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Collective funding mechanism in which individuals invest in an early-stage business or product not listed on stock exchanges and, in return, receive a percentage of the company's common stock. While crowdfunding relates to a collective mechanism of financing a particular business, social or personal venture, Equity Crowdfunding allows people to invest funds in a startup or new ventures. In return, they receive a percentage of the company's common stock. At the core of this funding modality lies a mutual relationship of trust where the share value and venture's growth are both tied with success amidst shareholders. Since investors need the company to succeed in making a profit, they act as a brand ambassador advertising business and products they are investing in. Equity crowdfunding is suitable for many types of businesses. However, companies that manage to build a sense of connectedness with a given community's interest level usually show higher-growth potential. With people tending to invest in ideas that match their ideals rather than focus on a product's revenue. With the rise of investments made through initial coin offerings (ICOs), ideas and projects initially perceived as impossible can be collectively funded by citizens. This might reduce their dependence on multinational corporations and venture capitalists whose motivations are usually linked to a product's profit and investment return. Equity crowdfunding is giving birth to a form of socially responsible investing, which is becoming an essential catalyst in promoting sustainable businesses. Backers in crowdfunding consider not only tangible rewards but also societal and environmental ones. Overall, equity crowdfunding promotes the inclusion and democratization of financial markets regarding both supply and demand of capital. It could be a crucial stepping stone towards more cooperative economics different from the current capitalist neoliberal system.

Equity Crowdfunding

KEY TRENDS

Network Economy