Raise your next round on StartEngine. Apply Now
Raise your next round on StartEngine. Apply
Get iOS App Sign Up
May 1, 2024 | 3 Min Read

What is Equity Crowdfunding? Exploring the Benefits

What is Equity Crowdfunding? Exploring the Benefits

Equity crowdfunding has emerged as a transformative force in the world of finance, offering entrepreneurs and investors alike a new avenue to connect and collaborate. In this blog post, we will delve into the intricacies of equity crowdfunding, its benefits, and the regulatory landscape that governs this rapidly evolving landscape.

Understanding Equity Crowdfunding

Equity crowdfunding is a method of raising capital where startups and small businesses offer equity, or ownership stakes, in their companies to a large number of investors through online platforms. This model allows entrepreneurs to tap into a wider pool of potential investors, while providing individuals with the opportunity to invest in private companies that were previously inaccessible to the general public.

The Rise of Equity Crowdfunding

The growth of equity crowdfunding has been nothing short of remarkable. According to a report by Pitchbook, the global equity crowdfunding market reached a valuation of $1.1 billion in 2021.  This popularity can be attributed to the increasing accessibility of online platforms, as well as regulatory changes that have made it easier for startups and small businesses to raise capital through this method.

Regulatory Landscape

Equity crowdfunding is subject to a robust regulatory framework, primarily governed by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The Jumpstart Our Business Startups (JOBS) Act, enacted in 2012, paved the way for the legalization and regulation of equity crowdfunding in the United States. This legislation has been instrumental in providing a clear set of guidelines and requirements for companies and investors to navigate the equity crowdfunding landscape.

Benefits of Equity Crowdfunding

  1. Democratization of Investing: Equity crowdfunding democratizes the investment landscape by providing access to a wider pool of investors, including non-accredited individuals, who were previously excluded from investing in private companies.
  2. Diversification Opportunities: Equity crowdfunding allows investors to diversify their portfolios by investing in a range of startups and small businesses, potentially reducing their overall risk exposure.
  3. Funding for Entrepreneurs: For entrepreneurs and small businesses, equity crowdfunding offers an alternative to traditional financing methods, such as bank loans or venture capital, providing them with access to the necessary capital to grow and scale their operations.
  4. Community Engagement: Equity crowdfunding platforms often foster a sense of community, where investors can engage with the companies they invest in, providing valuable feedback and support.
  5. Regulatory Oversight: The regulatory framework governing equity crowdfunding, including the SEC and FINRA, ensures a level of transparency and investor protection, promoting a more secure and trustworthy investment environment.

The Private Securities Marketplace

The private securities marketplace has experienced significant growth in recent years, driven in part by the rise of equity crowdfunding.  This growth highlights the increasing appetite for alternative investment opportunities beyond traditional public markets.

In conclusion, equity crowdfunding has emerged as a powerful tool for entrepreneurs and investors alike, offering a democratized and regulated avenue for capital raising and investment. As the regulatory landscape continues to evolve and the private securities marketplace expands, we think the potential of equity crowdfunding to transform the financial landscape is undeniable.


Pitchbook. (2022). Global Equity Crowdfunding Market Report.

U.S. Securities and Exchange Commission. (2012). Jumpstart Our Business Startups (JOBS) Act.

Securities Industry and Financial Markets Association (SIFMA). (2022). Private Securities Transactions Report.

Want to stay up to date with the latest posts from StartEngine? Sign up here:

You May Also Like

Important Message


www.StartEngine.com is a website owned and operated by StartEngine Crowdfunding, Inc. (“StartEngine”), which is neither a registered broker-dealer, investment advisor nor funding portal.

Unless indicated otherwise with respect to a particular issuer, all securities-related activity is conducted by regulated affiliates of StartEngine: StartEngine Capital LLC, a funding portal registered here with the US Securities and Exchange Commission (SEC) and here as a member of the Financial Industry Regulatory Authority (FINRA), or StartEngine Primary LLC (“SE Primary”), a broker-dealer registered with the SEC and FINRA / SPIC. You can review the background of our broker-dealer and our investment professionals on FINRA’s BrokerCheck here. StartEngine Secondary is an alternative trading system (ATS) regulated by the SEC and operated by SE Primary. SE Primary is a member of SIPC and explanatory brochures are available upon request by contacting SIPC at (202) 371-8300.

