Green paper dolls surrounding a pile of cash
From affordability to market validation, equity crowdfunding offers benefits that aren't limited to just funding. — Getty Images

You need to raise capital for your business, but you’re not yet ready or able to pitch big investors. Have you considered taking it to “the crowd”? Two regulations from the Jobs Act implemented in 2015 and 2016 opened the doors for equity crowdfunding, which enables businesses to get smaller investments from a broader audience of people.

The general public can now invest in privately held companies, which was a right previously reserved for accredited investors. In exchange for their investment in your business, equity crowdfunders get a stake in your company. This differs from general crowdfunding, like Kickstarter, for example, which provides funders with the opportunity to pre-purchase product or to receive other perks. With equity crowdfunding, investors get securities, which can be stock, debt, revenue shares or a convertible note, and hope for a financial return on that investment.

[Read: Everything You Need to Know About Crowdfunding]

Gaining an impressive number of crowdsourced investors helps demonstrate that the market approves of your concept or product.

Benefits to equity crowdfunding

Numerous equity crowdfunding platforms now exist to create the bridge between companies and potential investors — and the benefits go beyond finances.

Here are eight benefits to consider:

Access to investors

The average person, age 18 or older, can now make an equity investment in a company. While there are restrictions on the amount they can invest based on their income and net worth, the access to investment opportunities is far broader than before. This means you can promote your business to the crowd and get a lot of small investments that can add up to a large amount of capital.


The process is streamlined by using a platform that supports the equity crowdfunding process, such as Wefunder, StartEngine or Fundable. Many don’t charge a setup fee and take a small percentage of funds raised.


Leveraging a crowdfunding platform to reach a broad audience frees you up to focus on building your business rather than trying to figure out how to find big investors, get an introduction and present your pitch.


With equity crowdfunding, you’re in control of the company valuation and setting the share prices. What’s more, because you’ll have many smaller investors, there’ll be no large group of investors that holds majority power to sway decisions. This may give you peace of mind that you remain in control of your company.

Market research

Your investors are the early adopters of your vision and your product. They may provide you with valuable feedback on your messaging and your offering. This can help you make adjustments to improve your odds of success.

Marketing and media

Your crowdfunding campaign is a marketing campaign. If you make the most of social media and digital channels to spread the word, you may also raise awareness of your brand and extend your reach beyond your investors. And, if your campaign is successful in raising funds, that may be newsworthy and get you press coverage.

Brand advocates

Your investors can be ambassadors for your business. With crowdsourcing, you can build a large team of investors, which means you’ll have many people out there talking up your business.

Market validation

Gaining an impressive number of crowdsourced investors helps demonstrate that the market approves of your concept or product. This can validate your pitch when it’s time to seek angel investors.

[Read: Business Investors: A Guide to Knowing When and How to Find One]

If you decide to raise capital through equity crowdsourcing, it’s wise to understand the legalities. There are a few fundraising exemptions to choose from and you’ll need to know how your choice impacts the amount of funds you can raise, the forms you fill out and other requirements you must adhere to.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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