Crowdfunding

Crowdfunding is a way of raising money through small contributions from a large number of investors, i.e. a “crowd.” Crowdfunding constitutes a common denominator for a number of financing methods, from donations through lending up to venture capital, all taking place online. Therefore, there are numerous legal challenges, namely use of copyright, distribution of loans and credits, or possible sale of securities. This chapter focuses on the development of equity crowdfunding, which shows many similarities with classical initial public offering (IPO) as a financing tool, yet on a smaller scale. The chapter analyzes the existing regulatory framework of equity crowdfunding in the United States and in the European Union.