Financial Contracting with the Crowd

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.