Conquering the Information Asymmetry

How do you solve the information asymmetry problem in crowdfunding?

By having lead investors who then syndicate their investment with the crowdfunding public.

Lead investors typically have the background, experience and reputation for picking good investments and are technically able to perform the necessary and possible due diligence (since many of them are located in Silicon Valley).

Investors get to rely on this work and entrepreneurs are able to deal with sophisticated investors who understand the marketplace. A win for all involved.
https://www.pehub.com/2016/04/the-vc-investment-slowdown-an-important-test-for-equity-crowdfunding/

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in accredited investor, balance, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, fraud, Funding Portals, Investments, Jobs, Legislative Intent, review, SEC, Small Business, technology, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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