Are Syndicates the Killer App of Equity Crowdfunding?

11 Pages Posted: 27 Feb 2015 Last revised: 7 Dec 2015

Ajay Agrawal

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Christian Catalini

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Avi Goldfarb

University of Toronto - Rotman School of Management

Date Written: February 25, 2015

Abstract

Syndicates cause a shift from crowdfunding startups to crowdfunding lead investors. They provide both the tools and incentives for lead investors to conduct due diligence and monitor post-investment activity and also to leverage their expertise and reputation when connecting with interested investors worldwide. By linking the online benefits of low transaction costs and global investor networks with the offline benefits of face-to-face interactions with founders, syndicates may result in a significant increase in the overall level of online investment activity. We report evidence that foreshadows a meaningful role for syndicates as a channel for allocating capital to early-stage ventures.

Keywords: equity crowdfunding, crowdfunding, angel investment, business angels, syndicates, online syndication, local bias, social networks

Suggested Citation

Agrawal, Ajay and Catalini, Christian and Goldfarb, Avi, Are Syndicates the Killer App of Equity Crowdfunding? (February 25, 2015). MIT Sloan Research Paper No. 5126-15; Rotman School of Management Working Paper No. 2569988. Available at SSRN: https://ssrn.com/abstract=2569988 or http://dx.doi.org/10.2139/ssrn.2569988

Ajay Agrawal

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christian Catalini (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-480
Cambridge, MA MA 02142
United States

HOME PAGE: http://mitsloan.mit.edu/faculty-and-research/faculty-directory/detail/?id=58777

Avi Goldfarb

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-8604 (Phone)
416-978-5433 (Fax)

Paper statistics

Downloads
1,511
Rank
8,860
Abstract Views
5,918