Crowdfunding – a regional policy assessment

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The entrepreneurial finance literature argues that investors prefer to invest in close proximity to investee firms to facilitate better information exchange, due diligence and investment decisions, and post-investment monitoring. However, crowdfunding has different geographies than e.g. venture capital. Actors are often anonymous, as on stock markets, and geographical proximity seems irrelevant. Contrary, research indicates that also on-line platform-investors prefer close proximity in investments. However, previous research studies large markets such as the U.S., Australia, U.K., Italy, possibly affecting the extent to which there is an investment ‘home bias’. The first of two interrelated research questions in this paper asks whether, and to which extent, there are geographical effects on direct financing mechanisms like crowdfunding. Affirmative answers to this question provide a rationale to embark on a regional policy discussion.

New modes of financing and new actors argueably smoothens the financial system and could potentially alleviate some of the regional financing gap, which is said to hinder development of regional innovation and entrepreneurial ventures. Following this reasoning, bottom-up driven, private crowdfunding initiatives should be given room for unfolding opportunities for groups at the financial markets (nacent entrepreneurs) who are potentially otherwise marginalised and rationed. Contrary, it could be argued that a more extensive regulation of crowdfunding, as pursued at other parts of financial markets, is expedient and that crowdfunding de-couples finance and competences, contrary to what has been strived for in recent capital market policies. Therefore, the second research question is: which problem areas can be identified in crowdfunding, and how should the upsurge of crowdfunding be perceived from a regional innovation policy perspective?
Original languageEnglish
Publication date2018
Number of pages13
Publication statusPublished - 2018
EventRegional Innovation Policies conference: Responsible Innovation and Regional Development - Western Norway University of Applied Sciences, Bergen, Norway
Duration: 11 Oct 201813 Oct 2018


ConferenceRegional Innovation Policies conference
LocationWestern Norway University of Applied Sciences

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