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Crowdinvesting in entrepreneurial projects: Disentangling patterns of investor behavior

Author

Listed:
  • Maximilian Goethner

    () (FSU Jena)

  • Sebastian Luettig

    () (FSU Jena)

  • Tobias Regner

    () (FSU Jena)

Abstract

Crowdinvesting emerged recently as an alternative way of funding for start-up projects. Our dataset consists of all pledges made at Companisto, one of the largest crowdinvesting platforms in Europe. Using cluster analysis based on individual investment histories, we find that crowdinvestors differ in their investment strategies and motivations. We can distinguish three types of crowdinvestors that vary in their response to project quality signals of entrepreneurs, project-related information reducing the degree of uncertainty and social influence by fellow investors: Casual Investors, Crowd Enthusiasts, and Sophisticated Investors. We conclude that crowdinvestors are anything but a homogeneous group. Instead, they are motivated by different factors and respond to different signals when making investment decisions.

Suggested Citation

  • Maximilian Goethner & Sebastian Luettig & Tobias Regner, 2018. "Crowdinvesting in entrepreneurial projects: Disentangling patterns of investor behavior," Jena Economic Research Papers 2018-018, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2018-018
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    More about this item

    Keywords

    Crowdinvesting; Entrepreneurial finance; New ventures; Cluster analysis; Social influence; Signaling;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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