Law Commons^™

The Nonfinancial Returns Of Crowdfunding, Andrew A. Schwartz

Publications

Securities crowdfunding — the sale of unregistered securities to the public over the Internet — has come under attack before it has even begun. Legal scholars in particular have expressed concern that investors will lose any money they invest in crowdfunding companies. Even assuming that this may be true from a purely financial perspective, these critics are missing an important point: Crowdfund investors with negative returns will not simply have lost their money, but rather they will have spent it (at least in part) on nonpecuniary benefits, including entertainment, political expression and community building. These nonfinancial returns of crowdfunding are …

The Benefits Of Integrating Entrepreneurship Into Business Associations, Ann M. Scarlett

All Faculty Scholarship

Integrating entrepreneurship into Business Associations through an emphasis on start-up and small businesses is worth sacrificing some coverage of public corporations. Attorneys are much more likely to work with clients who are self-employed or own small businesses, and thus the legal principles covered in a Business Associations course have more relevance to students when focused on these likely clients. Students are also able to more easily understand the legal concepts presented when focused on start-up and small businesses. Incorporating entrepreneurship also has the advantage of introducing law students to the cross-curricular nature of this practice area and at a time …

The Digital Shareholder, Andrew A. Schwartz

Publications

Crowdfunding, a new Internet-based securities market, was recently authorized by federal and state law in order to create a vibrant, diverse, and inclusive system of entrepreneurial finance. But will people really send their money to strangers on the Internet in exchange for unregistered securities in speculative startups? Many are doubtful, but this Article looks to first principles and finds reason for optimism.

Well-established theory teaches that all forms of startup finance must confront and overcome three fundamental challenges: uncertainty, information asymmetry, and agency costs. This Article systematically examines this “trio of problems” and potential solutions in the context of crowdfunding. …