Equity crowdfunding allows startups and small businesses to sell securities such as shares and limited partnership units that represent ownership of the company. This is a lot different from your typical crowdfunding campaign on Kickstarter or Indiegogo, which function more like pre-order sites through which backers get first dibs and early-bird discounts on products that don’t exist yet.
Crowdfunding, then, is a way to sell products, acquire customers and gain traction, while equity crowdfunding is a way to raise capital, selling actual equity to regular folks without going public. Many startups salivate at this idea, and it benefits the economy overall, too, which naturally appeals—or at least, should appeal—to government bodies.
Of course, equity crowdfunding has its risks. Without proper regulation, it’s ripe for fraud—a concern that is apt to be under additional scrutiny in B.C., where Vancouver is still licking its wounds after the infamous Vancouver Stock Exchange earned the city the nickname “scam capital of the world” by Forbes magazine in 1989.
Read the rest of this article by Techvibes editor-in-chief Robert Lewis in BCBusiness for free.