Today’s congressional hearing on capital formation reinforced an important truth: Regulation Crowdfunding (RegCF) and Regulation A (RegA) are working. These mechanisms are fueling economic growth, creating jobs, and unlocking opportunities for everyday investors and entrepreneurs alike.
Yet, despite clear data showing their success, critics like Alexandra Thornton from the Center for American Progress continue to spread misinformation and fear, uncertainty, and doubt (FUD) about private market investing. Let’s address these concerns head-on.
Myth: 90% of Startups Fail—So Expanding Investment Access is Risky
While Andrew Barnell pointed to studies suggesting that 90% of startups fail, the real issue is why they fail—and that’s exactly what RegCF and RegA help solve.
According to CB Insights, lack of access to capital and running out of money are the two biggest reasons startups fail. RegCF and RegA directly address this problem by providing new funding pathways that allow entrepreneurs to raise capital from their communities, customers, and everyday investors.
Moreover, data from the Annual State of the Investment Crowdfunding Industry Report reveals that companies raising funds through RegCF have a failure rate of just 21.7%—far lower than the widely cited 90% figure. Investment crowdfunding is actively reducing startup failure rates, not increasing them.
Myth: Private Markets Are Risky and Opaque
Thornton’s claim that private investments lack transparency and investor protections is broad and flat-out false. RegCF and RegA require businesses to file financials, business plans, risk factors, and ongoing reporting with the SEC—all of which protect investors and create a level playing field.
“Thornton’s testimony is a textbook example of fear-mongering and a complete misrepresentation of the facts,” said Sherwood Neiss, Principal at Crowdfund Capital Advisors and author of Investomers – How Customers Turned Investors is Reshaping Early-Stage Finance. “If she actually understood these regulations, she’d realize that RegCF and RegA don’t reduce investor protection—they enhance it by giving everyday Americans access to vetted investment opportunities under a structured, transparent framework.”
In reality, traditional venture capital and private equity deals may offer far less transparency than crowdfunding, where disclosures are public and accessible to all investors.
Myth: Expanding Access to Private Investments Will Lead to More Fraud
Thornton warns of fraud risks in private markets, but doesn’t substantiate her claim with data. The SEC, FINRA, and funding portals actively monitor RegCF offerings, ensuring strict compliance and investor protections.
“The idea that investment crowdfunding is a Wild West is absurd,” said Neiss. “The regulatory framework is strong, the platforms are diligent, and investors are protected. There is no widespread fraud in investment crowdfunding—it’s a well-regulated and thriving industry.”
Myth: Private Markets Only Benefit Wealthy Investors
Thornton suggests that private market expansion benefits insiders at the expense of retail investors. In reality, RegCF and RegA are democratizing access to capital across the country, not just in major cities like New York and San Francisco.
RegCF has enabled fundraising in over 2,000 towns across the U.S., ensuring that small businesses in underserved communities can raise capital from their supporters. This isn’t just about entrepreneurs—it’s about giving everyday Americans the ability to invest in the businesses they believe in.
McKeever Conwell emphasized this during the hearing: “For too long, underrepresented founders have been shut out of traditional funding. Crowdfunding is changing that, allowing great businesses to raise capital from their communities and thrive.”
Rebecca Kacaba, CEO of DealMaker, highlighted another major advantage: “When customers become investors, they don’t just bring dollars—they bring loyalty, advocacy, and network effects that drive long-term success.
The JOBS Act Was a Bipartisan Success—Let’s Keep It That Way
Let’s not forget: The JOBS Act, which created RegCF and RegA, passed the House in 2012 by a vote of 407-17—one of the most bipartisan bills in recent history. Both sides of the aisle agree that expanding access to capital is good for the economy.
Instead of rolling back these successful programs, Congress should focus on expanding them. The data is clear:
✅ Crowdfunding is working. ✅ It’s driving job creation and economic growth. ✅ It’s supporting women, minority, and underserved founders. ✅ It’s reducing failure rates for small businesses. ✅ It’s creating wealth-building opportunities for everyday investors.
It’s time to build upon this success, not restrict it. Instead of limiting investor access, policymakers should focus on expanding opportunities—so more Americans can participate in our nation’s entrepreneurial growth.
2025 Investment Crowdfunding Report: Capital Markets Are Evolving—Are You Ready?
Capital markets move in cycles, with peaks and valleys shaping investment trends. As venture capital remains sluggish, investment crowdfunding is stepping in—not as a temporary fix, but as a lasting force in private markets.
The 2025 Investment Crowdfunding State of the Industry Report offers a data-driven analysis of how the market continues to grow, attract accredited investors, and solve critical private capital pain points. Liquidity is now on the horizon for thousands of crowdfunding investors holding billions in unrealized returns.
Key Takeaways from the 2025 Report
Accredited Investors Drive Record Capital Deployment – Despite a slowdown in broader private markets, investment crowdfunding in 2024 saw near-record capital inflows. While the total number of investors declined, accredited investors stepped in, writing the largest checks yet. Frustrated with VC inaction, they directly funded issuers and backed new early-stage venture funds (like D3VC) that are investing in the ecosystem.
