The past can be a nostalgic place, although when it comes to financing startups, it can also be a place of missed opportunities – businesses that never got off the ground because they lacked the investment they desperately required.
Luckily, the present is much brighter for startups, with equity crowdfunding proving hugely beneficial to entrepreneurs looking to bring their visions to life.
We believe that equity crowdfunding is undoubtedly the future of financing – and this article explains why. Whether you are a founder exploring your first fundraise, an investor evaluating early-stage opportunities, or a startup advisor guiding clients through capital formation, this guide covers the fundamentals of equity crowdfunding, how it is regulated, and where the industry is headed.
What Is Equity Crowdfunding?
First, let’s return to the past. Years ago, the go-to methods of generating capital were to ask friends and family for money, or – for larger business ideas – to head to the bank for a loan, or seek an investment from an accredited angel investor.
If you could lure and hook an elusive angel, then the world was your oyster – you would have significant investment and expertise, albeit in exchange for an equally significant portion of your business.
These days, things are different. Equity crowdfunding now proves one of the best ways for startups to raise the capital they need to start their businesses, whether that’s a local plant-based milkshake bar or a cutting-edge fintech platform.
But What Exactly Is Equity Crowdfunding?
Equity crowdfunding is essentially an investment round with the public – allowing everyday people to invest smaller sums of money (as low as $100) in your business, via online platforms such as Wefunder, Republic, and StartEngine.
These small investments can lead to huge amounts of money for startups. For example, in 2017, the entertainment company Meow Wolf raised more than $1.3 million from 621 investors. This is just one of many success stories.
Unlike traditional fundraising, equity crowdfunding democratizes the investment process – opening the doors so that non-accredited investors (everyday people) can participate in private market deals alongside accredited investors. This shift has fundamentally changed the capital formation landscape and given startups a powerful new tool for growth.
Pro Tip: While equity crowdfunding platforms provide access to a large pool of investors, the most successful campaigns don’t rely solely on organic platform traffic. Companies that pair their listing with a data-driven investor acquisition strategy – including social media advertising, email campaigns, PR, and content marketing – consistently raise significantly more capital than those that simply list and wait.
Why Is Equity Crowdfunding So Popular?
Since the slow birth of equity crowdfunding in around 2009, this method of investing has now overtaken angel investing in terms of annual funding.
The Covid-19 pandemic accelerated the need for this kind of remote investment method, saving great time and effort on the part of the entrepreneur.
It is easy to see why equity crowdfunding has become so popular with both businesses and investors:
Volume of Investors
Equity crowdfunding pairs businesses with thousands of people who are actively looking to invest. Instead of having to manually search for investors, equity crowdfunding brings them to you. For example, on Wefunder alone, more than 1.4 million people have invested in companies on the platform.
Raise Significant Capital
Until recently, the funding ceiling for businesses raising money via equity crowdfunding was set at $1.07 million in a 12-month period. However, in 2021, the Securities and Exchange Commission (SEC) raised the limit to $5 million. This increase opens the doors to companies at different stages of their development. For companies looking to raise even more, Reg A+ allows raises up to $75 million, and Reg D 506(c) has no upper limit.
Generate New Customers
Businesses can enjoy the fact that, in addition to raising investment dollars, each investor also becomes a customer and ambassador for their products or services. If you can attract hundreds of investors, suddenly you have hundreds of new customers, all ready to share your story and product.
Stay in Control
Equity crowdfunding allows you to retain control over the terms of investment, including your objectives, your company valuation, and how much capital you wish to raise. Because of the nature of this style of investing (i.e., more investors making smaller contributions), you always retain the majority share.
Start with Less Effort
With equity crowdfunding, there is no need to meet and pitch to each investor. Entrepreneurs simply create a business plan, upload it to one of the aforementioned platforms, and passively watch the investments arrive.
Remote Funding
In the past, to raise significant capital, you would have had to have been based in a large city like New York. With equity crowdfunding, it doesn’t matter from where you run your business, you will be able to connect with investors.
Pro Tip: The “generate new customers” benefit is one of the most underestimated advantages of equity crowdfunding. Each investor becomes an emotionally and financially invested brand ambassador. Companies that build a strong brand identity before launching their campaign can convert investors into long-term customers at a much higher rate – turning a fundraise into a community-building exercise.
