Equity crowdfunding is the name given to the process whereby people (the “crowd”) invest in a company in exchange for shares.
It is a new capital raising and investing method. Equity crowdfunding enables startups and small companies to raise up to 2 million capital/year from non-accredited and accredited investors (4M if issuer provides independently reviewed and officer certified financial statements), through online equity crowdfunding platforms. Non-accredited investors are considered all individuals with an income lower than $200 K/year. Until now only accredited investors (income higher that $200K/year) were allowed to invest in companies in exchange of equity. Since May, 2014 when the Illinois Intrastate Crowdfunding Exemption law was passed non-accredited are able to become shareholders. They can invest up to $5,000 in every company they consider promising.