Distance in Reward based Crowdfunding

Abstract

In this paper, we ask the question of the impact of the distance between backers and entrepreneurs on success of reward based crowdfunding campaigns and provide a framework to understand the association. Using a unique data set provided by the French leading platform Ulule that allows us to work on a sample of 4861 campaigns, we find that the ones attracting more distant backers succeed more frequently and more intensively. This result is attributed to the fact that campaigns that succeed are those launched by entrepreneurs with the most important social capital , a social capital that includes the most of weak ties. The way that supports articulates themselves is in line with this. We find that successful campaigns attracting the most distant backers are also those for which the amount of the average individual support is the lowest. They also attract more numerous supports from more numerous backers. Successful campaigns attracting less distant backers (more local ones) collect more important average supports, but less numerous ones from less numerous backers.