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Growth Turbine has helped 200+ equity crowdfunding campaigns raise over $490M in capital. Whether you’re launching your first Reg CF raise or scaling a multi-regulation strategy, our team builds custom investor acquisition campaigns that deliver results.
Schedule a Free ConsultationHow Is Equity Crowdfunding Regulated?
Equity crowdfunding is made possible with Regulation Crowdfunding (Regulation CF) of the Jumpstart Our Business Startup Act (JOBS Act), which came into effect in 2016.
This regulation meant that eligible companies were able to offer and sell securities through crowdfunding, and investors no longer had to be accredited. This means that anybody was able to become an angel investor and participate in private market deals, investing up to $2,200 per year.
In addition to Regulation CF, the SEC regulates the crowdfunding market in the United States with two other regulations – Regulation A (and A+) and Regulation D.
The differences between the three come down to factors such as how much companies can raise under each regulation; who the company can solicit their offering to; and who is eligible to invest in their offering, among other things.
For example, compared to the $5 million of Regulation CF, Regulation A allows companies to raise up to $75 million, while Regulation D has no upper limit.
While Regulation CF can entice anyone to invest, only accredited investors with $1+ million in net worth can invest in companies using Regulation D.
The list of differences goes on. In short, if you are a startup looking to raise up to $5 million, Regulation CF is your route to success. For a comprehensive breakdown of all four major regulations, see our in-depth guide on Reg CF vs Reg D vs Reg A+ vs Reg S.
Key Regulatory Comparison
| Feature | Reg CF | Reg A / A+ | Reg D |
|---|---|---|---|
| Max Raise | $5 million | $75 million | No limit |
| Investor Type | Anyone (accredited + non-accredited) | Anyone (accredited + non-accredited) | Accredited only ($1M+ net worth) |
| General Solicitation | Yes (via platform) | Yes | 506(c): Yes; 506(b): No |
| Best For | Early-stage startups | Growth-stage companies | Companies targeting accredited investors |
Pro Tip: Many successful companies don’t limit themselves to a single regulation. A stacked approach – running a Reg CF campaign to build community and momentum, then layering in a Reg D 506(c) offering for accredited investors – can dramatically increase total capital raised. Some companies also add a token sale for international reach. This multi-regulation strategy requires careful coordination, but the results speak for themselves.
The Future of Equity Crowdfunding and the Future of Financing
Equity crowdfunding is growing, and – if you have read this article – this should no longer be a surprise to you.
According to a report published by Crowdfund Capital Advisors, Regulation CF has meant that – since 2016 – a total of $500 million has been raised for 2,600 companies from 700,000 investors, and no fraud has been reported.
As with any form of investing, equity crowdfunding has its critics, with concerns over possible overinflated valuations of some companies, unrealistic forecasts, and the lack of investor protection on some platforms.
Yet, providing equity crowdfunding can reflect and evolve, and platforms mature as quickly as markets, it will remain one of the best routes for budding businesses for decades to come.
Emerging Trends Shaping Equity Crowdfunding
Several key trends are shaping the future of equity crowdfunding and expanding its reach:
- Sector expansion: Equity crowdfunding is now being adopted across a wide range of industries, from real estate and health tech to fintech, clean energy, and biotech.
- Tokenization and blockchain: The rise of Web3 and blockchain technology is opening new fundraising channels through tokenization and alternative trading systems (ATS).
- Real estate crowdfunding: The rise of real estate crowdfunding has created a massive new vertical, with specialized platforms now competing for market share.
- Platform competition: The growing number of platforms (55+) is driving innovation in tools, compliance, and investor experience. See our comprehensive platform comparison for the latest landscape.
- International reach: Regulations like Reg S now allow companies to access international investors, further expanding the total addressable market.
At Growth Turbine, we’ve been at the forefront of this evolution, helping over 200 companies navigate equity crowdfunding across Reg CF, Reg A+, Reg D, and token sales. Our case studies demonstrate how strategic investor acquisition marketing can transform a crowdfunding campaign from an experiment into a powerful capital formation engine.
