Every third crowd-funded start-up fails

Germans have already invested more than 100 million euros in start-ups on crowdfunding platforms. But many are going bust.

By 2019, 306 start-ups had been invested in on crowdinvesting platforms. 89 of them went bust. This means that one in three start-ups that were crowdfunded failed. Markus Petry, Professor of Financial Services Controlling at the Wiesbaden Business School of the Rhein Main University of Applied Sciences, reports on this in a guest article for the Springer Fachmedien Verlag.

For ten years, crowdfunding and crowdinvesting platforms have made it possible for anyone to invest small amounts in start-ups. Two years ago, the 100 million euro mark in investments via the platforms was already broken. However, only two thirds of all crowd-funded start-ups are retained. "Investors can hardly assess the validity of the business model and the prospects of success of the financed start-up themselves and are dependent on the risk assessment of the platform operators," writes Petry in his article. "The high failure rates give rise to the suspicion that the platforms' selection procedures are not fully developed." 28 of the failed start-ups were already out of business in the first year after funding.