![handle is hein.journals/depbcl16 and id is 1 raw text is:
Over- And Under-Funding: Crowdfunding Concerns of
the Parties Involved
By: Tanya M. Marcum, J.D. & Eden S. Blair, Ph.D. *
I. INTRODUCTION
Financial collaboration for new business ventures or the expansion of
existing businesses utilizing the internet and social media is expanding.
One area of growth is in the area of crowdfunding. Crowdfunding or
crowdsourcing is known as collaborative funding using the internet to
attract many investors to a new business venture.1 As of February 12,
2017, [o]n average 416 new projects each day'2 and 456,875 projects
are currently tracked.
Crowdfunding platforms can be a great way for entrepreneurs to fund
new ventures or projects. Funding for the project can be obtained
utilizing crowdfunding platforms when traditional funding choices may
not be available to the artist, entrepreneur, or small business owner.4
Although there are many types of crowdfunding, this research will focus
on crowdfunding utilizing a platform where rewards or thank you gifts
are provided to those who invest in a campaign utilizing one of several
popular platforms for such campaigns, sometimes known as patronage
plus ex ante crowding5 or rewards-based crowdfunding.6 Entrepreneurs
pitch their products on a fundraising platform looking for financial
support.7 Support is given when the like-minded contributor provides
* Tanya M. Marcum is an Associate Professor of Business Law and Eden S. Blair is an Associate
Professor of Entrepreneurship, both at the Foster College of Business at Bradley University in
Peoria, Illinois. They would like to thank Andrea Nemcova for her research assistance.
'Chance Barnett, Top 10 Crowdfunding Sites for Fundraising, FORBES (May 8, 2013)
http://www.forbes.com/sites/chancebarnett/2013/05/08/top- 10-crowdfunding-sites-for-
fundraising/#de9562alcfbd.
2 Project Stats and Analytics, THE CROWD DATA CENTER, thecrowdfundingcenter.com (last visited
Feb. 12, 2017).
31d.
' Edan Burkett, A Crowdfunding Exemption? Online Investment Crowdfunding and U.S. Securities
Regulation, 15 TRANSACTIONS: Tenn. J. Bus. L. 63, 64 (2011) (discussing securities regulation as
it may or may not apply to patronage crowdfunding).
5 Tim Kappel, Ex Ante Crowdfunding and the Recording Industry: A Model for the U.S. ?, 29 LoY.
L.A. ENE. L. REv. 375, 376 (2009).
6 See Uriel S. Carni, Protecting the Crowd Through Escrow: Three Ways That the SEC Can Protect
Crowdfunding Investors, 19 FORDHAM J. CORP. & FiN. L. 681, 686 (2014) (defining the reward
model of crowdfunding).
7 Teachers are using an online platform called Funding4Learning to fund education based
classroom projects. See, Eric Savitz, Crowdfunding: Potential Legal Disaster Waiting to Happen,
FORBES, (Oct. 22, 2012), www.forbes.com/sites/ericsavitz/2012/10/22/crowdfunding-potential-
legal-disaster-waiting-to-happen/ (last visited Feb. 8, 2017).](ViewImageLocal?handle=hein.journals/depbcl16&div=1&collection=&method=preview&ext=.png&size=3)
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