Which of the following represents a risk associated with crowdfunding?

Legal and advisory costs represent a risk associated with crowdfunding because these expenses can accumulate as startups seek to ensure compliance with regulations and legal requirements. When engaging in crowdfunding, businesses often need to navigate complex legal frameworks, including securities laws, which can result in the necessity of hiring legal professionals for guidance. Additionally, crowdfunding platforms might impose their own regulations, further necessitating legal support.

These costs can strain the limited financial resources of a startup, particularly if the crowdfunding campaign does not yield the expected funding. Therefore, the potential for significant legal and advisory expenses is a salient risk that entrepreneurs must consider when deciding to utilize crowdfunding as a means of raising capital.