The Legal Regulation of U.S. Crowdfunding: An Organically Evolving Patchwork

Heminway, Joan MacLeod

doi:10.1007/978-3-030-79264-0_10

Cited by 5 publications

(1 citation statement)

References 8 publications

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“…However, the development of quasi-foundations-especially those that could take the form of digital crowdfunding platforms-is hampered by regulatory obstacles. The lending/giving products that quasi-foundations could offer do not fall into any category set by the prevailing tax and accounting rules, which are based on the deemed nature of the funder's financial interest (Heminway, 2015(Heminway, , 2017. Giving, lending, or investing transactions are governed by distinct operating provisions aiming to protect funding interests from various threats, primarily financial risk.…”

Section: The Centrality Of Quasi-foundationsmentioning

confidence: 99%

Feasible Institutions of Social Finance: A Taxonomy

Cornée¹,

Jegers²,

Szafarz³

2022

JITE

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This paper unpacks the continuum of social finance institutions (SFIs), ranging from foundations offering pure grants to social banks supplying soft loans. The in-between category includes under-researched "quasi-foundations" granting loans requiring partial repayment. We develop a model under which SFIs maximize their social contribution arising from financing successful social projects, under a budget constraint dictated by their funders. Our model determines the feasibility of each SFI category and reveals that quasifoundations are efficient and adapted to environments with low market rates. Finally, we show that value-based unconditional reciprocity from SFI borrowers can elicit a so-called "hold-up" effect, whereby the SFI maximizing its social contribution charges a high interest rate to its loyal clients.

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Section: The Centrality Of Quasi-foundationsmentioning

confidence: 99%

Feasible Institutions of Social Finance: A Taxonomy

Cornée¹,

Jegers²,

Szafarz³

2022

JITE

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La régulation juridique du crowdfunding

Kleiner

2020

Ius Comparatum - Global Studies in Comparative Law

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Governance and Success in U.S. Equity Crowdfunding

2021

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We propose three governance mechanisms pertinent to equity crowdfunding and campaign success through mitigating pronounced information asymmetries and agency problems. First, unlike IPOs for which the effect of Delaware incorporation has declined or disappeared over time, we propose Delaware incorporation matters a great deal for success in the new setting of equity crowdfunding. Second, we propose that security design is a critical tool for equity crowdfunding success and even more important than the limited 2-year financial statement disclosure. Third, we propose that platforms as intermediaries between entrepreneurs and investors play an important role in mitigating and sometimes exacerbating information asymmetries and agency problems. The population of equity crowdfunding campaigns from market inception in May 2016 to Q2, 2021 in the United States provides strong support for these propositions.

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The Legal Regulation of U.S. Crowdfunding: An Organically Evolving Patchwork

Cited by 5 publications

References 8 publications

Feasible Institutions of Social Finance: A Taxonomy

Feasible Institutions of Social Finance: A Taxonomy

La régulation juridique du crowdfunding

Governance and Success in U.S. Equity Crowdfunding

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