Crowdfunding

Seth C. Oranburg

doi:10.1017/9781316597736.012

11 - Crowdfunding

from The Third Era

Published online by Cambridge University Press: 24 March 2022

Seth C. Oranburg

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Seth C. Oranburg: Affiliation:
Duquesne University, Pittsburgh

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Summary

The last Chapter explores crowdfunding, a method of raising money from a large number of people via the internet. Crowdfunding is a new financial tool that allows ordinary investors to get in on the ground floor of startup investing. Crowdfunding solves several problems that are common in financial markets by capitalizing on the wisdom of the crowd by sharing information freely and leveraging online reputation. Equity crowdfunding is now a legitimate means to raise capital under the JOBS Act. However, this Chapter discusses how excessive regulations, such as the income threshold requirement, the inability to resell illiquid securities, and unrealistically low funding limits, hamper the most promising features of equity crowdfunding. Therefore, regulators must proactively design legislation that harnesses the benefits while mitigating costs, and further promote the attractiveness of open, public, and non-secretive markets.

Keywords

crowdfunding equity crowdfunding crowdsourcing JOBS Act Regulation CF (Reg CF)Rule 144

Type: Chapter
Information: A History of Financial Technology and Regulation
From American Incorporation to Cryptocurrency and Crowdfunding
, pp. 153 - 173

DOI: https://doi.org/10.1017/9781316597736.012 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2022

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11 - Crowdfunding

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