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.

As of 2019, 306 startups have been invested in on crowdinvesting platforms. Eighty-nine of them have gone bust. This means that every third start-up that was crowdfunded failed. This is reported by Markus Petry, professor of financial services controlling at the Wiesbaden Business School of the Rhine Main University of Applied Sciences, in a guest article for Springer Fachmedien Verlag

For ten years, crowdfunding and crowdinvesting platforms have made it possible for anyone to invest in start-ups with even small amounts. Already two years ago, the 100-million-euro mark in investments via the platforms was cracked. But only two-thirds of all crowd-funded startups stick around. "Investors can hardly assess the validity of the business model and the prospects of success of the funded start-up themselves and are dependent on the risk assessment of the platform operators," Petry writes in his article. "The high failure rates raise the suspicion that the platforms' selection processes are not mature." 28 of the failed startups were already down in the first year after funding.