Equity crowdfunding and venture capital can be similar in that both provide money to help a business get off the ground and investors earn equity in return.
However, one of the differences is that while crowdfunding accepts small sums from many individuals, venture capital (VC) involves larger funds from wealthy investors who are looking for higher returns.
By its very nature, venture capitalism is restricted to the rich who have several years of experience running a business, explains Sam Quawasmi, managing director and co-founder of Eureeca. Crowdfunding, on the other hand, offers anyone, regardless of their wealth, the chance to invest a small amount to make a business idea happen.
“Venture capital investors often invest large sums of money in exchange for a majority shareholding in the business and operating or decision-making rights. With crowdfunding, the minimum amount of investment can be relatively low and the pool of investors often much larger,” says Quawasmi.
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