Investomers Are Reshaping Early-Stage Finance – Crowdfunding investors are no longer just passive backers. They are customers, brand advocates, and long-term stakeholders, aligning their capital with the companies they believe in.
Liquidity Is on the Horizon – RegCF investors are sitting on billions in unrealized returns. With platforms exploring secondary trading and new liquidity solutions, policy shifts could accelerate investment crowdfunding’s role in unlocking private market liquidity.
Investment Crowdfunding Is Solving Private Market Gaps – At a time when venture capital remains stalled, investment crowdfunding is filling the gap, spreading capital across the country, spurring innovation, and creating jobs. Policy advancements could further scale this impact.
Investment Crowdfunding Has Proven Its Resilience
Markets evolve. Venture is in a valley, but investment crowdfunding has weathered multiple cycles—and grown stronger each time.
Investors aren’t waiting for VCs to return. They’re deploying capital directly into startups, fueling the next wave of innovation, creating tens of thousands of jobs, and driving billions in economic impact. The next phase is unlocking liquidity, ensuring that investment crowdfunding continues to scale as a transformative force in private capital markets.
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For decades, two forces controlled consumer behavior and capital markets:
Madison Avenue dictated traditional marketing, crafting polished ad campaigns that shaped what people bought.
Wall Street analysts from Citibank, Goldman Sachs, and JPMorgan dominated public company valuations, providing research and investment recommendations that moved markets.
But in the digital age, social media influencers have replaced Madison Avenue, dictating trends and driving mass purchasing decisions—whether it’s the latest viral Dubai chocolate or entire industries, like fast fashion or fitness tech.
However, no equivalent has existed for private companies raising capital online—until now.
Enter the Influvestors: a new class of social media influencers who are also investors, using their platforms to showcase why they invested in a company, what makes it great, and why others should take notice. These are not just passive shareholders—they are investomers (customers who invest) who actively contribute to a company’s success.
The Evolution of Investment Crowdfunding & Why Influvestors Matter
Investment Crowdfunding is scaling rapidly. Today, around 1,500 companies raise funds annually. But as we expand to 3,000 or 5,000 startups per year, investors will face an overwhelming number of choices.
Traditionally, investors relied on Wall Street analysts to identify opportunities. But in the investment crowdfunding world, no such structured research exists for early-stage private companies.
AI-driven venture funds like D3VC (full disclosure: I’m a GP in the fund) are leveraging machine learning models to tackle this problem, identifying promising companies at scale. But AI alone isn’t enough—it lacks the human element of consumer trust, community, and virality.
That’s where Influvestors step in.
Why This Isn’t Just Another Hype Machine
Skeptics might say this sounds like the perfect pump-and-dump opportunity. However, RegCF offerings require a one-year holding period, eliminating short-term speculation. Plus, securities laws and anti-fraud protections still apply, ensuring a level playing field.
Unlike traditional influencers who get paid per click, Influvestors’ financial success is directly tied to the company’s long-term performance. They aren’t just contracted promoters—they are investor relations agents with skin in the game, focused on growth, brand awareness, and increasing company value.
The Future: Community-Driven Investing & Market Awareness
For startups, the biggest challenge isn’t just raising capital—it’s market awareness. Even great businesses struggle to reach enough customers and investors. Influvestors solve this problem by creating viral content that not only fuels investment rounds but also drives real sales.
As investment crowdfunding scales, this convergence of influence, investment, and market-making will define the next wave of startup success.
Wall Street had its analysts. Madison Avenue had its ad agencies. The next evolution belongs to the Influvestors.
(Want to stay ahead of the crowdfunding revolution? Follow us for more insights!)
Family offices, long the cornerstone of private equity and venture capital, are at a crossroads. While investments in Silicon Valley and Wall Street remain staples, a burgeoning trend in investment crowdfunding offers a compelling opportunity for diversification, localized impact, and direct engagement with the innovation economy. With its unique combination of accessibility and potential, investment crowdfunding is fast becoming a strategic asset for sophisticated investors.
Since its establishment under the JOBS Act in 2012, Regulation Crowdfunding (Reg CF) has built a foundation for a new era in private investment. Nearly 8,000 companies have leveraged crowdfunding to raise over $2.7 billion across 10,000 funding rounds. Unlike venture capital, which is concentrated in a handful of metropolitan hubs, investment crowdfunding spans 2,750 cities nationwide, fueling innovation and economic development in communities that have traditionally been underserved by institutional capital. The companies funded through these efforts have an estimated collective valuation of $90 billion and are injecting an impressive $27.1 billion into local economies.
This phenomenon is reshaping the American entrepreneurial landscape. Crowdfunding platforms, such as Wefunder, StartEngine, and Republic, enable businesses to connect directly with investors, bypassing many of the barriers that have historically limited access to capital. For family offices, this democratization of investment presents an opportunity to diversify portfolios in previously inaccessible ways.
Emerging sectors such as renewable energy, biotech, and fintech thrive in the crowdfunding ecosystem, providing entry points into innovative industries. Additionally, many of the seeds of artificial intelligence (AI) integration in technology are being planted within this space. From AI-driven diagnostic tools in healthcare to predictive analytics in energy efficiency and advanced automation in fintech, the early adoption and experimentation with AI are flourishing among startups leveraging investment crowdfunding. These innovations not only attract investors seeking high-growth potential but also position crowdfunding as a gateway to technologies that are shaping the future of global industries.
