Investor Behavior in Equity Crowdfunding

Abstract

Using a hand collected dataset, 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 5,000 and larger from the first 59 campaigns account for 50.6% of the raised capital whilst 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 amongst 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.

Keywords: Crowdinvesting, Investment-Based Crowdfunding, Equity Crowdfunding, Equity-Based Crowdfunding, Venture Finance, Entrepreneurial Finance, Crowdfunding

JEL Classification: G02, G23