Equity crowdfunding transforms entrepreneurial finance with powerful network effects.
Equity crowdfunding is a new way for people to invest in startups. The way these crowdfunding websites are set up helps investors make better decisions by sharing information and building connections. By studying real data from a big crowdfunding platform, researchers found that investors' information has a big impact on whether a startup gets funded. Hard facts from investors are more important than from entrepreneurs, but it's the personal connections and shared knowledge that really make a difference in getting funding.