Crowdfunders appraisal: economic and behavioural profiles

The research analyses crowdfunding decisions, in lending as well as in the equity-based funding, accounting for the existing trade–off with investments in more or less traditional asset classes. The behavioural features of the decision process are investigated through a survey focused on a selected group of potential funders, namely the university students in economics and management degree courses. The aim of the research is twofold. On one side, the analysis of the main determinants of agents’ segmentation in a framework similar to that one of the behavioural analysis allows to identify ex-ante sources of irrationality in potentially investors’ choices. On the other side, and under a different light, the data collected have been used to identify the schedule of crowdfunding supply, as a function of risk-adjusted-performance indicators. Specifically, the research compares risk-revenue trade-off among crowdfunding investments and more standard asset-classes, using data to identify potential behavioural biases with respect to the standard selection in portfolio-choice models. The control variables collected in the survey have been used also to describe approximately some of the determinants of crowdfunding investments’ choice. The research allows to draw four policy recommendations. First of all, as regards the impact of crowdfunding on the stability of the financial system, noise traders might raise the cost of arbitrage. Secondly, the role of professional investors might reveal of the utmost importance to foster crowdfunding implementation, as funders are sensitive to the presence of “big players” in crowdfunding processes. Thirdly, as crowdfunding exhibits the same level of risk of a start-up, the analysis suggests that crowdfunding might work as an initial platform to launch projects that at a subsequent stage go to IPO. Fourthly, financial services industry, especially investment advisors, should adjust portfolio advices making them gender-specific, as gender seems to have a significant influence on crowd funders behaviour.