Financing efficiency of securities-based crowdfunding

David C. Brown, Shaun William Davies

Research output: Contribution to journalArticlepeer-review

8 Scopus citations


We analyze early-venture fundraising from dispersed, endogenously informed investors. An entrepreneur chooses a payoff-maximizing offering, and investors communicate their information by either contributing capital or abstaining. The entrepreneur uses the information conveyed by fundraising amounts to decide whether or not to undertake a risky venture. His decision threshold hedges investors against bad projects, creating a “loser’s blessing” that encourages contributing without information. Making the offering less attractive to investors mitigates the loser’s blessing but can give rise to a winner’s curse. Both tensions reduce financing efficiency.

Original languageEnglish (US)
Pages (from-to)3975-4023
Number of pages49
JournalReview of Financial Studies
Issue number9
StatePublished - Sep 1 2020

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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