Equity crowdfunding involves people – the “crowd” – investing money in an early-stage private, or unlisted, company (a company that is not listed on a stock market) in exchange for a share, or equity, in that company.
As an investor in a company, you own a percentage of the business. So if the business does well and goes on to make a successful “exit” – typically when the business “goes public” and lists on the stock market, or is bought by another company – at a higher value than when you invested, you will get a return on your investment and make a profit.
However, the opposite is also true. If the company fails, you may lose some, or all, of your investment.
