Study: Investors want experiences, not only returns
Helsinki 2 Nov 2017 – A survey by online investment platform Invesdor finds that investors investing in unlisted companies via crowdfunding and online investment services expect to gain experiences, learning opportunities, thrills, and conformity with their values.
Online investment platform Invesdor conducted a survey to its registered users in the autumn of 2017. The survey was taken by more than 800 investors based in Finland.
The survey respondents had most actively invested in shares of publicly listed companies and in mutual funds. 75% of the respondents had invested in listed shares in the past year, while 60% had invested in mutual funds. Their investment plans for the upcoming year were similar to their behaviour this year. Men preferred to invest directly in listed shares, whereas women opted more often for mutual funds.
The third most popular investment category among respondents were shares of unlisted companies in which 56% of respondents had invested in the past year. In total 61% had tried out online investment platforms and 24% were interested in trying them out.
Consumption trends reflected in investment
The top reported motivations for investing in unlisted companies were returns, values, and experiences.
Many investors want to be part of a phenomenon, to help out a business idea that corresponds to their values, or to support specific entrepreneurs or their home country. Excitement is also a strong motive: the investors acknowledge the high risks of unlisted shares but are also enticed by the possibility of large returns.
Respondents were also excited about the stage of growth of unlisted companies: when you get in early it becomes possible to influence the company’s growth and learn about its operating sector. Direct communications with company management were also reported as a benefit.
“The respondents of our survey are quite experience investors who know what they are doing, are ready to commit to a long-term investment, and understand the dynamic between risks and returns. Experience and value driven consumption have been trending for a long time; now investments in unlisted companies and online investment platforms are bringing the same to investments,” comments Invesdor CEO Lasse Mäkelä.
The survey was conducted via email in August–September 2017. The survey received responses from 892 investors in Invesdor’s customer register. The survey was conducted by Mailand Communications Oy for Invesdor.
Parallels between crowd investors and angel investors
Licentiate (Econ) Anna Lukkarinen is conducting research on equity crowdfunding at the Aalto University School of Business in Helsinki. She concurs with the results of Invesdor’s survey.
“Individuals who have invested through equity crowdfunding have typically also experience in investing in the stock markets and mutual funds. They are usually highly educated and, on average, over 40 years of age. Notwithstanding this solid background, the motives of most crowdfunding investors extend beyond the desire to achieve returns,” Anna Lukkarinen says.
“They want to be part of the phenomenon that the company represents and to support the entrepreneur. In this sense, a parallel could be drawn with business angels who are, without doubt, motivated by financial returns, but also by a desire to help companies grow and to share their knowhow with entrepreneurs,” Lukkarinen continues.
Mikko Savolainen, communications manager, Invesdor Ltd.
Lasse Mäkelä, CEO, Invesdor Ltd.
Invesdor in brief
A financial technology (fintech) company founded in Finland in 2012, Invesdor operates an online investment platform that connects ambitious European growth companies with investors worldwide. Invesdor has helped raise more than 38 million euros for more than a hundred businesses. Invesdor's clients include private and publicly traded companies from Finland, the UK, Sweden, Norway and Denmark as well as investors from more than 70 countries. Invesdor has offices in London and Helsinki. Invesdor is the Nordic market leader in equity crowdfunding platforms measured in invested capital in 2015 and 2016.