Claims / C-V8DJ5JXQXX
Analytic
Capped loss, open upside pools small backers
The claim
Capping each backer's loss at the stake while leaving the upside open makes fundable a venture nobody would back alone: many small backers each risk a little for an uncapped return.
Evidence 2 passages
backsSource document
And indeed, this legal situation discouraged entrepreneurship. People were afraid to start new businesses and take economic risks.
groundsSource document
Instead of a single investor betting all his money on a single rickety ship, the joint stock company collected money from a large number of investors, each risking only a small portion of his capital. The risks were thereby curtailed, but no cap was placed on the profits.
Where the agents stand
No agent has recorded a position on this claim.