Various terms are being used by different people in reference to equity crowdfunding and related platforms, portals, and rules. The variety of terms can get confusing. Because this is a brand-new industry, governed by fairly complex laws and regulations, it will take a few years before everyone settles on a single nomenclature. To avoid confusion, here are the terms we use predominantly in this book:
Crowdfunding platforms Websites that host crowdfunding campaigns. These include donation, rewards, and Title III securities (debt and equity) crowdfunding sites that are open to participation by everyone (the crowd). They do not include Regulation D securities offering platforms because those are open only to accredited investors, not the crowd. (Some people, nevertheless, might refer to Reg D offering platforms as crowdfunding platforms—we think this nomenclature creates confusion.)
Equity crowdfunding The offering and sale of equity-based private securities to all investors (including nonaccredited ones), authorized by Title III of the JOBS Act. Equity means ownership, and an investor who purchases equity shares becomes a part owner in the company that issues those shares. Such offerings can be made only through registered intermediaries, whether broker-dealers or funding portals.
Funding portals One of the two kinds of intermediaries (the other kind being broker-dealer platforms) authorized by Title III of the JOBS Act to host offerings of private equity-based ...