As federal equity crowdfunding legislation languishes on Capitol Hill, a growing number of states have pressed forward with their own equity crowdfunding legislation. States where equity crowdfunding legislation has been passed or is likely to be passed very soon include North Carolina, Georgia, Kansas, Wisconsin, Washington and Michigan.
Equity-based crowdfunding is where an individual invests into a company and in exchange becomes an owner of a percentage of the company. This differs from donation-based crowdfunding, where an individual receives a small gift in exchange for a financial donation, which has become popular on sites including Kickstarter and Indiegogo.
Historically, only accredited investors have been able to invest. The Jumpstart Our Business Startups Act, signed into law in April of 2012, made it legal for even non-accredited investors to participate in equity crowdfunding.