Pro Tip: The key to success in equity crowdfunding isn’t just choosing the right platform or regulation – it’s building a comprehensive investor acquisition funnel. This means creating compelling brand positioning, developing targeted landing pages, running paid ads to qualified investor audiences, and nurturing leads through email sequences. The companies that treat their raise like a marketing campaign consistently outperform those that treat it as a passive listing exercise.
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Whether you’re raising under Reg CF, Reg A+, or Reg D, Growth Turbine builds custom investor acquisition strategies that drive results. With an 87% success rate across 200+ campaigns, we know what works.
Get Started TodayFrequently Asked Questions
What is equity crowdfunding?
Equity crowdfunding is a method of raising capital by allowing everyday people to invest smaller sums of money (as low as $100) in a business through online platforms such as Wefunder, Republic, and StartEngine. Unlike traditional fundraising, equity crowdfunding is open to both accredited and non-accredited investors, democratizing access to private market deals. It was made possible by the JOBS Act, which came into effect in 2016.
How much can a company raise through equity crowdfunding?
Under Regulation CF (Reg CF), companies can raise up to $5 million in a 12-month period (raised from $1.07 million by the SEC in 2021). For larger raises, Regulation A+ allows up to $75 million, and Regulation D has no upper limit but is restricted to accredited investors.
What is the difference between Reg CF, Reg A+, and Reg D?
The three regulations differ in maximum raise amount, eligible investors, and compliance requirements. Reg CF allows up to $5 million from anyone. Reg A+ allows up to $75 million from anyone. Reg D has no limit but is restricted to accredited investors ($1M+ net worth). For a detailed comparison, see our Reg CF vs Reg D vs Reg A+ vs Reg S guide.
Who can invest in equity crowdfunding campaigns?
Under Regulation CF, anyone can invest – you do not need to be an accredited investor. The JOBS Act specifically opened private market deals to non-accredited investors. Under Regulation D, only accredited investors (those with $1+ million in net worth or $200K+ annual income) can participate. Under Regulation A+, both accredited and non-accredited investors are eligible.
What are the best equity crowdfunding platforms?
Some of the best-known platforms include Wefunder (1.4M+ investors, $70.9M raised in 2020), Republic (90%+ funding success rate), and SeedInvest ($435,780 average raise per campaign). Other major platforms include StartEngine, Dalmore Group, DealMaker, and Issuance.com. For detailed comparisons, see our Wefunder vs Republic vs SeedInvest comparison and our 6-platform comparison guide.
How successful is equity crowdfunding as an investment method?
According to Crowdfund Capital Advisors, since Regulation CF came into effect in 2016, a total of $500 million has been raised for 2,600 companies from 700,000 investors, with no fraud reported. Equity crowdfunding has overtaken angel investing in terms of annual funding, and the market continues to grow rapidly.
What was the JOBS Act and how did it change crowdfunding?
The Jumpstart Our Business Startup Act (JOBS Act) introduced Regulation Crowdfunding (Reg CF), which came into effect in 2016. Before the JOBS Act, only accredited investors could participate in private market deals. The JOBS Act opened equity crowdfunding to everyone, allowing non-accredited investors to invest up to $2,200 per year in startups and small businesses through SEC-registered platforms.
Do I need a marketing strategy for my equity crowdfunding campaign?
Absolutely. The most successful equity crowdfunding campaigns generate the majority of their investments through external marketing – including social media advertising, email campaigns, PR, and content marketing – not from organic platform traffic alone. Working with a specialized investor acquisition agency that builds data-driven marketing strategies can significantly increase the amount of capital raised.
What industries are using equity crowdfunding?
Equity crowdfunding is now used across a wide range of industries, including fintech, real estate, health tech, clean energy, biotech, AI, food and beverage, cannabis, and blockchain/crypto. The model works for consumer brands, B2B startups, real estate funds, and technology companies alike.
Can I use multiple regulations to raise more capital?
Yes. Many companies use a stacked approach, combining a Reg CF campaign to build community and momentum with a Reg D 506(c) offering for accredited investors. Some also add a token sale for international reach or pursue Reg A+ for larger raises. This multi-regulation strategy can dramatically expand your total addressable investor pool.
