08 Dec What is Equity Crowdfunding?
Equity Crowdfunding is a new way to connect investors and start-up companies, made possible by the Federal JOBS Act of 2016.
Under Equity Crowdfunding, investors pool money into a specific start-up in exchange for equity shares. This type of investment allows start-ups to reach vast networks of individual investors, beyond the traditional circle of venture capital firms and “accredited investors, “ i.e., individuals and institutions with a large base of investible assets.
For this reason, many describe Equity Crowdfunding as “leveling the playing field” between large and small investors. The opportunity for anyone to invest directly in start-up companies gives investors a range of choice and opportunity that they never had before the JOBS Act. Venture Capital is an important asset class that is now available to all.
In practice, Equity Crowdfunding investors can leverage social networks and create a popular base of support for start-ups that have a distinctive mission and an innovative product or service offering that bigger companies cannot often match. Warren Buffet famously said “invest in what you know,” so the ability to be both a customer and an investor is a powerful motivator for many.
The platforms that support Equity Crowdfunding play a critical role for investors by vetting start-ups and providing investment due diligence. When you see a start-up on a leading Equity Crowdfunding platform such as SeedInvest, you can be confident that the company’s financial statements, management team, and operations have been validated and that the company is worthy of your consideration.
SeedInvest only selects 1% of start-ups that apply to be on its platform, so the team at PureWine is very proud to be selected and excited to offer customers and friends of the firm a new way to participate in our growth.