A recent study shows that companies founded via equity crowdfunding have 8.5% higher failure rates than companies which raise capital in more traditional ways.
Additional findings include that equity crowdfunded firms financed through a nominee structure make smaller losses while firms financed through a direct shareholder structure have more new patent applications, including foreign patent applications.
Authors argue that:
For policy makers and crowdfunding platforms, investor protection against adverse selection will be important to ensure the sustainability of equity crowdfunding markets.
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