Equity crowdfunding in the United States is a blank slate. Withequity crowdfunding's recentlegalization in the United States, many companies smell anopportunity to develop technical and financial innovations to helpthe industry mature.

Equity crowdfunding is much like crowdfunding, which has beenpopularized in the United States through sites such as Kickstarterand Indiegogo. The difference is that instead of individualssupporting campaigns through donations, numerous investors arepurchasing small stakes in startups or small businesses. Critics ofcrowdfunding worry that the industry will be rife with Ponzischemes or that having too many investors will hurt startups'prospects for future funding.

Proponents of equity crowdfunding, however, point to its successin countries such as Australia and Germany. Forexample, Seedmatch,an equity crowdfunding platform in Germany, allowsinvestors to enter long-term investment contracts where they getequity. Australia, where equity crowdfunding has been legal forseven years, already has a platform for “secondary” salesof unlisted issued securities.

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