The Evolution of Equity Crowdfunding

This chapter is dedicated to the narrative of the evolution of crowdfunding in its different forms. Equity crowdfunding is a mutation of the simplest form of crowdfunding known as donation crowdfunding. The crowdfunding tool has many facets linked to the expectations of the subjects who participate financially in the collection campaigns. Equity crowdfunding is configured when the investor intends to participate in business risk and does not expect a certain and fixed return. Equity crowdfunding is characterized by the distribution of company risk capital shares in favor of investors who have decided to support the business project promoted through an online portal. Investors, therefore, will succeed in their investment only in case the possible profit the company achieved at the end of the administration period is distributed in the shareholders’ favor. In this way, equity crowdfunding is among the most representative of the equity-oriented type alternative financing instruments.