Analysis of the Crowdinvesting Market in Germany. Motives, Chances, and Risks from a Company's Perspective

Table of Contents

1. Introduction

1.1 Statement of the problem and research question

1.2 Goal and approach of this thesis

2. Theoretical framework

2.1 New institutional economics

2.1.1 Transaction cost economics

2.1.2 Principal-agent theory

2.1.3 Financial intermediation

2.2 Traditional financing

2.2.1 Basics

2.2.1.1 Mezzanine capital

2.2.1.2 Financing phases

2.2.2 Financing methods

2.2.2.1 Private equity and venture capital

2.2.2.2 Business angels

2.2.2.3 Debt capital

2.2.2.4 Bootstrapping and family, friends, and fools

2.2.2.5 Public funds

3. Introducing the crowd into the financing process

3.1 Crowdsourcing – The origin

3.1.1 Types of crowdsourcing

3.1.2 Motivations of contributors

3.2 Crowdfunding

3.2.1 Donation-based crowdfunding

3.2.2 Reward-based crowdfunding

3.2.3 Lending-based crowdfunding

3.2.4 Crowdinvesting

3.2.4.1 Definition and characteristics

3.2.4.2 Actors

3.2.4.2.1 Investors

3.2.4.2.2 Platforms

3.2.4.2.3 Agency problems in crowdinvesting

3.2.4.3 Process

3.2.4.4 Legal situation in Germany

4. Empirical analysis of the crowdinvesting market in Germany

4.1 Overview

4.1.1 Market development 2011-2016

4.1.2 Characteristics of the companies in 2016

4.1.3 Platforms

4.1.4 Financing instruments in practice

4.1.5 Status of crowdinvesting projects 2011-2016

4.2 Critical appraisal

4.2.1 Motives

4.2.2 Chances

4.2.3 Risks

5. Conclusion and discussion

5.1 Conclusion

5.2 Discussion

Research Objectives and Key Topics

This thesis examines the crowdinvesting market in Germany, specifically addressing the motives, chances, and risks that companies face when utilizing this financing method. By bridging theoretical frameworks with empirical data from the 2011–2016 period, it aims to provide a comprehensive understanding of why firms choose crowdinvesting and the implications of this decision for their growth and operational strategy.

• New Institutional Economics and traditional financing paradigms.
• Categorization and functionality of crowdsourcing, crowdfunding, and crowdinvesting.
• Empirical analysis of the German crowdinvesting market development and its specific segments.
• Agency theory applications to platform-based financing.
• The influence of legal regulations on small investor protection and company financing.

Excerpt from the Book

Summary of Chapters

1. Introduction: Outlines the challenges companies face in raising capital and defines the research question regarding the motives, chances, and risks of crowdinvesting.

2. Theoretical framework: Provides a foundation in new institutional economics and traditional financing methods to contextualize modern crowd-based models.

3. Introducing the crowd into the financing process: Explains the concepts of crowdsourcing, crowdfunding, and crowdinvesting, detailing actors, processes, and legal frameworks.

4. Empirical analysis of the crowdinvesting market in Germany: Evaluates market development, platform characteristics, and critically appraises the practical application of crowdinvesting for companies.

5. Conclusion and discussion: Summarizes the thesis findings and discusses the future outlook and limitations of crowdinvesting as a financing instrument.

Keywords

Crowdinvesting, Crowdfunding, Crowdsourcing, Germany, Financing, Start-ups, SME, Principal-Agent Theory, Transaction Costs, Equity, Debt Capital, Mezzanine Capital, Venture Capital, Market Analysis, Financial Regulation.

Frequently Asked Questions

What is the core focus of this research?

The work focuses on analyzing the crowdinvesting market in Germany from the specific perspective of capital-seeking companies, examining why they choose this route and what risks or benefits they encounter.

What are the primary themes discussed?

Key themes include institutional economics, the evolution of financing methods, the distinction between various crowdfunding types, and an empirical breakdown of the German market.

What is the central research question?

The study seeks to identify the specific motives, chances, and risks that companies experience when engaging in crowdinvesting.

What methodology is applied?

The thesis utilizes a literature-based theoretical framework followed by an empirical analysis of market data recorded by portals such as Crowdfunding.de and Crowdinvest.de between 2011 and 2016.

What does the main body cover?

It covers the definitions of institutional economic concepts, a comparison of traditional versus modern crowd-based financing, and a critical appraisal of empirical market performance.

Which keywords best characterize this work?

The work is defined by terms like crowdinvesting, financing, start-ups, German market, and institutional economics.

How does the legal environment affect crowdinvesting in Germany?

The German market saw significant changes with the "Kleinanlegerschutzgesetz" in 2015, which introduced stricter prospectus requirements and investment limits to protect small, private investors.

What are the main risks identified for companies?

Companies face planning uncertainty if financing targets are not met, potential damage to their reputation in the event of a failed campaign, and high administrative burdens post-financing.

What role do platforms play in this process?

Platforms act as financial intermediaries, providing the technical framework, performing screening and selection of projects, and managing communication between companies and investors.