Fundraising for Start-ups—A Research Focusing on Equity Crowdfunding

• Main Authors: Yi-An Chen, 陳怡安
• Other Authors: Wen-Yeu Wang
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/kugjjz

碩士 === 國立臺灣大學 === 法律學研究所 === 106 === Start-ups are one of the impetus for economic innovation and economic growth. The most difficult part for a start-up is fundraising. To encourage innovation and start-ups, governments around the world have been trying to come up with relevant policies and regulations. After the 2008 global financial crisis, the availability of bank lending was greatly reduced due to stricter credit regulations and collateral requirements. Venture Capital or Angel investment are more careful with their investments and higher-volume early-stage equity is limited. Crowdfunding has hence become an emerging fundraising trend. This thesis focuses on equity crowdfunding, which is very similar to issuance of securities for that they are both ways to raising money from the general public. What is different is that money contributes to crowdfunding is often small amount and comes from diverse sources. With a view to expanding financing ways for start-ups, that start-ups are deficient in human resources and financial resources has to be taken into consideration. Complete application of Securities Law would incur considerable legal compliance costs and consequently impose too huge a burden for start-ups. Yet the anonymity of the vast Internet network should be heeded as fraudulent cases may happen as a result. Therefore, fundraising efficiency and investment protection are equally important issues. The government of Taiwan has come up with GISA and invited securities firms to run equity crowdfunding platforms. However, the outcome is not as good as predicted. This thesis compares the law in Taiwan with the regulations in the U.S. and the U.K., particularly the JOBS Act and concludes with the following suggestions: first, the captital market of GISA and crowdfunding platforms run by securities firm should be differenciated. Secondly, to epitomize equity crowdfunding mechanism in Taiwan, “syndicates” should be formed. Moreover, equity crowdfunding is listed as exempted securities for administrative efficiency consideration; however, this listing is against the nature of exempted securities, which is of low risk. Worsestill, present regulations governing equity crowdfunding in Taiwan fails to point out the result of mispresentation and fraud, which is ill to investor proctection. Thus, this thesis suggests that equity crowdfunding be listed as exempted trade instead of exempted securities. To clarify the extent to which the securities law shall be applied to equity crowdfunding, a specific chapter for equity crowdfunding better be drafted.