Externally funded project
Innovation and Entrepreneurship Research

Crowdinvesting in Germany, England and the USA: Regulatory Perspectives and Welfare Implications of a New Financing Scheme

The project is funded by the DFG (Deutsche Forschungsgemeinschaft).

Crowdfund investing is the internet based collection of financial contributions to fund startup companies. Crowdfund investing dissolves a bottleneck in corporate finance. The companies, which are financed via crowdfund investing, are too risky for banks, too small for private equity or venture capital funds, and have capital needs, which exceed the available resources of family and friends. Without crowdfund investing, such companies would rely on government funding or would receive no funding at all. Crowdfund investing thus holds an enormous potential for innovative ideas and economic growth.

The research project aims to evaluate the question whether and how crowdfund investing should be regulated on the national or EU level. In a first step, the size and the structure of crowdfund investing markets in Germany, England and the United States are recorded and existing public or private regulations in these three jurisdictions identified. In a second step, we analyze how economic and legal circumstances affect the parties involved. More precisely, we will evaluate whether crowdfund investing allows for an efficient allocation of financial resources between investors and startup companies. This relates to the question whether crowdfund investing exhibits a market failure, which requires specific legal interventions. Finally, we investigate whether crowdfund investing portals compete over private rules and standards and whether competition leads to a race to the top or a race to the bottom. To find out about these questions, we apply the methods of empirical finance as well as a comparative legal analysis. The data collected during the research project will also serve to evaluate any regulatory changes on the national or EU level in the years ahead.

Since April 2016, Lars Hornuf is Affiliated Research Fellow at the Max Planck Institute for Innovation and Competition within the scope of the Project.


Project Manager

Prof. Dr. Lars Klöhn (Humboldt-Universität zu Berlin),
Jun. Prof. Dr. Lars Hornuf (MPI and Universität Bremen)


Dr. Matthias Schmitt,
Tobias Schilling (Humboldt-Universität zu Berlin)

Fields of Research