Backer behaviours: an explorative study of investor types in equity crowdfunding

Equity crowdfunding (ECF) is a new source of early-stage finance where ordinary people are the investors. In this context, investors are called backers, and their behaviours are less well understood. The contribution of this paper is to explore differences between backer investment behaviours. This is important, as it further positions backers when it comes to behaviour of different investor types, but also enables a discussion of attitudes and management of uncertainty from a portfolio theory perspective. The data include 4,938 backer transactions collected from FundedByMe.com during 2012-2016. Most backers invest in single campaign portfolios (single-portfolio backers) and seem less attracted to uncertainty. However, 16% of the crowd invest in multiple campaign portfolios (multi-portfolio backers). They seem more attracted to uncertainty and most of them diversify to manage the portfolio uncertainty. Hence, a minority of the crowd seem to care about uncertainty and manage it in a professional manner.