Glossary · Ecosystem and support · Updated
Equity crowdfunding lets a large number of individuals invest small amounts in a startup through a regulated platform. In exchange they receive shares, usually pooled into a single vehicle so the cap table does not fill with hundreds of names.
The appeal goes beyond the money. A successful campaign is public market proof and builds a community of several hundred people financially invested in your success, who often become customers and advocates. For a consumer brand that effect can be worth more than the amount raised.
The cost is higher than it looks. On top of platform fees comes substantial communication work: producing content, running the campaign, answering questions from hundreds of individuals. Two to four months of a founder's attention is a realistic estimate.
Structuring determines what comes next. Putting three hundred shareholders directly on the cap table makes every future decision difficult and deters professional funds. Pooling them into a holding vehicle with a single representative is now the norm and conditions whether the next round is even feasible.
Example: an equity crowdfunding campaign
A consumer brand raises from its community after two years of trading.
| Amount raised | €400,000 |
|---|---|
| Number of subscribers | 320 |
| Average cheque | €1,250 |
| Post-money valuation | €4,000,000 |
| Equity given up | 10% |
| Structure used | holding vehicle pooling subscribers, single representative |
| Platform fee | 5% to 8% of the amount raised |
| Campaign length | 2 to 4 months including communication |
| Lines added to the cap table | 1, thanks to the holding vehicle |
One line instead of three hundred and twenty: that is what keeps the operation compatible with a later Series A. Without the vehicle, the same round would have made every shareholder meeting unmanageable.
The common mistake
Putting subscribers directly on the cap table to save on structuring costs. The saving is a few thousand euros; the cost is a substantially harder next round, and sometimes a fund that walks away rather than inherit the problem.
Frequently asked questions
How does equity crowdfunding differ from crowdfunding?+
Crowdfunding broadly covers donations, pre-orders and lending. Equity crowdfunding specifically means investing for shares: subscribers become shareholders and hope for a gain on resale, with no guarantee of getting their money back.
Does equity crowdfunding complicate later rounds?+
Only if subscribers join the cap table directly. Pooled into a holding vehicle with a single representative, they occupy one line and cause no particular difficulty at the next round.
Related terms
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