Abstract

The skill required to predict the feasibility of an entrepreneurial opportunity limits most individual because of significant information asymmetries in new ventures. We study the degree to which crowdfunding is an effective means to successfully fund new ventures by examining how the interaction between the crowd and the entrepreneur affects information asymmetries. The research also shows how technology impacts the equity investment through crowdfunding because it creates a greater level of information asymmetry for some potential investors in the crowd.

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