The geographic diversity of crowdfunding (much like the family offices themselves) should appeal to family offices with a focus on community development or ESG mandates. By investing in businesses tied to specific regions, family offices can foster local economic growth while aligning their financial strategies with their values. The multiplier effect of these investments—supporting local jobs and contributing to regional economies—further underscores the potential of this asset class.
Beyond its financial benefits, investment crowdfunding offers a unique educational opportunity. It provides a platform for teaching younger generations in family offices about wealth creation and intergenerational wealth transfer. Crowdfunding investments serve as a practical way to introduce heirs to the fundamentals of startup growth and scaling—demonstrating how businesses evolve with the right combination of capital, expertise, and relationships. These investments, with their smaller check sizes, allow families to explore early-stage opportunities at a lower risk threshold while fostering a deeper understanding of long-term investment strategies and the principles of smart investing.
For family offices seeking a more streamlined entry into this burgeoning ecosystem, investment funds like D3VC.ai provide a compelling solution. (Disclosure: I am a General Partner at D3VC.) These venture funds leverage artificial intelligence (AI) and machine learning (ML) to analyze thousands of crowdfunding offers, identifying what we believe are the most promising investments based on data-driven insights. By investing in such funds, family offices can gain exposure to the crowdfunding market without the need to evaluate 10,000 individual offerings directly. It’s an efficient and scalable way to diversify while benefiting from cutting-edge technology applied to investment diligence. While D3VC is one example, it highlights a growing trend of funds leveraging advanced tools to make the investment process both rigorous and accessible.
Unlike venture capital, which often requires substantial upfront commitments, investment crowdfunding allows for smaller investments spread across a wide portfolio. This flexibility enables family offices to experiment with new sectors, mitigate risk, and gain exposure to a broad spectrum of opportunities. Furthermore, crowdfunding platforms provide direct access to entrepreneurs, offering a level of engagement rarely available through other investment channels. For family offices with a hands-on approach, this fosters deeper connections and the ability to influence outcomes through mentorship or co-investment.
Critics of crowdfunding often view it as a domain for retail investors, but the data tells a different story. Institutional players are increasingly participating, and platforms are adapting to meet their needs. Many campaigns now integrate co-investment opportunities, blending smaller public contributions with larger institutional commitments to amplify their impact.
Regulative protections also bolster the investment crowdfunding sector, ensuring that both issuers and investors operate within clearly defined parameters. For family offices, this means entering a vibrant but well-regulated space.
With investment crowdfunding rapidly maturing, family offices have a unique window to integrate this asset class into their broader investment strategies. For those ready to take the next step, D3VC and similar funds provide a strategic entry point, delivering curated opportunities and advanced insights. Additionally, Crowdfund Capital Advisors offers a wealth of resources to help family offices navigate the investment crowdfunding landscape. From data-driven insights to tailored capacity-building events, CCA can help individual family offices explore how crowdfunding aligns with their goals, deepen their understanding of the ecosystem, and implement strategies for long-term success.
Investment crowdfunding isn’t just an alternative—it’s a bridge to the next wave of private investment, one that prioritizes innovation, broad-based economic growth, and meaningful education for the next generation of family leaders. For family offices ready to lead rather than follow, the time to act is now.
As 2025 begins, the financial world reflects on a transformative year for investments. In 2024, crowdfunding investors recalibrated their strategies, favoring industries with proven resilience while pulling back from sectors seen as speculative or overextended. The result was a dramatic reshuffling of winners and losers across the economic landscape.
Healthcare emerged as a standout performer, with investments nearly doubling compared to 2023. Biotechnology breakthroughs and life sciences innovations commanded significant attention, driven by the dual promise of societal impact and strong financial returns. Among the year’s top healthcare performers was Koios Medical, which blends artificial intelligence with medical diagnostics to reduce errors and improve outcomes. Koios raised nearly $1.26 million from retail investors on Wefunder while simultaneously securing $8 million from institutional backers on the same terms. This dual approach highlights a growing trend of parallel offerings in investment crowdfunding, where issuers seek funding from both retail and institutional investors to maximize their reach and capital.
CCLEAR Data as of 12/31/2024 – CCLEAR is a Division of Crowdfund Capital Advisors, LLC
Energy and Utilities also surged, with investments nearly doubling year-over-year as the sector benefited from technological advancements and efficiency gains. Among the leaders was Pytheas Energy, which uses AI and machine learning to enhance oil and gas production. This focus within Energy and Utilities highlights how artificial intelligence is driving innovation and optimizing traditional energy systems. Their campaign on Equifund demonstrated how crowdfunding can amplify opportunities even in legacy industries by tapping into investor interest in technological innovation.
Real estate found renewed favor among investors as declining interest rates and financing unlocked new opportunities. Arrived, a platform allowing fractional investment in rental properties, raised an extraordinary $32.5 million from retail and institutional capital. The company syndicates offerings into individual properties, turning customers into investors—a model that aligns user incentives and democratizes real estate ownership. Notable investors in Arrived include Jeff Bezos, Marc Benioff (CEO at Salesforce), and Dara Khosrowshahi (CEO at Uber).
