1st factor on why crowdfunding platforms have lower cost of capital
Better matches: Creators match with those individuals who have the highest will- ingness to pay for equity in their venture (or for early access to their new product, etc.) where the search for such matches occurs across a global rather than local pool of potential funders. Thus, as opposed to traditional offline mechanisms for financing early-stage creative ventures, access to capital is not so strongly influenced by the cre- ator’s location. Indeed, in Agrawal, Catalini, and Goldfarb (2011), we report that on Sellaband, more than 86% of the funds came from individuals who were more than 60 miles away from the creator, and the average distance between creators and funders was approximately 3,000 miles.