Investor Motivations and Decision Criteria in Equity Crowdfunding

Success drivers of online equity crowdfunding campaigns

“…Equity crowdfunding investors are a very diverse group of individuals with varying levels of professional and educational backgrounds (Lukkarinen et al, 2017) and investor professionalism (Guenther et al, 2018). Thus far, the majority of equity crowdfunding investments have been made domestically and by individuals who have no professional affiliation with investing.…”

“…In addition to the existence of differing levels of information asymmetries and differing ways of mitigating them, different investors also have different motivations for investing and therefore different campaign and venture preferences (Lukkarinen et al, 2017). Indeed, fundamentally, investment activity in equity crowdfunding is driven by investors' underlying motivations.…”

“…A key topic expected to shape investment activity in equity crowdfunding is the performance of investments made via equity crowdfunding and the performance of equity crowdfunded ventures (Mochkabadi and Volkmann, 2018). Relevant performance measures are linked to investors' motivations (Lukkarinen et al, 2017) and can include financial returns (Signori and Vismara, 2016), follow-up funding rounds Signori and Vismara, 2018), and firm survival Signori and Vismara, 2018). Indeed, as time goes by and investing activity in equity crowdfunding becomes increasingly driven by recurring investments rather than by the experimentation of first-time investors, the drivers of investors' willingness to make further investments become important in shaping the field.…”

“…Smaller minimum investment requirements have been shown to be related to larger numbers of investors and more total capital raised, as they allow participation from investors who are not willing or able to dedicate larger sums, and as smaller minimum investments translate into smaller minimum risks of losing the investment (Hornuf and Schwienbacher, 2017;Lukkarinen et al, 2016). Indeed, a sufficiently small minimum investment was stated by investors to be one of the most important decision criteria in the survey of Lukkarinen et al (2017).…”

“…While most equity crowdfunding research has identified drivers of investment activity through campaign-level assessments, a few researchers have also turned to prospective investors to directly ask them about what they perceive to affect their intention or willingness to invest (Mochkabadi and Volkmann, 2018). Investment decision criteria that respondents have highlighted as important include the perceived informativeness of the campaign page and materials, clarity and uniqueness of the business idea and products, characteristics of the entrepreneur and the team, the explanation for the planned used of funds offered in the campaign, perceived openness and trustworthiness, and the presence of a credible lead investor (Bapna, 2017;Kang et al, 2016;Lukkarinen et al, 2017;Moritz et al 2015;Ordanini et al, 2011).…”