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opportunities for entrepreneurs.However, cross-border opportunities havenot been fully exploited by investors yet (Wardrop et al. 2015), and therefore, entrepreneurs should still focus on developing and leveraging their own local personal network. Critically, local investors tend to invest early, and thismay represent an important signal to the other funders in the initial phase of campaign (Agrawal et al. 2011). 3.1.2 Peer-to-Peer Lending Lending-based crowdfunding, typically referred to as peer-to-peer (P2P) lending, hasattractedmostof thecrowdfunding investment so far.P2P lendingplatformsare typically quite targeted as theymostly focus on either personal or business lending withvery fewexceptions (e.g.LendingClub1).Table 4provides anoverviewof the funding provided through P2P lending platforms by region and segment. Zopawas thefirst P2P lendingplatform tobe launchedback in 2005 (Cummins et al. 2019). Two other largeUS-based platforms, Prosper.com and LendingClub, followed in 2006 and 2007, respectively (Greiner andWang 2009). However, the amount of capital channelled through P2P lending started growing significantly only post-2009, in the aftermath of thefinancial crisis. In fact, the combined effect of the crisis and the introductionof stricter banking regulations (e.g.Basel II)made access to capital extremely difficult for small enterprises and entrepreneurs.On the otherhand, lowinterest ratesmadebondsandother traditionalfinancial instruments unattractive for investors. In this context, P2P lending platforms started to prosper as they represented suitable alternatives to traditional channels for both businesses and investors. P2P lending is anything but new. Entrepreneurs have traditionally leveraged their personal network to raise capital (Berger andUdell 1998;Kotha andGeorge 2012; Robb and Robinson 2014; Cummins et al. 2019). Small loans are often providedby familymembers or friendson thebasis of personal relationships rather than formal due diligence. These informal transactions carry undeniable risks for both borrowers and lenders. Online P2P lending platforms have improved this process by providing online marketplaces that enable borrowers and lenders to transact directlywith defined rules of engagement and by providing due diligence services that reduces the riskofdefault (Cumminset al. 2019). Inexchange for this, platforms charge a fee, typically a small percentage of the funded amount, paid by borrowers. A brief outline of the funding process for business loans on LendingClub is as follows.2Apotential borrower registers to the platform, provides verifiable contact and bank details together with the desired loan amount and duration. Then, the borrower provides additional background information about the business and its currentfinancial status (e.g. last year’s revenues and profits, ownership, and other existingfinancial commitments suchas loansor leases).Theapproval process takes on average seven days, and the platform sets the interest rate based on its own risk 1https://www.lendingclub.com/. 2https://help.lendingclub.com/hc/en-us/articles/360001352047-Business-loan-application-walk through. NewSources of Entrepreneurial Finance 219