While these sectors thrived, others struggled to maintain momentum. Technology, once the darling of venture capital and crowdfunding alike, faced a sharp downturn. A nearly 42% drop in investment reflected broader corrections in tech valuations, as investors grew wary of speculative startups. Similarly, industries like e-sports and gaming, education and training, and space exploration experienced significant declines, revealing a pivot away from high-risk, long-horizon opportunities.
A common theme among the year’s success stories was the strategic use of artificial intelligence. From healthcare to energy, AI has proven to be a transformative force, attracting capital across diverse sectors. This trend mirrors developments in public markets, where AI-focused companies saw significant funding inflows. Additionally, the growing convergence of retail and institutional capital—evident in parallel offerings like those of Koios and Arrived—aligns with broader shifts in the financial ecosystem, such as the inclusion of private assets in traditionally public investment vehicles like ETFs.
As 2025 unfolds, the trends of 2024 are likely to shape the contours of the economy. Industries that capitalize on technology and strategic innovation may look to consolidate their gains, while others may face the challenge of adapting to an era defined by cautious optimism and an appetite for scalable, impactful ventures.
Happy New Year! As we look back on 2024, Regulation Crowdfunding (RegCF) has firmly established itself as a cornerstone of the U.S. capital markets. Against the backdrop of global economic uncertainty and the retreat of traditional venture capital, RegCF demonstrated its maturity and resilience, driving innovation, creating jobs, and transforming communities.
From near-record-setting capital commitments to rising valuations and job creation, 2024 was a landmark year for the industry. Below, we break down the key data and trends that defined this transformative year.
Capital Commitments Hit Record Levels
Capital raised through investment crowdfunding reached $547 million in 2024, marking steady growth from its early years. More significantly, 71.2% of these commitments came from post-revenue issuers, reflecting the industry’s evolution into a critical funding source for growth-stage companies.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
Parallel offerings, where companies simultaneously raise funds from both retail and accredited investors, also gained significant traction, accounting for a notable portion of total commitments in 2024. Without these parallel offerings, however, the year would have marked a continuation of the decline in overall RegCF commitments, which have dropped for three consecutive years—from a high of $554 million in 2021 to just $375 million in 2024. The inclusion of these parallel amounts has allowed the industry to show cumulative growth (RegCF combined with 506(c)) over the past three years, signaling a maturing ecosystem where issuers strategically use RegCF to target a diverse investor base and optimize their capital-raising efforts.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
This growth came amid a challenging macroeconomic environment, characterized by rising interest rates and VC hesitancy. As traditional investors held back, crowdfunding filled the gap, empowering businesses to connect directly with everyday investors and accredited backers alike.
Valuations Reflect Industry Maturity
Median valuations in 2024 showcase crowdfunding’s ability to support businesses at all stages of development. Pre-revenue startups achieved a median valuation of $10 million, double the $5 million benchmark from 2016. In contrast, post-revenue issuers reached $20 million, leveraging proven revenue models to command higher investor confidence. Established businesses led the way with a median valuation of $20 million, double that of startups at $10.3 million. These trends highlight how crowdfunding has evolved into a platform capable of meeting the needs of both early-stage and growth-stage companies.
However, the sharp rise in valuations among pre-revenue startups deserves closer scrutiny. For companies with little more than an idea, median valuations exceeding $5.0M raise questions about investor discipline and the realistic expectations of founders. While crowdfunding is designed to democratize access to capital, overly ambitious valuations can undermine investor trust and skew market dynamics. As Sherwood Neiss of Crowdfund Capital Advisors explains, “Crowdfunding gives startups a fighting chance, but founders must balance ambition with practicality. Responsible valuations ensure that both investors and issuers build sustainable relationships for long-term success.”
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
Crowdfunding Drives Job Creation
In 2024, RegCF companies supported 110,976 jobs, up from just 6,432 in 2016. This growth reflects the increasing participation of larger companies with more employees seeking crowdfunding.
The average company employed 10 people in 2024, more than double the 4.6 average in 2016. While not massive, these companies are the backbone of the economy, creating jobs in local communities and reinvesting billions into the economy. This trend aligns with the rise of post-revenue issuers, which tend to have larger workforces than early-stage startups.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
The Rise of Diverse Offering
RegCF continued to support a wide range of offering types in 2024, with equity deals dominating but debt and revenue-share deals maintaining a strong presence:
Debt and revenue-share offerings (32% of 2024’s total) reflect the flexibility RegCF provides for issuers.
However, the majority being equity deals highlight investor interest in ownership stakes in growth-stage companies.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
Checks Written: A Barometer for Investor Sentiment
In 2024, 210,000 checks were written into crowdfunding deals, highlighting steady investor participation but falling significantly short of the industry’s peak of 538,000 checks in 2021. While the volume remains well above the formative years of the industry, this decline underscores the impact of broader macroeconomic challenges.
