VCs ‘threatened’ by equity crowdfunding

Equity crowdfunding grew over 100% in both the UK and US in 2015 as Business Insider’s BI Intelligence forecasts in a new study that firms will raise $11 billion across US and UK in 2020 up from $1 billion last year.


Here are some of the key takeaways from the research:

It’s open to the general public — recent legislative changes in the US mean almost anyone can now invest via equity crowdfunding. It’s also used by accredited and sophisticated individual investors, as well as VCs and angel networks.

It’s not only for startups — equity crowdfunding presents significant opportunities to businesses of all sizes. It offers firms diversity of funding sources, potentially easier access to funding, brand and marketing benefits, as well as the potential to retain greater control over their business.

Growth in equity crowdfunding is largely being driven by increased awareness, and the benefits it provides both businesses and investors mean it’s now starting to threaten VCs and angel investors.

As a result, VCs are increasingly investing via crowdfunding platforms in a number of ways. They aim to benefit from the equity crowdfunding industry and protect their share of the larger equity funding market.