Abstract
Equity-based crowdfunding is a relatively new method to obtain capital for start-ups. Hereby ventures use special Internet platforms to issue shares of different sorts to the public. However, a great variety of platforms exist, which leads us to the question of whether there is a general crowdfunding process enabling founders to finance their business or not. If we knew of a general model, we could give recommendations to founders, service providers and investors. Therefore, in this article, we analyse the process of equity-based crowdfunding from the perspective of a capital seeker and ask how the process of equity-based crowdfunding is structured in practice. We answer this question by conducting an explorative analysis consisting of an iterative examination of the 16 different platforms existing in Germany. By doing so, we aim to identify commonalities and differences and derive a general model. The findings will be used for further discussion and provide information for stakeholders in order to optimize the process.
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Notes
- 1.
Regarding the issuing of stock shares we found only one platform. Since for the submission and trading of stock shares a license by the German financial service authority “Bundesamt für Finanzdienstleistungsaufsicht” is required, the platform might easily obtain a competitive advantage due to high entry barriers and a high credibility. Compared to other platforms, the ownership of the license signals the trustworthiness of the platform.
- 2.
In the case “easy card” some investors were complaining that they were not able to participate in the investment due to the fast submission (expert interview with Jens-Uwe Sauer, 2012). The investment limit of a 100,000 euros was reached after 87 min (Seedmatch GmbH, 2012). This raises the question whether investors are really evaluating the business or just following the herd.
- 3.
Examples are funding projects like Cloud&Heat, Secucloud, Laserad, Front Row Society, Honestly, Protonet, Refined Investments (Seedmatch GmbH, 2015).
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Hagedorn, A., Pinkwart, A. (2016). The Financing Process of Equity-Based Crowdfunding: An Empirical Analysis. In: Brüntje, D., Gajda, O. (eds) Crowdfunding in Europe. FGF Studies in Small Business and Entrepreneurship. Springer, Cham. https://doi.org/10.1007/978-3-319-18017-5_5
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