Fundraising
Equity Crowdfunding
Raising capital from many small investors online, enabled by SEC regulations like Regulation CF and Regulation A+.
Equity crowdfunding allows startups to raise capital from large numbers of non-accredited investors through online platforms, enabled by the JOBS Act. Regulation CF permits raises up to $5M from the general public, while Regulation A+ allows up to $75M with simplified SEC filings. Platforms like Republic, Wefunder, and StartEngine facilitate these raises. While democratizing access to startup investing, equity crowdfunding creates complex cap tables and limited investor value-add.
In Practice
A consumer brand raises $2M on Republic from 3,000 individual investors averaging $667 each. The raise provides capital and creates 3,000 brand ambassadors but adds significant cap table complexity.
Why It Matters
Equity crowdfunding has expanded access to startup investing but creates challenges for follow-on VC rounds due to messy cap tables. Companies must weigh the benefits of community investment against future fundraising friction.
Related Concepts
Further Reading
Angel Investing 101: How to Start Investing in Startups
A practical guide to entering the world of startup investing — from accredited investor requirements and minimum check sizes to finding deal flow and understanding the legal basics.
Bootstrapping vs Venture Capital: Which Path Is Right for Your Startup?
A comprehensive comparison of bootstrapping and venture capital funding paths for startups, covering the tradeoffs in control, speed, equity, and long-term outcomes.
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