Definition
Raising capital from numerous small investors through online platforms, democratizing access to startup investment and the opportunity to lose money on early-stage companies. Kickstarter, but instead of getting a T-shirt, you get illiquid securities.
Example Usage
They raised $1M through equity crowdfunding on Republic, attracting 500 investors who each put in an average of $2,000.
Origin
Enabled by the JOBS Act of 2012, which loosened restrictions on soliciting investment from non-accredited investors
Fun Fact
Despite enthusiasm about democratizing startup investment, most equity crowdfunding campaigns fail to reach their targets, and successful exits remain extremely rare.
Source: Alternative financing and securities regulation terminology
Related Terms
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See “equity crowdfunding” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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