Crowdfunding in a not-so-flat world

Abstract

This article analyzes the geographic clustering of crowdfunding (CF) activity across two countries at the city level. We find that the ability of Kickstarter projects to attract funding or backers is spikier than the simple number of projects, suggesting that while the locations of Kickstarter projects are not as clustered, projects that are able to recruit funding are clustering. In addition, we find that digital media (DM) projects cluster more than Local projects. Yet, once we control for the pre-existing geographic distribution of population and economic activity, we find more complex patterns of geographic clustering. The spatial clustering of total Kickstarter funds raised is largely explained by the population and economic activity controls. Conditional on those controls, funds raised for DM projects do spatially cluster, while funds raised for Local projects exhibit significant dispersion. Funding and number of backers cluster for DM projects, above and beyond the prior concentration of socioeconomic and employment factors. Conversely, our results suggest CF can reduce or flatten the spikiness of fundraising for local projects. The world was already spiky, and it is a bit less so thanks to CF platforms like Kickstarter.