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Equity Crowdfunding: Principles and Investor Behaviour

In: Advances in Crowdfunding

Author

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  • Anna Lukkarinen

    (Aalto University)

Abstract

The chapter provides a topical summary of the present research knowledge of equity crowdfunding. It describes the typical equity crowdfunding process, investor characteristics, and investor motivations. Recognizing the limited due diligence efforts of the crowd despite the presence of high information asymmetries, the chapter presents the role of platforms in evaluating and preselecting target ventures. Furthermore, it highlights the importance of rapidly observable campaign features and signals of venture quality in investor decision making, while also emphasizing the relevance of experienced investors and the herding tendency of crowdinvestors. The chapter offers a comparison of equity crowdfunding investors with traditional providers of early-stage equity financing including micro funders, angel investors, and venture capital funds. It concludes with a discussion of the challenges and potential of equity crowdfunding.

Suggested Citation

  • Anna Lukkarinen, 2020. "Equity Crowdfunding: Principles and Investor Behaviour," Springer Books, in: Rotem Shneor & Liang Zhao & Bjørn-Tore Flåten (ed.), Advances in Crowdfunding, edition 1, chapter 5, pages 93-118, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-46309-0_5
    DOI: 10.1007/978-3-030-46309-0_5
    as

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