The collapse of Silicon Valley Bank, a venture capital pullback, surging inflation, lingering supply chain disruptions, and rising interest rates collectively tempered investor enthusiasm for writing checks. Despite these headwinds, the steady participation demonstrates the enduring appeal of crowdfunding, particularly for post-revenue and larger issuers who continue to attract robust investor interest.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
Economic Ripple Effects: A 10x Multiplier
The economic impact of crowdfunding is undeniable. Since its inception, We estimate RegCF companies have reinvested $26 billion into the economy. For every $1 invested, businesses generate a 10x economic multiplier, spurring local growth through job creation, supply chain activity, and community reinvestment.
The 2024 contribution was particularly impactful, with businesses reinvesting billions in goods and services while supporting employment across a range of industries. This multiplier effect is a compelling argument for policymakers and economic development offices to expand access to crowdfunding.
(C) Crowdfund Capital Advisors, CCLEAR Data as of 12/31/24
Looking Ahead: Optimism for 2025
As the industry enters 2025, optimism abounds. The incoming administration has signaled a focus on revitalizing America’s entrepreneurial engine, and proposed regulatory changes promise to democratize access to capital further.
Sherwood Neiss, Principal at Crowdfund Capital Advisors, captures the sentiment: “Crowdfunding isn’t just about raising money—it’s about creating ecosystems of innovation, jobs, and intergenerational wealth. By empowering everyday investors to become owners, we’re fundamentally reshaping the economy and ensuring opportunity flows to every corner of the nation.”
This year also marks the release of Investomer, a book exploring the economic rationale behind investment crowdfunding. By turning customers into investors, crowdfunding is creating a new class of participants who drive not only financial returns but also economic and social impact.
To Wrap Up
2024 was a defining year for crowdfunding. From near-record capital raised to valuation growth and job creation, investment crowdfunding proved its value as an economic engine and a tool for democratizing wealth.
As we move into 2025, the opportunities for crowdfunding—and its impact—have never been greater. For entrepreneurs, investors, and policymakers alike, the call to action is clear: embrace crowdfunding as a vital tool for driving innovation, creating jobs, and building a stronger economy.
The foundation is set. Now, it’s time to build the future.
Why Regulation Crowdfunding Is Transforming Early-Stage Capital Formation
In the ever-evolving world of finance, crowdfunding has often been dismissed by traditionalists as a novelty—a niche solution for entrepreneurs unable to crack the fortress of venture capital or private equity. Some critics have gone so far as to label Regulation Crowdfunding (Reg CF) as “bottom of the ladder” finance, alleging it lacks credibility and fails to deliver meaningful capital to businesses. These criticisms ignore the hard data that tell a very different story.
Reg CF is not a second-tier financing option. It’s an innovative model that has democratized access to capital, spurred job creation, and even caught the attention of venture capitalists. With millions raised annually and a clear upward trajectory in both the size and sophistication of deals, crowdfunding is rapidly cementing its position in the financial mainstream.
The Data: A Narrative of Growth
Since its inception under the 2012 JOBS Act, Reg CF has grown from an experimental initiative into a vibrant marketplace. One of the clearest indicators of its success is the steady increase in average deal sizes. In 2016, the first year of operation, the average raise was just over $300,000. By 2023, that number had more than doubled to $670,000, and projections for 2024 suggest an average raise of $730,000.
This growth isn’t an anomaly. It reflects the maturation of the ecosystem, with entrepreneurs leveraging the platforms to secure increasingly significant funding for high-potential ventures. It also reflects growing trust from investors who recognize the opportunity to back early-stage companies outside traditional channels. These aren’t signs of an industry in decline; they’re proof of one on the rise.
Data from CCLEAR.ai
Venture Capital: A Growing Player
One persistent myth is that crowdfunding operates in isolation, divorced from the “serious” world of venture capital. The numbers paint a different picture. While VC participation in Reg CF deals was negligible at the outset—just one deal in 2020—it has grown exponentially. In 2023 alone, 81 deals included VC participation, and the trajectory for 2024 is even steeper, with 122 deals already showing VC involvement.
This uptick isn’t just about volume; it’s about validation. Venture capitalists are known for their meticulous due diligence and selective investments. Their increasing involvement in crowdfunding deals underscores the quality of the opportunities being created. Platforms like Wefunder, Republic and StartEngine have evolved into credible deal pipelines for institutional players, bridging the gap between grassroots funding and high finance.
The growth in VC participation also signals a shift in how investors view crowdfunding. It’s no longer a siloed option for bootstrapped entrepreneurs but a legitimate avenue for building scalable, high-growth companies.
Data from CCLEAR.ai
Serving Rural America: An Overlooked Triumph
Another critical success story of Reg CF lies in its ability to reach underserved markets—particularly rural areas. When crowdfunding began in 2016, just 3.2% of funded deals came from rural regions. Today, that figure has more than doubled to 7.2%.
This increase demonstrates how crowdfunding is breaking down geographic barriers that have long hindered entrepreneurs outside major urban centers. While traditional venture capital tends to concentrate in tech hubs like Silicon Valley or New York City, crowdfunding platforms are connecting rural innovators with a national base of investors. This not only provides vital capital to overlooked regions but also fosters economic resilience and innovation where it’s needed most.
By enabling rural entrepreneurs to access funding, Reg CF is fulfilling its promise of democratizing capital and proving its value in ways that traditional finance simply cannot replicate.
