Protecting investors in equity crowdfunding: An empirical analysis of the small investor protection act

During the past decade, equity crowdfunding (ECF) has emerged as an alternative funding channel for startup firms. In Germany, Small Investor Protection Act became binding in July 2015, with legislative goal to protect investors engaging this new asset class. Since then, pledging more than 1,000 EUR now must self-report their income and wealth. Investing 10,000 a single ECF issuer is only possible through corporate entity. We examine how affected investor behavior at Companisto, Germany's largest portal The results show that after law binding, sophisticated invest less on average while casual more. Moreover, signaling capacity of large investments disappeared.