Equity crowdfunding is one of the most popular nontraditional startup financing options for early-stage businesses because it offers a compelling win-win proposition for investors and founders.
Equity crowdfunding platforms like the ones on this list give risk-tolerant investors access to equity offerings that, if the companies making them find success, could dramatically increase in value over time — especially if the raise eventually leads to an initial public offering (IPO). And they provide capital-hungry entrepreneurs with vital backing at a stage when risk-averse banks, private equity firms, and even some venture capital investors are loath to get involved.
Some equity crowdfunding portals are better than others, however. The best options for founders and potential investors alike offer a range of deal structures, some with investment minimums that are manageable for everyday investors.
Equity Crowdfunding Sites for U.S. Investors and Business Startups
These are the best crowdfunding platforms available to U.S.-based equity investors and companies raising money early in the business life cycle. All leverage the benefits of the JOBS Act and Regulation A+, which collectively modernized and democratized smaller-scale private equity investing in the United States.
While all platforms accept accredited investors, only some accept non-accredited investors. Many aren’t clear on this point, and a particular platform’s investor requirements may change at any time. Prospective investors should contact their platform of choice to determine its current policy.
In all cases, investors need to provide their identity, income, and asset verification to register with the platform and participate in listed companies’ funding rounds. Unless otherwise noted, these crowdfunding investment platforms don’t charge fees to register or maintain membership as an investor.
Founded in 2010, AngelList is one of the oldest and most established equity crowdfunding platforms. It was originally conceived to broker connections between cash-strapped technology entrepreneurs and angel investors — high-net-worth, tech-savvy backers, many of whom earned their fortunes by selling out of their own successful startups.
AngelList remains true to its roots today. There are three main ways to invest in companies and funds on this platform:
Registered investors can partner with investor syndicates led by notable lead investors — usually venture capitalists with extensive Silicon Valley experience.
Syndicates generally exist to invest in specific companies. They can have dozens or hundreds of investors who pool their resources to make low-six-figure investments. (The average check size is $200,000 to $350,000 per deal.) The minimum individual investment is $1,000.
Be aware that single deals are by definition not diversified, so if you’re looking to build a customized angel portfolio, you’ll need to invest in a dozen or more individual deals across multiple market segments.
Also, you need to do your own due diligence — it’s not wise to take the lead investor’s word on the deal’s suitability, even if their reputation precedes them.
AngelList Access Fund
The AngelList Access Fund offers access to dozens or hundreds of individual deals. All are vetted by AngelList, cutting down on your due diligence responsibilities — although you should still vet all component companies yourself.
The minimum investment is $50,000, so this isn’t for everyday investors.
This service is limited to high net worth individual and institutional investors (including family offices) that can afford to invest at least $500,000 at once. Professional investors get their own AngelList representative, plus rare access to company founders and executives.
Separately from these three investment models, AngelList also operates a high-end job board that connects developers, engineers, marketers, medical professionals, and other talented job-seekers with early-stage companies looking for help. You don’t need to register as a crowdfunding campaign participant to use AngelList’s job board.
Microventures is a full-service investment bank with a robust equity crowdfunding arm that caters both to non-accredited and accredited investors. Offerings span a wide range of industries with a bias toward consumer-facing opportunities (like beverage and sporting equipment startups) and opportunities in high-growth niches like cannabis and biotechnology.
For non-accredited investors, investment minimums can be as low as $100, although some offerings have higher minimums. Certain offerings are available only to accredited investors, generally with significantly higher minimums.
Microventures has an unusually lively secondary marketplace as well, giving early-stage investors the possibility — although by no means the guarantee — of an early exit.
Fundable offers rewards-based crowdfunding, a la Kickstarter or GoFundMe, as well as equity crowdfunding.
For companies interested in equity crowdfunding, Fundable provides hands-on help with onsite profile building, pitch construction, and even business plan development. Now operating under the aegis of TheStartups.co, whose portfolio businesses include virtual assistant platform Zirtual, Fundable’s wheelhouse is software, hardware, and consumer products startups.
Fundable’s basic company profiles are available to everyone. Registered users can request a prospectus and make nonbinding funding pledges through the Fundable platform.
However, Fundable isn’t set up to broker direct investments. You need to contact potential investment targets directly, and all money and shares actually change hands outside the platform. Unless otherwise noted, the minimum investment amount is $1,000.
StartEngine offers a hodgepodge of investment opportunities in both consumer- and business-facing startups. High-potential industries
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