Online or Not? What Factors Affect Equity Crowdfunding Platforms to Launch Projects Online in the Pre-Investment Stage?

This article draws on signal theory and the research findings of local bias in VC to examine how geographic distance (GD) and different signals affect equity crowdfunding platforms launching projects online. We find that local bias still exists in the pre-investment stage of equity crowdfunding. Equity crowdfunding platforms prefer to launch local projects online. We also prove that signals of media usage and start-ups' quality (credit) are positively correlated with the launching of projects on platforms. Moreover, the platform is more inclined to list projects initiated by firms engaging in strategic emerging industries online. Above all, the signal of project risk fully mediates the relationship between start-ups' quality and the launching of projects online. Empirical analyses are based on the dataset of equity crowdfunding projects on the Dahuotou equity crowdfunding platform (http://www.dahuotou.cn/) during 2014-2017.