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How do investors invest in crowd-investing? A qualitative study in Mexico

Author

Listed:
  • Enrique Wiencke

    (Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786)

  • Pilar Madrazo-Lemarroy

    (Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786)

  • Luz Estela Reyna

    (Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786)

Abstract

Objective: The purpose of this paper is to understand for the first time how inexperienced investors invest in high-risk new ventures in Mexico through a crowd-investing platform. Research Design & Methods: The study follows a qualitative approach based on case studies. We developed our case study design from theoretical propositions which also guided the case study analysis. The in-depth interviews with investors revolved around investors’ motives for investing and the way they evaluated investment opportunities in new ventures. Findings: The study shows that novice investors in Mexico invest in crowd-investing not because of financial motivations but because they want to learn how to finance private companies and to live an exciting experience. In addition, their investment decisions are based on intuition to recognize the right people for the project and on their business experiences to assess the growth potential of the new venture. Contribution & Value Added: To date, there is limited research on investors’ behaviour in crowd-investing markets. This research presents academics and practitioners with valuable insights into factors that influence the decision-making process of crowd-investing investors.

Suggested Citation

  • Enrique Wiencke & Pilar Madrazo-Lemarroy & Luz Estela Reyna, 2019. "How do investors invest in crowd-investing? A qualitative study in Mexico," International Entrepreneurship Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(4), pages 77-91.
    • Handle: RePEc:krk:ientre:v:5:y:2019:i:4:p:77-91
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    More about this item

    Keywords

    investment decisions; crowd-investing; equity crowdfunding; investor behaviour; business angels; fintech; Mexico;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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