The Complete Guide to Equity Crowdfunding
How everyday people invest in private companies, how founders raise from their community, and what the SEC rules actually require. Everything in one place.
Short answer
Equity crowdfunding lets many people invest small amounts in a private company in exchange for shares, through an SEC-registered online platform. In the U.S., most raises use Regulation Crowdfunding (Reg CF), which lets a company raise up to $5 million a year from anyone, accredited or not. This guide covers how it works for both founders and investors.
What equity crowdfunding is
Equity crowdfunding lets a private company sell shares to the public through a registered online platform, so investors own a piece of the company rather than getting a product or a donation. For the full definition, see what is equity crowdfunding, and browse terms in the glossary.
The state of equity crowdfunding
Equity crowdfunding is now an established part of private markets, and capital is concentrating into fewer, larger, more competitive raises.
$378.3M
Raised through Reg CF in 2025, up about 11% year over year.
$924.8M
Combined Reg CF and Reg A+ funding in 2025, up about 58%.
~1,006
Reg CF offerings launched in 2025, a more selective field.
Source: KingsCrowd 2025 Investment Crowdfunding Annual Report.
How it works
1
A company files and lists
It files with the SEC and lists an offering on a registered funding portal or broker-dealer.
2
Investors review
They read the raise page, the company’s Form C disclosures, and the terms.
3
Funds are held in escrow
Investors commit money, which is held until the raise closes.
4
The raise closes
If it meets its target, funds are released and investors receive their securities.
The regulations, in one minute
Most online raises use one of three SEC exemptions: Reg CF (up to $5M/year from anyone), Reg A+ (up to $75M/year, the “mini-IPO”), and Reg D (unlimited, mainly accredited). For a full side-by-side, see Reg CF vs Reg A vs Reg D.
For founders and for investors
For founders
Equity crowdfunding suits a company with a community, customers, or an audience to activate. You raise capital and turn supporters into owners.
For investors
You can become an early-stage investor in companies you believe in, at a stage that used to be closed to the public.
Founders can dig into how to prepare for a raise; investors can start with how to evaluate a startup investment and the risks.
Benefits and risks
For founders
Upside
Community activation, marketing momentum, and capital without debt.
Trade-off
Dilution and ongoing disclosure obligations.
For investors
Upside
Access to early-stage companies before they’re household names.
Trade-off
Illiquidity and a real risk of losing your entire investment.
Explore the full guide
Explainer
What Is Equity Crowdfunding?
Comparison
Reg CF vs Reg A vs Reg D
Explainer
Types of Offerings & Securities
Explainer
What Is a Form C?
Regulatory
The 12(g) Rule & Your Transfer Agent
Regulatory
Reg CF SPVs & Crowdfunding Vehicles
Explainer
How to Prepare for a Reg CF Campaign
Explainer
The Risks of Equity Crowdfunding
Explainer
How to Evaluate a Startup Investment
Explainer
Is Equity Crowdfunding Right for You?
Frequently asked questions
Is equity crowdfunding legal?
Yes. It has been legal for everyday U.S. investors since Reg CF took effect in May 2016, under Title III of the 2012 JOBS Act.
How much can a company raise?
Up to $5 million in a 12-month period under Reg CF. Reg A+ allows up to $75 million; Reg D is unlimited but mainly accredited.
How much can I invest?
Non-accredited investors have SEC limits based on income and net worth. Accredited investors have no Reg CF limit.
Is it a good investment?
It’s high risk and speculative. Most startups fail, so diversify and invest only what you can afford to lose.
How is it different from Kickstarter?
Kickstarter is rewards crowdfunding; you get a product. Equity crowdfunding gives you shares and real ownership.
Do investors get a say in the company?
It depends on the security and its terms. Some come with voting rights; many crowd instruments do not.
Key takeaways
Equity crowdfunding means buying shares in a private company online.
It grew in 2025 even as capital concentrated into fewer, larger raises.
The mechanics are file, review, escrow, close.
Most U.S. raises use Reg CF (up to $5M/year).
There are clear paths for both founders and investors.
Keep reading
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- ✓The Complete Guide to Equity Crowdfundingthis article
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- 3Types of Offerings and Securities in Crowdfunding
- 4What Is a Form C?
- 5Reg CF SPVs and Crowdfunding Vehicles: What the Rules Actually Allow
- 6SPV Setup for a Reg CF Raise: When It Makes Sense and How It Works
- 7How to Prepare for a Reg CF Campaign
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