Crowdinvestor Investment Decision-Making: A study of the motivation, investment process and criteria

Balthasar Scheder & Casper Kærgaard Arbøll

Student thesis: Master thesis


Crowdinvesting is a new source of entrepreneurial finance allowing the broad public to investmoney into start-ups in exchange for an equity stake in the venture. As a consequencecrowdinvesting is said to democratize start-up financing. While crowdinvesting as a financingvehicle for early-stage ventures is gaining momentum little remains known about thecrowdinvestor who, if not classified as accredited investor, was previously excluded frominvesting in unlisted companies. This study is an initial attempt to investigate crowdinvestors’motives and investment decision-making criteria inspired by previous research on businessangels. For this purpose a total of twenty interviews were conducted with crowdinvestorsfrom three different platforms: Seedmatch, FundedByMe and Seedrs. All interviews wereconducted, transcribed and analysed in March and April 2014.In the first part of this thesis the concept of crowdinvesting is placed in its broader thematiccontext of crowdsourcing and crowdfunding. Subsequently, relevant background knowledgeon the crowdinvesting process and ecosystem are presented, before moving into thetheoretical background on business angel investment decision-making process and criteriaas well as motivational aspects. Hereafter, research findings are presented in the analysischapter followed by a discussion of possible implications of our results.Our results suggest that crowdinvestors in some characteristics resemble business angels.This is not only true in terms of motivational considerations, but also in crowdinvestors’decision-making criteria. However, we perceive structural differences, i.e. size, stage andcontext of the investment, as too significant to misconceive crowdinvestors as businessangels. Overall, our findings suggest that crowdinvestors are well informed about the riskinvolved when investing in early-stage ventures. We imply crowdinvestors makeconscientious investment choices.

EducationsMSocSc in Organisational Innovation and Entrepreneurship , (Graduate Programme) Final Thesis
Publication date2014
Number of pages130