Success Metrics: A Better Measure
Critics often seize upon minimum funding targets (MFTs), arguing that artificially low thresholds inflate success rates and obscure the true efficacy of crowdfunding. While it’s true that many campaigns set modest initial goals to ensure compliance with regulatory frameworks, this critique misses the forest for the trees.
The real measure of success lies in the total capital raised. As the data shows, both total amounts and average deal sizes are climbing steadily. This indicates that businesses are not just meeting their goals—they’re exceeding them. To dismiss crowdfunding based on MFTs is akin to dismissing IPOs because some companies start with modest valuations. The end result—the capital raised—paints a far more compelling picture of impact.
Data from CCLEAR.ai
The ultimate measure of success in any investment model lies in exits and returns. Now, eight years into Regulation Crowdfunding (Reg CF), we’re beginning to see these outcomes materialize. Early signs suggest the potential for significant wealth generation for both entrepreneurs and investors.
One compelling data point highlights this potential. Issuers who initially raised funds through Reg CF and subsequently conducted follow-on rounds—excluding those that transitioned to traditional Reg D offerings, meaning this is likely a conservative estimate—have seen their unrealized value increase by a staggering $17.9 billion. This growth underscores the transformative power of crowdfunding in creating and scaling value within startups.
As more of these exits occur and unrealized gains are realized, it will become clear that Reg CF is not just a stepping stone for entrepreneurs but a powerful engine of wealth creation for investors who believed in these businesses early. The era of life-changing returns through crowdfunding is no longer a distant promise—it’s becoming a tangible reality.
Economic Impact: Beyond the Numbers
Crowdfunding’s contributions extend far beyond the balance sheet. By democratizing access to capital, it has empowered diverse entrepreneurs and stimulated local economies. Small businesses in rural areas, minority founders, and first-time entrepreneurs—groups historically underserved by venture capital—have found crowdfunding to be a lifeline.
This inclusivity has ripple effects. Crowdfunded businesses generate jobs, pay taxes, and contribute to community growth. They purchase goods and services, invest in marketing, and hire talent, creating a virtuous cycle of economic activity.
And it’s not just small businesses that benefit. Crowdfunding fosters innovation in industries ranging from biotech to clean energy, driving solutions to some of society’s most pressing challenges. By lowering barriers to entry, it enables breakthroughs that might never receive traditional funding.
The Future Is Crowdfunded
Dismissive critiques of Reg CF ignore the data and the broader trends shaping finance. Far from being “bottom of the ladder,” crowdfunding has redefined what’s possible in early-stage funding. It has delivered on its promise of democratizing capital, created pathways for underrepresented groups, and won the endorsement of venture capitalists.
As we move into 2025, the trajectory is clear. Crowdfunding isn’t just a viable option—it’s an essential one. Critics may cling to outdated perceptions, but the numbers—and the success stories—speak for themselves.
Crowdfunding has climbed the ladder of finance, and it’s not stopping anytime soon.
As Paul Atkins awaits confirmation as the next Chair of the Securities and Exchange Commission (SEC), his nomination presents an exciting opportunity to bolster investment crowdfunding and empower entrepreneurs and small investors alike. Regulation Crowdfunding (Reg CF), introduced in 2016, has unlocked billions in capital for small businesses while providing individual investors access to a burgeoning asset class. If Atkins is confirmed, he would have the chance to elevate Reg CF to the next level.
Here are four steps the SEC could take under his leadership—without Congressional approval—to strengthen investment crowdfunding:
1. Adjust Offering and Investment Limits for Inflation The $5 million cap on what companies can raise under Reg CF and the limits on what investors can contribute are outdated. Inflation has reduced the real value of these thresholds, constraining growth and opportunity. The SEC can, and should, revise these limits to reflect current economic realities.
“Investment crowdfunding has proven its value by enabling thousands of companies to raise needed capital from their communities,” says Sherwood Neiss, Principal at Crowdfund Capital Advisors. “But outdated caps are holding the industry back. Adjusting for inflation will allow more businesses to thrive and give investors greater flexibility.”
2. Extend COVID-Era Audit Relief for Issuers During the pandemic, the SEC temporarily eased financial statement requirements for offerings of $250,000 or less, allowing issuers to provide certified financial statements instead of CPA-reviewed ones. Extending this relief would reduce compliance costs for small businesses still recovering economically, while maintaining investor protections through mandatory disclosures, legal accountability for certifications, and the low fraud rate historically seen under Reg CF. This targeted approach balances the needs of small businesses and investors, ensuring both access to capital and transparency.
3. Boost Education and Outreach via the SEC’s Office of the Advocate for Small Business Capital Formation Many entrepreneurs are unaware of how Reg CF can help them raise capital, and investors often don’t understand the benefits of diversifying into this emerging asset class. The SEC’s Office of the Advocate for Small Business Capital Formation should prioritize education and outreach to close this knowledge gap. Empowering entrepreneurs and investors with better information will unleash the full potential of crowdfunding.
4. Encourage Compliance with Annual Reporting Requirements Transparency is key to Reg CF’s success. The SEC should send reminders to successful issuers about their annual reporting obligations, along with clear instructions on how to comply or terminate reporting if eligible. Maintaining high compliance rates will ensure that Reg CF remains the most transparent exemption in private capital markets—an achievement that should be the envy of the world.
