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ujbmxx:v:63:y:2025:i:3:p:1022-1062

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ujbm20

DOI: 10.1080/00472778.2024.2369790

Access Statistics for this article

Journal of Small Business Management is currently edited by Eric Liguori

More articles in Journal of Small Business Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().