Protecting Investors in Equity Crowdfunding: An Empirical Analysis of the Small Investor Protection Act

Arbeitspapier

During the past decade, equity crowdfunding (ECF) has emerged as an alternative funding channel for startup firms. In Germany, the Small Investor Protection Act became binding in July 2015, with the legislative goal to protect investors engaging in this new asset class. Since then, investors pledging more than 1,000 EUR now must self-report their income and wealth. Investing more than 10,000 EUR in a single ECF issuer is only possible through a corporate entity. We examine how the Small Investor Protection Act has affected investor behavior at Companisto, Germany’s largest ECF portal for startup firms. The results show that after the new law became binding, sophisticated investors invest less on average while casual investors invest more. Moreover, the signaling capacity of large investments has disappeared.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 8351

Classification and Topics

• Classification: Wirtschaft ; Investment; Capital; Intangible Capital; Capacity ; General Financial Markets: Government Policy and Regulation ; Corporate Finance and Governance: Government Policy and Regulation ; Business and Securities Law ; Entrepreneurship
• Subject: equity crowdfunding ; crowdinvesting ; investor protection

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Goethner, Maximilian ; Hornuf, Lars ; Regner, Tobias
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/219169
• Last update: 10.03.2025, 11:41 AM CET