By taking these four steps, the SEC under Atkins’ potential leadership could build on the strong foundation of Reg CF and foster an environment where entrepreneurs can thrive and investors can benefit. “With small businesses driving economic growth and job creation, it’s imperative to support them with accessible and transparent capital-raising tools,” Neiss emphasizes. “These are commonsense actions that will have an outsized impact.”
Whether or not Atkins ultimately assumes the SEC chairmanship, the ideas outlined here represent practical measures that could—and should—be implemented to improve the crowdfunding ecosystem.
Sherwood Neiss is a Principal at Crowdfund Capital Advisors and a pioneer in the investment crowdfunding industry.
The startup world is undergoing a seismic shift. The way early-stage businesses secure funding is evolving, and a new champion is emerging: Investment Crowdfunding. Here’s why I believe it’s poised to become the primary starting point for all startups—surpassing venture capital and angel investing in the near future.
Venture capital has long been a cornerstone of the startup ecosystem, but the cracks in its foundation are showing. Post-pandemic market corrections, economic uncertainty, and investor caution have caused a pullback in funding. Even when VCs do invest, they’re increasingly targeting later-stage companies, leaving early-stage founders to fend for themselves.
This shift upstream is creating a gap at the most critical stage of startup growth—the early, formative years when ideas are fragile but full of promise. That’s where investment crowdfunding comes in.
Angel Investors: Limited in Scope
Angel investors have traditionally filled the gap left by venture capital, but their reach is inherently limited. They typically invest close to home and within their networks, which can exclude diverse founders and underrepresented industries. Angels play a vital role but lack the scale and democratization needed to drive a paradigm shift in startup funding.
The Crowdfunding Revolution: Retail Investors to the Rescue
Investment crowdfunding, regulated under the JOBS Act, has empowered everyday retail investors to participate in funding startups. Millions of small checks are collectively filling the void left by venture capital and angels. These investments are more than just financial—they’re building communities of investors who are also customers, brand advocates, and early adopters.
This model addresses one of the largest pain points for startups funded by traditional means: turning capital into market traction. With investment crowdfunding, the very act of raising money creates a built-in base of users who are financially and emotionally invested in the product’s success.
The Data: Small Checks, Big Impact
As keepers of all the investment crowdfunding data (via CCLEAR), the numbers speak for themselves. Regulation Crowdfunding campaigns are consistently hitting—and exceeding—early-stage funding goals. In many cases, crowdfunding rounds now rival Series A investments in terms of total capital raised. Platforms like Republic, StartEngine, and Wefunder are leading the charge, hosting campaigns that raise millions of dollars while activating thousands of supporters.
Why This Shift is Good for Startups
This shift is more than a temporary trend; it’s a fundamental evolution in startup funding. Here’s why it’s beneficial:
Diverse Access to Capital: Founders who may not fit the traditional mold for VC or angel funding can tap into the power of the crowd.
Market Validation: Crowdfunding campaigns validate a product’s demand, providing proof of concept before scaling.
Built-In Advocates: Crowdfunded startups create an engaged community of investors who amplify their message and drive growth.
The Series A is Coming to the Crowd
Crowdfunding campaigns are no longer just about scraping together seed funding. With aggregate investments increasingly surpassing $1 million per campaign, retail investors are stepping up to fund amounts traditionally reserved for Series A rounds. As this trend accelerates, startups will no longer need to beg VCs for funding—they’ll find it in their customers’ pockets.
The Timeline: Where Are We Headed?
It’s clear this trend is already underway, but its full impact will take a few more years to unfold. By 2030, I predict investment crowdfunding will be the definitive starting point for most startups. Its scale, efficiency, and ability to drive market traction will outpace traditional methods of funding.
Mark My Words
The rise of investment crowdfunding isn’t just a possibility—it’s an inevitability. The democratization of startup investing is here, and it’s already proving its worth. Millions of small-dollar investors are stepping up, funding innovation, and driving change. The era of the venture capital gatekeeper is waning, and a new champion of entrepreneurship is taking its place. Startups of the future will be built by the crowd, for the crowd.
If you’re not watching this space, you’re already behind.
As the landscape of investment opportunities evolves, investment advisors must broaden their horizons to stay relevant. Regulation Crowdfunding (Reg CF), introduced under the JOBS Act, has created a pathway for everyday investors to support small businesses and startups through equity and debt investments. While the structure of these investments may not directly benefit advisors through traditional commissions, embracing investment crowdfunding offers strategic advantages that align with modern advisory practices.
A Holistic Approach to Wealth Management
Advisors are increasingly expected to take a comprehensive view of their clients’ financial portfolios. Clients today, particularly millennials and Gen Z investors, are motivated by values-driven investing, community support, and high-growth potential opportunities. Crowdfunding fits this ethos, offering access to pre-IPO opportunities and local investment projects. By advising clients on these investments, advisors demonstrate an awareness of contemporary trends and an ability to guide clients beyond traditional assets like stocks and bonds.
