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With recent legal changes, it is now possible to attract real investors through equity crowdfunding campaigns. Indiegogo is the go-to platform for startups looking to raise funds from investors in America.
In the U.S., startups can raise up to $1 million in capital from small investors, who, in turn, become shareholders, even if with minor equity stakes. This marks a true revolution in company financing, made possible by progressive legislation and Indiegogo’s online platform, developed in partnership with MicroVentures.
On Kickstarter, crowdfunding was essentially a donation-based funding model: a startup would present its product, service, or business concept, and if people liked it, they would donate money, usually receiving only a symbolic reward in return.
The driving force behind this type of financing was entirely psychological and ideological. By targeting the right niche of potential consumers and aligning communication with their values, a startup could hope for spontaneous donations. In traditional crowdfunding campaigns, donors did not expect any financial return—their contributions were simply acts of generosity, supporting a product or service that resonated with their lifestyle and values.
The evolution beyond traditional crowdfunding and the birth of a new startup financing model based on equity participation.
Alchema – A Successful Equity Crowdfunding Campaign to Fund a Home Appliance for Wine & Liquor Production
With the new U.S. regulations on investment promotion, even small investors can now participate in the equity of privately held companies. The fundraising limit for a company is $1,000,000—in other words, a startup cannot raise more than $1 million from small investors.
This is an example of an innovative, effective, and forward-thinking law, perfectly aligned with the changing values and lifestyles of new generations. It almost feels more like a marketing initiative than a legislative act!
Indiegogo, in partnership with MicroVentures, provides the perfect platform for promoting startup investment opportunities and raising funds. Everything happens entirely online. One million dollars is no small sum for a startup, and it is worth noting that equity crowdfunding funds can be combined with existing capital investments or other funding sources.
For example, if a startup already has $500,000 in capital from a qualified investor (such as a bank, investment fund, or high-net-worth individual), it can combine this initial capital with the funds raised through an equity crowdfunding campaign.
Texas Zebo: A Restaurant Concept Funded Through Equity Crowdfunding That Has Already Raised $361,815 from 305 Investors
With equity crowdfunding, economic incentives play a dominant role in investment decisions, while the value-driven and lifestyle-based motivations typical of traditional crowdfunding become secondary. For instance, I may be a teetotaler, but if I see an opportunity in a home wine-making machine, I might still consider investing in this startup.
The fundamental idea behind equity crowdfunding is to either receive a portion of the dividends generated by the startup or wait for a future IPO, sell the shares, and profit from capital gains.
In traditional crowdfunding, the funds received are classified as donations and are counted as business income, which is subject to standard tax rates.
With equity crowdfunding, the funds become part of the company’s share capital and are recorded as balance sheet items [(for those familiar with double-entry accounting: liability → additional paid-in capital; asset → bank account)].
In other words, funds raised through equity crowdfunding are NOT counted as business income and are therefore NOT taxed—an important financial advantage!
In this context, the rules and procedures for launching and managing an equity crowdfunding campaign are much stricter than those for traditional crowdfunding.
Since equity crowdfunding involves soliciting private investments, the law requires a series of investor protections, including:
Unlike traditional crowdfunding, equity crowdfunding requires a much more structured approach. While marketing and communication remain essential—just as in traditional crowdfunding campaigns—financial and legal compliance play a critical role.
Alchema had already raised $344,231 in 2016 through a traditional Kickstarter crowdfunding campaign. Now, the company has launched an equity crowdfunding campaign on Indiegogo to raise capital by bringing in new shareholders.
ExportUSA provides the resources, expertise, and operational support needed to structure, manage, and coordinate an equity crowdfunding campaign, including:
Through our network of specialized law firms, marketing agencies, and U.S. accountants, we help startups identify the best solutions and implement successful equity crowdfunding campaigns.
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