Looking for a Change in Scene: Analyzing the Mobility of Crowdfunding Entrepreneurs

Abstract

As the platform economy expands, little is known about entrepreneurial mobility for those creating new ventures using online platforms. Few studies have focused on entrepreneurs’ decisions to relocate. Entrepreneurs using crowdfunding platforms, especially those in the arts and creative industries, present an interesting opportunity to investigate factors influencing relocation decisions. Our analysis sheds light on why crowdfunding creators relocate their projects, the factors that explain their destination choice, and how those factors differ by the type of crowdfunding venture. To understand entrepreneurs’ relocation decisions, we build a pseudo-panel dataset to track creator relocations on the largest reward-based crowdfunding platform (Kickstarter). The final dataset consists of over 25,000 instances where entrepreneurs within the USA made relocation decisions. Taken together, the Kickstarter data on thousands of creators over time, some of whom opted to move, reveals interesting patterns about who moved and where they went. We model their relocation decisions in two stages. First, we analyzed the decision to stay or relocate. Then, for those who relocate, we estimate a destination choice model that identifies the factors that influence which destination regions are selected. Even though these entrepreneurs utilize a platform-based tool for fundraising, they are strongly tied to their local geography. The results confirm that decisions to “change scenery” follow regional conditions relevant to local market size and their networks. The particular factors attracting these entrepreneurs depend on the sort of creative activity (e.g., music, film), as these creators exhibit tendencies to cluster in metros with well-developed crowdfunding communities.