Equity Crowdfunding vs. “Crowdfunding”

Crowdfunding, as it is generally used, refers to a large number of people gifting small amounts of money to a cause, company, project or person they believe in. Also known as “Rewards-Based Crowdfunding”, this type is open to anyone, regardless of income and doesn’t give the “investor” any type of ownership, return or equity in their investment. Equity Crowdfunding is only open to accredited investors and although the investment amount is lower than for other types of investments, it is still significantly higher than the average American could afford. In return, the investor receives equity and, if all goes well, a return on their investment. Equity Crowdfunding, although approved by the JOBS Act, has not yet been implemented because of pending SEC regulations.