The crowdinvestor: What drives investors’ decision-­making to participate in crowdinvesting?

Tim Ebert & Simone Schöndorfer

Student thesis: Master thesis


The phenomenon of crowdinvesting, a term used in Western Europe to describe equity-based crowdfunding for start-ups, is still quite a recent development and the status of the crowdinvesting industry can be described as immature and fragmented. However, it is rapidly growing and it provides start-ups with a new way to close a fundamental funding gap that often occurs in the seed phase. While the motivation for start-ups to participate in crowdinvesting initiatives seems quite obvious for practitioners and scholars, the primary reasons being money and attention, the motives for the investors appear to be more complex and manifold. The review of relevant literature as well as the expert interviews we conducted with researchers, crowdinvestors and platform providers lead to the conclusion that there is a general lack of systematic comprehension of the crucial factors attracting investors to crowdinvesting. Hence, this thesis aims to identify important drivers that influence the decision of investors to participate in crowdinvesting. Based on the assumption that parallels to traditional forms of investment can be drawn, traditional investor decision literature is chosen as a point of departure for this investigation. Furthermore, input from existing crowdfunding and crowdinvesting literature as well as expert interviews are used to develop a conceptual model aiming at explaining the decision-making criteria of crowdinvestors. The factors developed in the model are investigated with an online survey among retail investors and crowdinvestors, including 133 participants. A binary logistic regression is applied to analyse each factor’s influence on the crowdinvestors’ decision-making process. The results indicate that factors such as the social relevance of crowdinvesting, an early adopter profile of the investor and the possibility to use crowdinvesting for portfolio diversification show strong positive correlations on the investor to participate in this new type of investment opportunity. Furthermore, the reluctance to trust online platforms, the network effect of crowdinvesting and neutral information in the form of financial and general press coverage on crowdinvesting influence the decision in a negative way. These results provide an interesting starting point for further investigation about the motivation that drives crowdinvesting from an investor’s standpoint. Key words: decision-making, investors in crowdinvesting, crowdfunding, start-ups

EducationsMSc in Strategy, Organization and Leadership, (Graduate Programme) Final Thesis
Publication date2014
Number of pages146