Does crowdfunding foster rural entrepreneurship?

内容摘要

Entrepreneurs in rural areas face much greater difficulties than those located in cities, also with respect to the access to entrepreneurial finance. Recent developments in the provision of capital, however, have opened new opportunities for small firms and start-ups to obtain funding. In this empirical work, I hypothesize that crowdfunding provides crucial resources and support for rural-based entrepreneurs and that rural areas characterized by greater (bridging) social capital are better positioned to benefit from the opportunities of crowdfunding. Using a newly developed database linking crowdfunding campaigns to industry and counties in the U.S. (KIUS), county-level information on social capital and official U.S. census data, I test these hypotheses. My findings indicate that crowdfunding is indeed positively related to the number of ventures operating in the industry-location in the following period. In addition, this relationship is stronger for counties with higher levels of bridging social capital and of civic engagement. The results are robust to a number of checks, including a placebo test and matching exercises. Access to capital through crowdfunding is critical for rural counties: obtaining funds through Kickstarter is associated with an increase in the number of business ventures operating in rural areas. Rural-based entrepreneurs have to face a number of challenges to establish their ventures. Among these challenges, a crucial one pertains access to capital, which is much less available and difficult to obtain outside the city. The use of crowdfunding however may represent an important alternative to traditional funding channels, like banks and venture capitalists. In this paper, I show that providing resources to rural entrepreneurs through crowdfunding is associated to a higher number of ventures operating in the industry in the location which received the funds. Interestingly, the effect of crowdfunding is strongest for those areas with higher rates of volunteering and higher connections between people with different socio-economic backgrounds. These results suggest to practitioners and policy-makers that, one the one hand, rural entrepreneurs can successfully exploit crowdfunding for their ventures; on the other hand, social connections are essential for taking advantage of opportunities offered by crowdfunding.