The Entry of Equity Crowdfunding means Small Investors will Lose a lot of Money

Until recently, only the rich could invest in entrepreneurs’ companies. But with equity crowdfunding, anyone can go online to invest in early-stage companies in exchange for ownership shares. While 22% of Americans have contributed to a crowdfunding campaign on some crowdfunding platform, this form of crowdfunding is donation- or rewards-based: the donor gets a gift, a mention on a website, or the first product released. On the other hand equity crowdfunding gets the investor a share in the company. This may be great news for entrepreneurs, but it will likely cause a start-up bubble and millions of these small investors are likely to lose a lot of money.