There are four basic types of crowdfunding: Donation, Rewards, Equity, and Debt.
- Donation-based crowdfunding, where campaigns collect money with no promise of anything in return (i.e. GoFundMe)
- Rewards-based crowdfunding, where the sponsor sets various levels of rewards that correspond with pledge amounts (this is currently the most popular type of crowdfunding—i.e., Kickstarter and Indiegogo)
- Equity crowdfunding, which is the exchange of interests of a private company for capital
- Debt crowdfunding or marketplace lending, which is the raising of capital in the form of a loan, whether for a personal, small business or real estate
Generally, the first two types—donation and rewards-based crowdfunding—do not fall under securities law and are regulated by the Federal Trade Commission. The latter two types—equity and debt crowdfunding—do fall under securities laws and are regulated by the Securities and Exchange Commission and state-level regulators.
Crowdfunding Lawyers represents all federally regulated securities transactions, including equity and debt crowdfunding and other exempt and registered offering.