StartEngine facilitates three types of primary offerings:

1) Regulation A offerings (JOBS Act Title IV; known as Regulation A+), which are offered to non-accredited and accredited investors alike. These offerings are made through StartEngine Primary, LLC (unless otherwise indicated). 2) Regulation D offerings (Rule 506(c)), which are offered only to accredited investors. These offerings are made through StartEngine Primary, LLC. 3) Regulation Crowdfunding offerings (JOBS Act Title III), which are offered to non-accredited and accredited investors alike. These offerings are made through StartEngine Capital, LLC. Some of these offerings are open to the general public, however there are important differences and risks.

Any securities offered on this website have not been recommended or approved by any federal or state securities commission or regulatory authority. StartEngine and its affiliates do not provide any investment advice or recommendation and do not provide any legal or tax advice concerning any securities. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. StartEngine does not verify the adequacy, accuracy, or completeness of any information. Neither StartEngine nor any of its officers, directors, agents, and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, or completeness of any information on this site or the use of information on this site.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks, and you should complete your own independent due diligence regarding the investment. This includes obtaining additional information about the company, opinions, financial projections, and legal or other investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment. See additional general disclosures here.

By accessing this site and any pages on this site, you agree to be bound by our Terms of Use and Privacy Policy, as may be amended from time to time without notice or liability.

Canadian Investors

Investment opportunities posted and accessible through the site will not be offered to Canadian resident investors. Potential investors are strongly advised to consult their legal, tax and financial advisors before investing. The securities offered on this site are not offered in jurisdictions where public solicitation for offerings is not permitted; it is solely your responsibility to comply with the laws and regulations of your country of residence.

California Investors Only – Do Not Sell My Personal Information (800-317-2200). StartEngine does not sell personal information. For all customer inquiries, please write to contact@startengine.com.

StartEngine Marketplace

StartEngine Marketplace (“SE Marketplace”) is a website operated by StartEngine Primary, LLC (“SE Primary”), a broker-dealer that is registered with the SEC and a member of FINRA and the SIPC.

StartEngine Secondary (“SE Secondary”) is our investor trading platform. SE Secondary is an SEC-registered Alternative Trading System ("ATS") operated by SE Primary that matches orders for buyers and sellers of securities. It allows investors to trade shares purchased through Regulation A+, Regulation Crowdfunding, or Regulation D for companies who have engaged StartEngine Secure LLC as their transfer agent. The term “Rapid,” when used in relation to transactions on SE Marketplace, specifically refers to transactions that are facilitated on SE Secondary, This is because, unlike with trades on the StartEngine Bulletin Board (“SE BB”), trades on SE Secondary are executed the moment that they are matched.

StartEngine Bulletin Board ("SE BB") is a bulletin board platform on which users can indicate to each other their interest to buy or sell shares of private companies that previously executed Reg CF or Reg A offerings not necessarily through SE Primary. As a bulletin board platform, SE BB provides a venue for investors to access information about such private company offerings and connect with potential sellers. All investment opportunities on SE BB are based on indicated interest from sellers and will need to be confirmed. Even if parties express mutual interest to enter into a trade on SE BB, a trade will not immediately result because execution is subject to additional contingencies, including among others, effecting of the transfer of the shares from the potential seller to the potential buyer by the issuer and/or transfer agent. SE BB is distinct and separate from SE Secondary. SE Secondary facilitates the trading of securities by matching orders between buyers and sellers and facilitating executions of trades on the platform. By contrast, under SE BB, SE Primary assists with the facilitation of a potential resulting trade off platform including, by among other things, approaching the issuer and other necessary parties in relation to the potential transaction. The term “Extended”, when used in relation to transactions on SE Marketplace denotes that these transactions are conducted via SE BB, and that these transactions may involve longer processing times compared to SE Secondary for the above-stated reasons.

Even if a security is qualified to be displayed on SE Marketplace, there is no guarantee an active trading market for the securities will ever develop, or if developed, be maintained. You should assume that you may not be able to liquidate your investment for some time or be able to pledge these shares as collateral.

The availability of company information does not indicate that the company has endorsed, supports, or otherwise participates with StartEngine. It also does not constitute an endorsement, solicitation or recommendation by StartEngine. StartEngine does not (1) make any recommendations or otherwise advise on the merits or advisability of a particular investment or transaction, (2) assist in the determination of the fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Invest in StartEngine

190% YoY Growth: Invest in the leading equity crowdfunding platform.

This Reg A+ offering is made available through StartEngine Crowdfunding, Inc. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. For more information about this offering, please view StartEngine’s offering circular and risks associated with this offering.


Kevin O’Leary is a paid spokesperson for StartEngine. Read the 17(b) disclosure here.

Founder's Summit Application