Equity crowdfunding platforms let individual investors provide seed money to startups and small businesses.Equity crowdfunding is a financing method that allows investors to buy stock in young, private businesses, via online platforms.
While equity crowdfunding offerings are open to any investor, how much you can invest depends on your net worth and annual income.Used to be only the wealthy could invest in startups and early-stage companies. But not anymore. Equity crowdfunding is a method of raising capital for a business venture through the internet, where in exchange of backing the company, investors receive a stake in the company proportionate to their investment. First, online equity crowdfunding platforms aren't like their better-known crowdfunding cousins, such as Kickstarter and IndieGoGo, in which sizable numbers of people give money to interesting projects in return for a free product, gift or another reward .
Instead, equity crowdfunding platforms are all about, well, equity. In exchange for relatively small amounts of money, investors become shareholders of companies raising funds via the platform. Their invested money buys them stock in the new or growing enterprise. Since the companies are private, these aren't publicly traded shares, but they are an ownership stake, nevertheless.
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