Equity crowdfunding is a method of raising capital that allows individuals to invest in an early-stage company in exchange for shares or a small stake in that company. Unlike traditional crowdfunding where contributors might receive a product or thank you, investors in equity crowdfunding have the potential to earn a return on their investment if the company succeeds.
This approach democratizes the investment process, enabling not only traditional investors but also everyday people to invest in startups and growing companies. It’s regulated by securities authorities in many jurisdictions to protect investors and ensure compliance with relevant laws and regulations.
Equity crowdfunding is conducted via specialized online platforms, and it offers an opportunity for companies to reach a broader investor base, often without the need for traditional financial intermediaries like banks or venture capital firms.