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Investor behavior in equity crowdfunding

Author

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  • Johannes Wallmeroth

    (EM - EMLyon Business School)

Abstract

Using a hand collected data-set, this paper analyzes the investment behavior of over 15,100 investors and over 42,200 investments on one of Germany's largest equity crowdfunding portals. It shows that paramount contributions come from one subpopulation. Contributions of EUR 5000 and larger from the first 59 campaigns account for 50.6% of the raised capital while they make up a mere 3.2% of all investments. When these investments are linked to investor profiles, these individuals are found to invest less frequently, suggesting different investment behaviors among crowd-investors. This significantly advances the understanding of equity crowdfunding by showing that the crowd is not a homogenous community. Furthermore, it is found that for investors who make these investment sizes, men are not statistically more likely to be a part of this group. These findings provide numerous revelations for policy-makers, equity crowdfunding platforms, as well as entrepreneurs.

Suggested Citation

  • Johannes Wallmeroth, 2019. "Investor behavior in equity crowdfunding," Post-Print hal-02312242, HAL.
    • Handle: RePEc:hal:journl:hal-02312242
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    Citations

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    Cited by:

    1. Coakley, Jerry & Lazos, Aristogenis & Liñares-Zegarra, José M., 2022. "Seasoned equity crowdfunded offerings," Journal of Corporate Finance, Elsevier, vol. 77(C).
    2. Goethner, Maximilian & Hornuf, Lars & Regner, Tobias, 2021. "Protecting investors in equity crowdfunding: An empirical analysis of the small investor protection act," Technological Forecasting and Social Change, Elsevier, vol. 162(C).
    3. Lars Hornuf & Matthias Schmitt & Eliza Stenzhorn, 2022. "The local bias in equity crowdfunding: Behavioral anomaly or rational preference?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 693-733, August.
    4. Legenzova Renata & Leckė Gintarė, 2022. "Exploring Lithuanian Real Estate Crowdfunding Investors’ Rationality," Management of Organizations: Systematic Research, Sciendo, vol. 87(1), pages 83-102, June.
    5. Ferretti, Riccardo & Venturelli, Valeria & Pedrazzoli, Alessia, 2021. "Do multiple competing offerings on a crowdfunding platform influence investment behavior?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).
    6. Manuel Knott & Franz Strich & Kim Strunk & Anne-Sophie Mayer, 2022. "Uncovering potential barriers of using initial coin offerings to finance artistic projects," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(2), pages 317-344, June.
    7. Maximilian Goethner & Lars Hornuf & Tobias Regner, 2020. "Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act," Bremen Papers on Economics & Innovation 2008, University of Bremen, Faculty of Business Studies and Economics.
    8. Maximilian Goethner & Sebastian Luettig & Tobias Regner, 2021. "Crowdinvesting in entrepreneurial projects: disentangling patterns of investor behavior," Small Business Economics, Springer, vol. 57(2), pages 905-926, August.
    9. Lukkarinen, Anna & Schwienbacher, Armin, 2023. "Secondary market listings in equity crowdfunding: The missing link?," Research Policy, Elsevier, vol. 52(1).
    10. Niculaescu, Corina-Elena & Sangiorgi, Ivan & Bell, Adrian R., 2023. "Venture capital financing in the eSports industry," Research in International Business and Finance, Elsevier, vol. 65(C).

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