How do investors invest in crowd-investing? A qualitative study in Mexico

Enrique Wiencke (), Pilar Madrazo-Lemarroy () and Luz Estela Reyna ()
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Enrique Wiencke: Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786
Pilar Madrazo-Lemarroy: Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786
Luz Estela Reyna: Universidad Anáhuac México, Facultad de Economía y Negocios, Universidad Anáhuac 46, Col. Lomas Anáhuac, Huixquilucan, Estado de México, C.P. 52786

International Entrepreneurship Review, 2019, vol. 5, issue 4, 77-91

Abstract: Objective: The purpose of this paper is to understand for the first time how inexperienced investors invest in high-risk new ventures in Mexico through a crowd-investing platform. Research Design & Methods: The study follows a qualitative approach based on case studies. We developed our case study design from theoretical propositions which also guided the case study analysis. The in-depth interviews with investors revolved around investors’ motives for investing and the way they evaluated investment opportunities in new ventures. Findings: The study shows that novice investors in Mexico invest in crowd-investing not because of financial motivations but because they want to learn how to finance private companies and to live an exciting experience. In addition, their investment decisions are based on intuition to recognize the right people for the project and on their business experiences to assess the growth potential of the new venture. Contribution & Value Added: To date, there is limited research on investors’ behaviour in crowd-investing markets. This research presents academics and practitioners with valuable insights into factors that influence the decision-making process of crowd-investing investors.

Keywords: investment decisions; crowd-investing; equity crowdfunding; investor behaviour; business angels; fintech; Mexico (search for similar items in EconPapers)
JEL-codes: G21 G24 G32 K22 L26 M13 (search for similar items in EconPapers)
Date: 2019
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