A contribution from muenchen.ihk.de
At the University of Trier and the Ludwig Maximilian University of Munich, Junior Professor Lars Hornuf and Professor Lars Klöhn, along with a team of researchers, are researching the German crowdinvesting landscape. The project is funded by the German Research Foundation (DFG) and examines the regulation of crowdinvesting and its associated effects on the capital market and crowdfunded startups in Germany, England, and the USA. The research team is collecting and analyzing data from nearly all German crowdinvesting platforms. We asked one of the two leaders of the DFG project, Junior Professor Lars Hornuf, and his research associate Matthias Schmitt, about their work and what the DFG project's findings could mean for German startups.
At the University of Trier and the Ludwig Maximilian University of Munich, Junior Professor Lars Hornuf and Professor Lars Klöhn, along with a team of researchers, are researching the German crowdinvesting landscape. The project is funded by the German Research Foundation (DFG) and examines the regulation of crowdinvesting and its associated effects on the capital market and crowdfunded startups in Germany, England, and the USA. The research team is collecting and analyzing data from nearly all German crowdinvesting platforms. We asked one of the two leaders of the DFG project, Junior Professor Lars Hornuf, and his research associate Matthias Schmitt, about their work and what the DFG project's findings could mean for German startups.
What is the aim of the research project on crowdinvesting and what are the expectations of the results?
This research project examines, from a legal and economic perspective, whether crowdinvesting should be regulated in Germany, England, and the USA, and if so, how a specific law should be designed. We primarily use methods of comparative law as well as empirical and behavioral economics.
Where does the data for the studies come from?
The data was collected manually in the early stages of the research project, and some of it is still collected today. However, the major portals are interested in reliable empirical findings and are increasingly collaborating with us.
The DFG project currently runs until October 31, 2017. Are there any initial findings that can be seen from the last few months of research?
We recently examined the changes to the Small Investor Protection Act and concluded that legislators need to regulate this area more consistently. For example, it is not clear why certain investments, such as profit-participating loans, which are commonly used in Germany, are now exempt from the prospectus requirement up to an issue volume of EUR 2.5 million, while for other investments, such as silent partnerships, the threshold remains at EUR 100,000.
In two current projects, we are also analyzing the behavior of crowd investors. This shows that investors react to updates on crowd investing portals, content comments from other investors, or even large investments from other crowd investors with their own investment decisions. Co-investments with professional investors such as business angels and venture capitalists can therefore certainly boost a campaign. It is also interesting to note that investors invest excessively in local startups (also known as local bias), which runs counter to balanced portfolio diversification. Whether this strategy ultimately pays off for investors, for example because they have specific local knowledge about the startups, is something Matthias Schmitt investigates in his dissertation, among other things.
How do you think German companies can benefit from the results of the study?
First of all, as researchers, it is not our goal to promote individual startups or conduct research for them. We must admit this quite openly. The goal of this research project is to uncover inefficiencies in the crowdfunding market and identify potential behavioral anomalies among investors, as well as to describe a legislative framework that reflects the actual prevailing situation. However, this is not to say that our research is worthless for founders. The knowledge...
Read the full article at 'muenchen.ihk.de'
The Chamber of Industry and Commerce for Munich and Upper Bavaria is supporting the 3rd Crowdinvesting Symposium at LMU Munich as a sponsoring partner. You can find more information about the event and how to register here. here.
