Equity crowdfunding lets startups sell actual ownership — not products or perks — to the general public through registered online platforms. It is the regulated descendant of Kickstarter-style campaigns, created in the US by the 2012 JOBS Act.
The regulatory lanes
- Regulation Crowdfunding (Reg CF) — up to $5M per 12 months from anyone, including non-accredited investors, through platforms like Wefunder, StartEngine, and Republic. Requires reviewed or audited financials depending on raise size.
- Regulation A+ — up to $75M per year with an SEC-qualified offering circular; closer to a mini-IPO in cost and effort.
- Regulation D 506(c) — unlimited amounts but accredited investors only; often used alongside a Reg CF community round.
What it actually costs
Platforms typically charge around 5%–7% of the raise plus a slice of securities, and preparing financials and disclosures runs from a few thousand dollars to six figures for Reg A+. The less visible cost is cap-table complexity — which platforms solve by pooling crowd investors into a single special purpose vehicle or using instruments like a Crowd SAFE, so the startup's cap table shows one line instead of four thousand.
When it works
Equity crowdfunding performs best for companies whose customers *are* their believers: consumer brands, fintechs with passionate users, community-driven products. A successful raise doubles as a marketing event, and thousands of investor-customers become evangelists. It works poorly for deep-tech or enterprise startups whose buyers have no emotional connection to the product.
What VCs think
Attitudes have softened. A disciplined community round no longer poisons a future priced round, but a *failed* public campaign is visible forever, and messy early rounds (direct entries, missing signatures, non-standard instruments) still create diligence friction. If you expect to raise institutionally later, run the crowd round with the same paperwork hygiene as a VC round.