What Is Equity Crowdfunding?

Equity crowdfunding has begun to shake the world of finance. And you’re probably wondering exactly what it is, and if it can make a difference.

Equity crowdfunding is a new method for getting money to finance small businesses. In exchange for an investment, you get a share in the business. Crowdfunding allows both accredited investors and non-accredited investors to become involved in the early stages of startups and growth companies.

Let’s start with the basics. The Jumpstart Our Business Startups Act (JOBS Act) Title II is a 2012 securities regulation that provides the opportunity to access investment capital from the general public. the JOBS Act was signed into law by the President of the United States. This law specifically allows companies to publicly advertise opportunities for investment.

what is equity crowdfunding

Why the JOBS Act may be the greatest thing to happen to small business financing, entrepreneurs, and investors. The idea behind the JOBS Act was for small companies, who likely would not pursue a public listing or seek an investment bank’s investment capital, have the chance to do so. It’s the democratization of investment. In the past, only large firms had this opportunity. Now any business can raise capital online and provides a great way for startups to get funding without giving up equity or giving away equity ownership in their company.

Equity crowdfunding represents the next wave of innovation in financing, as it provides entrepreneurial businesses with access to a wide range of potential investors (strangers, family, banks, etc.)

Equity crowdfunding allows business owners to seek capital from strangers (unaccredited investors), family and friends, or banks, to help finance their business ventures.  Crowdfunding is a relatively new method of raising capital; however, it has the potential to dramatically increase funding for small businesses.

Equity crowdfunding is an innovative approach to the way businesses can finance their projects. Rather than hire outside lenders, crowdfunded businesses operate more informally across various networks of individuals. This process has offered a large number of small business owners access to thousands of potential investors.

It allows startups to grow more rapidly and access more capital by bypassing traditional banks.

Equity Crowdfunding is a way to raise capital that bypasses banks or VC’s by connecting startups and entrepreneurs directly with private investors–for example, you. This new method allows startups to grow more rapidly and access more capital while allowing them to maintain ownership of their companies. Through equity crowdfunding, anyone (i.e., individual investors or small groups) can invest in startups or small businesses, or take a stake in the company and become an owner.

The world of investing is changing. Equity crowdfunding through investment platforms is the future for startup companies and small businesses. In equity crowdfunding, you unlock the power of crowd investing and allow startups to raise capital directly from us, the people. This democratized form of financing allows small businesses to grow more rapidly and access more capital by bypassing traditional banks, VC’s, and angel investors.

Types of crowdfunding, Reg A, Reg D, Reg CF – The three main types of crowdfunding from the SEC. Learn more about how each works and what you need to know to get started.

Regulation A, (Reg A) fundraising is a provision in The JOBS act. Reg A gives companies the ability to offer and sell up to $75M of ownership interest in their businesses. Reg A is the only option that allows issuers to raise capital from both accredited and non-accredited investors.

Rule 506 of Regulation D (Reg D) offerings are not allowed to be traded publicly but instead, they can only be privately offered to accredited investors. Accredited investors are individuals that have an annual income of at least $200,000 per year or $300,000 per year with their spouse. Companies relying on the Rule 506 exemptions can raise an unlimited amount of money. The company cannot use general solicitation or advertising to market the securities.

Regulation CF allows companies to offer and sell up to $1.07 million of their securities without having to register the offering with the SEC.

Setting up your Crowdfunding campaign

Setting up a crowdfunding campaign is not easy. Navigating the process can be confusing at first. However, there are plenty of resources available on how to set up a successful crowdfunding campaign. They can take you through all the steps you should consider when setting up a successful campaign. You should research everything from how to determine your potential backer pool to how to make your pitch. Most importantly how to choose the right platform to get noticed.

How to accept credit cards from investors for your Equity Crowdfunding campaign

For most companies, accepting payments online is a pretty straightforward process. But when it comes to Equity Crowdfunding, you’re selling an investment so there is the risk of the investor losing money. If the investor pays with a credit card they can dispute the charge. That’s why many of the payment processors out there don’t work for Equity Crowdfunding. As an example, both Squares and Stripe will not support crowdfunding merchants

Crowdfunding payment processing can be complicated, sometimes the biggest challenge many entrepreneurs face. FintechMerchantAccounts provides the solution. Our influence in the payments industry and our established relationship with bank partners allows us to secure solutions for you to take credit cards from investors in addition to the traditional forms of payment like ACH and e-checks. Allow us to help make your experience easier and stress-free.


In recent years, crowdfunding payments have grown immensely. With the rise of online fundraising comes increased importance on the ability to accept both major credit cards and alternative methods of payment that improve conversion rates.

FintechMerchantAccounts are experts in credit cards, e-check, check by phone, and ACH transfers for crowdfunding payments.

We help startups accept investors payments to complement their fundraising campaigns as well as assistance in integrating your payment gateway. The goal is to meet every startup’s payment requirement successfully. Your business depends on accepting investor funds to succeed and grow, so we’ll do whatever it takes to make sure you get the payment processing services you need. Contact us today to integrate our solution with your offering.

Further Resources

Crowdfunding Payment Gateway

Regulation A Vs. Regulation D Investors

5 Ways to Raise Capital for your Company