Equity crowdfunding refers to raising money from small public investors (who collectively form the “crowd”) primarily through online forums and social media. In exchange for relatively small amounts of cash, investors get a proportionate slice of equity in a business venture. In the past, business owners raised such funds by borrowing from friends and family, applying for a bank loan, appealing to angel investors, or by going to a private equity or venture capital firm.
Equity crowdfunding is rapidly gaining in popularity. According to the research firm massolution®, equity crowdfunding platforms raised $1.1 billion for business owners in 2014, a 182% increase form the previous year (see annual publication “2015 CF – Crowdfunding Industry Report“). But as with any mode of investment, investing through equity crowdfunding has risks and rewards. Would-be investors should first do their research. (For more, see “What Crowdfunding Means To Investors.”) Read More