Crowdfunding Entrepreneurship: Evidence from US Counties

53 Pages Posted: 18 Oct 2022 Last revised: 12 Feb 2024

See all articles by Thomas Lambert

Thomas Lambert

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Aleksandrina Ralcheva

Delft University of Technology

Peter Roosenboom

Rotterdam School of Management, Erasmus University; Erasmus Research Institute of Management (ERIM)

Date Written: February 12, 2024

Abstract

Are new ideas and projects launched on reward-based crowdfunding platforms associated with entrepreneurship? We develop measures of reward-based crowdfunding activity at the county level based on all projects listed on Kickstarter (the largest US platform). We find that an increase in Kickstarter activity fosters the creation of young businesses, especially in industries that need less startup capital. For identification, we also use a natural quasi-experiment based on a Kickstarter rule change that exogenously increases the number of projects listed on the platform. We observe that this rule change is associated with an increase in the effect of Kickstarter activity on entry. In addition, we find that reward-based crowdfunding contributes to the further development of young businesses by increasing their establishment size. Further analysis indicates that reward-based crowdfunding activity supports entrepreneurship by reducing socio-demographic disparities prevalent in offline entrepreneurial finance. Our findings are consistent with the notion that crowdfunding promotes the “democratization” of entrepreneurship.

Keywords: crowdfunding, entrepreneurship, FinTech, Kickstarter, startup capital

JEL Classification: G23, L26

Suggested Citation

Lambert, Thomas and Ralcheva, Aleksandrina and Roosenboom, Peter, Crowdfunding Entrepreneurship: Evidence from US Counties (February 12, 2024). Available at SSRN: https://ssrn.com/abstract=4244733 or http://dx.doi.org/10.2139/ssrn.4244733

Thomas Lambert (Contact Author)

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands

HOME PAGE: http://www.thomaslambert.org

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Aleksandrina Ralcheva

Delft University of Technology ( email )

P.O. Box 5015
2600 GB Delft
Netherlands

Peter Roosenboom

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T09-56
3000 DR Rotterdam
Netherlands
+31 10 40 82255 (Phone)

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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