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Open Access. Powered by Scholars. Published by Universities.®

2019

Equity

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University of Georgia School of Law

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Financial Contracting With The Crowd, Usha Rodrigues Jan 2019

Financial Contracting With The Crowd, Usha Rodrigues

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Equity crowdfunding is broken. The current model imposes too many burdens on entrepreneurs in exchange for too little money. For alternative models, this Article looks to the time-tested venture capital financial contract, and the recent experience of initial coin offerings (ICOs). ICOs made headlines over the past two years, as the means by which blockchain technology companies raised billions of dollars to launch new cryptocurrency ventures. Although their novelty as a monetary and investing device is well known, ICOs also presented significant, unappreciated insights into financial contracting.

ICOs furnished an unprecedented experiment into how bargains would look if entrepreneurs raised …