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Equity crowdfunding is a form of crowdfunding. It’s a method through which an early stage business can raise money by selling shares to people (the “crowd”). The shares are equal to a small stake in the company – and so if it grows in value, the shareholders (crowd) will make a profit in their investment.
It’s a popular method for startups to raise money.
It is similar in structure, but there are a few key differences to keep in mind:
Whilst at one point, equity crowdfunding was reserved only for seasoned investors, today the field is more open.
It generally takes place on an online equity investment platform. And you’ll likely have to prove that you have adequate investment experience, that you’re aware of the risks and, vitally, that you have the means to be involved!
As with all investments, you need to be aware of the risks. Equity crowdfunding comes with its own specific set:
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