Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet. Crowdfunding has been used to fund a wide range of of for profit, and entrepreneurial Ventures such as artistic and creative projects, medical expenses, travel and community oriented social entrepreneurship project. The crowd fund campaign lasts for a predetermined period of time during which the company must raise enough funds to meet its funding goals.

Equity crowdfunding is the process whereby people (i.e. the ‘crowd’) invest in an early-stage unlisted company (a company that is not listed on a stock market) in exchange for shares in that company. A shareholder has partial ownership of a company and stands to profit should the company do well. The opposite is also true, so if the company fails investors can lose some, or all, of their investment.

Previously only wealthy individuals, venture capitalists, and business angels could invest in startups. Equity crowdfunding platforms have helped democratise the investment process by opening the door to a larger pool of potential investors dubbed “the crowd”.
It’s essential to determine your appetite for risk beforehand, or consider other forms of investing if you feel equity crowdfunding isn’t the right one for you.

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