Are Syndicates the Killer App of Equity Crowdfunding?

Syndicates cause a shift from crowdfunding startups to crowdfunding lead investors. They provide both the tools and incentives for lead investors to conduct due diligence and monitor post-investment activity and also to leverage their expertise and reputation when connecting with interested investors worldwide. By linking the online benefits of low transaction costs and global investor networks with the offline benefits of face-to-face interactions with founders, syndicates may result in a significant increase in the overall level of online investment activity. We report evidence that foreshadows a meaningful role for syndicates as a channel for allocating capital to early-stage ventures.