Equity crowdfunding refers to the company selling a certain proportion of shares to ordinary investors, and investors invest in the company to obtain future income. This financing model based on internet channels is called equity crowdfunding. Objectively speaking, there is not much difference between equity crowdfunding and IPO when investors buy shares, but in the field of internet finance, equity crowdfunding mainly points to earlier private equity investment, which is a powerful supplement to angels and VC.

I. Participants in equity crowdfunding

In the operation of equity crowdfunding, the main participants include fundraisers, investors and crowdfunding platforms, and some platforms are also specially designated as custodians.

1, fundraising.

Fundraisers, also known as sponsors, usually refer to start-ups or projects that need funds in the process of financing. They publish financing information of enterprises or projects and the proportion of shares that can be sold through crowdfunding platforms.

2. Investors.

Investors are often a large number of Internet users, who use online payment and other means to make small investments in startups or projects that they feel have investment value. After the financing is successful, the investor obtains a certain percentage of the equity of the startup enterprise or project.

3. Crowdfunding platform.

Crowdfunding platform refers to the media that connects fundraisers and investors. Its main responsibility is to use the support of network technology to release the information of the project sponsors' creativity and financing needs in virtual space according to relevant laws and regulations for investors to choose, and to undertake certain regulatory obligations after financing is successful.

4. Custodian.

In order to ensure the safety of each investor's funds, as well as the timely return of investors' funds to start-ups or projects and the unsuccessful fundraising, crowdfunding platforms generally set up special banks as custodians to perform fund custody duties.

Second, the operation process of equity crowdfunding

1. Start-ups or project sponsors submit project plans or business plans to the crowdfunding platform, and set the amount to be raised, the proportion of transferable shares and the deadline for raising funds.

2. The crowdfunding platform reviews the project plan or business plan submitted by the fundraiser, and the scope of review specifically includes but is not limited to authenticity, integrity, enforceability and investment value.

3. After the crowdfunding platform is approved, the corresponding project information and financing information will be published online.

4. Individuals or teams interested in enterprises or projects can commit or actually deliver a certain amount of funds within the target period.

5. If the target period ends and the fundraising is successful, the investor and the fundraiser will sign relevant agreements, as shown in the following figure; If the fundraising is unsuccessful, the funds will be returned to the investors.

Through the above process analysis, compared with private equity investment, equity crowdfunding mainly completes the "fundraising" link through the Internet, so it is also called "private equity internetization".