Renaissance of Investors' Control in 21st Century: Crowdfunding

18 Pages Posted: 28 Feb 2017

See all articles by Alexandra Andhov

Alexandra Andhov

University of Copenhagen - Faculty of Law; University of Copenhagen - Centre for Private Governance (CEPRI)

Date Written: January 27, 2017


Berle and Means in their seminal text The Modern Corporation and Private Property (1932) introduced a thesis on the separation of ownership and control in modern corporations. One of the arguments of Berle and Means was that the rise of large corporations in the United States left an enormous concentration of economic power in a relatively small number of organizations. Eighty-five years later, we witness a different direction of development. Globalization, capital dispersion and technological progress have generated greater competition by allowing formation of new entities in almost every other second. These mavericks happen to operate in technological industry, supported usually by venture capital firms. Besides venture capital, there has been a boom of new medium for financing: crowdfunding. Crowdfunding is a mass financial collaboration through large number of people using social media and internet. There are number of internet platforms, which allow crowdfunding. Some focus only on low-budget projects, but some enable investments of thousands of dollars. One may say that crowdfunding supports the dispersion of ownership and therefore diffusion of investors’ control, depending on how many investors have decided to contribute. Yet, looking at the crowdfunding from another perspective, crowdfunding is only successful if sufficient threshold is reached. The crowdfunders have to bring an idea that among thousands catches the necessary attention of many. The project initiators have to present an appealing case, why it is “them” who the investor should fund and support. Exploring the crowdfunding platforms and the launched projects, one realizes that the projects that plead for support sustainability and claim to be often socially and environmentally responsible. They are usually novel and inspiring. Thus, investing in crowdfunding projects is based on more than just an interest in profit making. There is additional layer of significance of the idea. Managers as well as lawyers should be able to understand the additional character behind crowdfunding, not only from the perspective of attaining investors’ interest but also from the perspective of deal and investment structuring. The main claim of this article is that crowdfunding enables direct control over the newly established projects, and possibly over the new direction of corporate culture. It is without any doubt that crowdfunding per se encompasses number of challenges. Yet, if used wisely, crowdfunding may bring substantial difference into the corporate culture, where people will place social and societal progress before their demand for profit.

Keywords: Crowdfunding, Investor Control, Profit, Value

Suggested Citation

Andhov, Alexandra, Renaissance of Investors' Control in 21st Century: Crowdfunding (January 27, 2017). Available at SSRN: or

Alexandra Andhov (Contact Author)

University of Copenhagen - Faculty of Law ( email )

Studiestraede 6
Studiestrade 6
Copenhagen, DK-1455

University of Copenhagen - Centre for Private Governance (CEPRI) ( email )

Karen Blixens Vej 16
Copenhagen, 2300

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