After a report appeared that many projects financed through crowd-funding site Kickstarter failed to meet their completion deadlines, an article in Bloomberg Businessweek noted: “The company says on its website that it doesn’t vet or track whether projects fulfill their promises, though it encourages people to be skeptical.” Crowd-funding sites typically take a percentage of the funds firms raise but do not make equity investments in the firms.

a. How do crowd-funding sites differ from venture capital firms?

b. Do crowd-funding sites reduce the transactions costs faced by small investors looking to make equity investments in startups?
Do crowd-funding sites reduce asymmetric information problems faced by small investors? Briefly explain.