Crowdfunding. An Equity Financing Instrument

Crowdfunding is explored as a crucial financial instrument, with distinctions made between donation-based, reward-based, debt-based, and equity-based models. Nonprofit organizations typically utilize donation-based systems, while startups favor equity or debt options to attract investment. The JOBS Act facilitates easier access to funding for startups, enabling them to leverage crowdfunding effectively. However, some online intermediaries exploit legal gaps to create angel groups for equity-based crowdfunding. Overall, crowdfunding presents a vital avenue for startups to realize their business ideas when traditional financing avenues are unavailable.