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Crowdinvesting – Angel Investing for the Masses?

Handbook of Research on Venture Capital: Volume 3. Business Angels, Forthcoming

20 Pages Posted: 26 Feb 2014 Last revised: 2 Nov 2014

Lars Hornuf

University of Bremen - Faculty of Business Studies and Economics; Max Planck Institute for Innovation and Competition; CESifo (Center for Economic Studies and Ifo Institute)

Armin Schwienbacher

SKEMA Business School

Date Written: October 8, 2014

Abstract

This book chapter reviews crowdinvesting, which is sometimes referred to as equity crowdfunding. It specifically aims at answering the following question: Is crowdinvesting transforming the crowd into small business angels? In order to answer this question, we review the securities regulation in different jurisdictions and compare crowdinvesting practices in these countries with angel finance. Finally, we offer insights into different avenues for future research. One pertains to the question whether crowdinvesting will complement or substitute angel finance. While this issue cannot be answered unambiguously, we expect that in many cases, crowdinvesting may become a complementary source of funding to angel finance rather than a substitute. This is because crowdinvestors fill funding gaps at the lower end of the market or may at times co-invest with professional investors. In other cases, crowdinvestors may compete with business angels for the same investments since average funding volumes can be similar.

Keywords: crowdinvesting, equity crowdfunding, business angels, regulation

Suggested Citation

Hornuf, Lars and Schwienbacher, Armin, Crowdinvesting – Angel Investing for the Masses? (October 8, 2014). Handbook of Research on Venture Capital: Volume 3. Business Angels, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2401515

Lars Hornuf

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

University of Bremen - Faculty of Business Studies and Economics ( email )

Bremen, D-28359
Germany
+49 89 20348619 (Phone)

HOME PAGE: http://www.hornuf.com

Max Planck Institute for Innovation and Competition

Marstallplatz 1
Munich, 80539
Germany

Armin Schwienbacher (Contact Author)

SKEMA Business School ( email )

Lille
France

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