Is the Crowd Sensitive to Distance? — How Investment Decisions Differ by Investor Type

40 Pages Posted: 2 Feb 2016 Last revised: 13 Oct 2016

See all articles by Christina Günther

Christina Günther

WHU - Otto Beisheim School of Management

Sofia Johan

Florida Atlantic University - Finance; University of Aberdeen; Tilburg Law and Economics Center (TILEC)

Denis Schweizer

Concordia University

Date Written: January 31, 2016


This paper presents the first evidence of the influence of geographic distance among retail, accredited, and overseas investors and venture location in an equity crowdfunding context. By analyzing investment decisions, we show that geographic distance is negatively correlated with investment probability for all investor types. Our comparison of home country and overseas investors reveals that overseas investors are sensitive to distance, but considerably less so than home country investors. However, when comparing only home country investors (subdivided into retail and the more sophisticated accredited), we document that both investor types are similarly sensitive to the distance of possible ventures.

Keywords: Distance, Equity Crowdfunding, Entrepreneurial Finance, Entrepreneurship, Home Bias, Internet

JEL Classification: G24, G32, M13, K22, L26

Suggested Citation

Guenther, Christina and Johan, Sofia A. and Schweizer, Denis, Is the Crowd Sensitive to Distance? — How Investment Decisions Differ by Investor Type (January 31, 2016). Small Business Economics, Forthcoming, Available at SSRN: or

Christina Guenther

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179

Sofia A. Johan

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States


University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE

Denis Schweizer (Contact Author)

Concordia University ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
+1 (514) 848-2424 ext. 2926 (Phone)
+1 (514) 848-4500 (Fax)


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