The Rise of the DIY Investor and the Need for Guidance
Platforms like Republic, Wefunder, and StartEngine have democratized investment access. However, navigating the landscape of private investments remains complex due to risks such as limited liquidity, disclosure variability, and fraud. This is where advisors can step in—not just to recommend or discourage, but to educate. By offering insights into Reg CF campaigns and performing due diligence, advisors can protect their clients from undue risk while reinforcing their own value proposition.
Differentiating the Advisory Practice
Investment advisors who incorporate crowdfunding insights into their services can position themselves as forward-thinking and client-centric. They can:
Analyze the potential risks and returns of crowdfunding campaigns.
Help clients identify opportunities aligned with their financial goals and risk tolerance.
Offer a value-added service that differentiates them from competitors who stick to conventional portfolios.
Moreover, research shows that startups using crowdfunding often contribute significantly to local economies and job creation. Advising on these investments allows advisors to champion community impact—a growing priority for many investors.
Regulatory Confidence and Fiduciary Duty
Reg CF is highly regulated by the SEC and FINRA, ensuring greater transparency and investor protection compared to earlier forms of crowdfunding. Advisors should leverage this regulatory structure to reassure clients that these investments are legitimate, albeit high-risk. This is consistent with a fiduciary duty to act in clients’ best interests while exploring new financial opportunities.
Conclusion: Adding Value Without Chasing Commissions
Investment crowdfunding may not fit the commission-based model, but its importance in the modern financial ecosystem cannot be ignored. Advisors who embrace this trend stand to enrich their client relationships, enhance their reputation, and ensure their practices remain relevant in a rapidly evolving investment landscape.
By recognizing crowdfunding’s potential and educating clients about it, investment advisors position themselves as indispensable partners in wealth creation and management. If you’d like to explore how crowdfunding data can integrate into your practice, visit CClear.ai or sign up for their newsletter for insights into the latest trends.
The crowdfunding industry, long championed as a democratized approach to funding startups and small businesses, has navigated a complex journey since its 2016 debut. As the numbers reveal, while total commitments remain robust, the underlying dynamics tell a more nuanced story of shifting capital flows, retail pullbacks, and the rise of parallel investments.
What began as an experimental financing avenue in 2016 has matured into a significant funding channel, with commitments growing from $19.7 million in its inaugural year to a staggering $554 million at its 2021 peak. The early years were fueled by retail investors eager to participate in Regulation Crowdfunding (Reg CF) opportunities, buoyed by the promise of investing in the next big idea.
By 2020, amid the economic turbulence of the COVID-19 pandemic, total commitments surged to $246.8 million, doubling from the prior year as businesses turned to crowdfunding for critical capital. That same year, a new trend emerged: the introduction of parallel investments—funds raised from accredited investors through private 506(c) deals but offered at the same terms as Reg CF campaigns. While these parallel deals initially accounted for a modest $255,000 in 2020, their role has grown exponentially, shaping the industry’s trajectory.
2022–2024: A Nuanced Narrative
The period following the 2021 high-water mark reflects the challenges facing crowdfunding. Retail investors, the backbone of the industry, began pulling back amid inflation concerns, venture capital hesitancy, and broader market uncertainty. Retail commitments fell from $554 million in 2021 to $473.5 million in 2022 and further to $343.4 million in 2024.
However, this pullback has been counterbalanced by a striking rise in parallel investments. In 2023, these accredited investor contributions reached $95.4 million, nearly four times the $24.7 million recorded in 2022. By 2024, parallel commitments had ballooned to $163.7 million, comprising a substantial portion of total funding.
While the 2024 numbers, bolstered by an estimated $58.7 million in December commitments, appear strong at $565.7 million, the reality is more layered. Retail participation has dwindled, and the growth seen in recent years has largely been sustained by parallel investments—a shift that has kept the industry afloat but highlights a critical dependency.
The Path to 2025: Challenges and Opportunities
Looking ahead, the industry faces a pivotal moment. The new administration, with its pro-business stance, is expected to create favorable conditions for private capital markets, potentially reigniting retail investor enthusiasm. Crowdfunding platforms are also anticipated to expand their reach into high-growth sectors like healthcare, food services, and FinTech, capitalizing on investor demand for both transformative technologies and a good empanada.
“Crowdfunding is more resilient than ever, but the key to long-term growth lies in re-engaging retail investors,” said Sherwood Neiss, Principal at Crowdfund Capital Advisors. “The reliance on parallel investments has been a lifesaver, but it’s not sustainable to depend so heavily on accredited investor contributions.”
CCLEAR, a division of CCA that focuses on investment crowdfunding data, projects that 2025 could see total commitments surpass $750 million, with a balanced mix of retail and parallel investments driving the growth. This rebound, if realized, would mark a return to form for the industry while underscoring its adaptability in the face of shifting economic conditions.
An Industry’s Evolution
As the industry gears up for 2025, its inclusivity remains a bright spot. In 2024, 40% of offerings were led by women or minority founders, a testament to crowdfunding’s potential to democratize access not just for investors but for entrepreneurs. This diversity, coupled with a maturing ecosystem, positions crowdfunding as a cornerstone of the private capital landscape.
The numbers tell a story of resilience and evolution. The question now is whether the industry can reignite the retail enthusiasm that once defined it while maintaining the momentum parallel investments have provided. For crowdfunding, the future is as nuanced as its past—and just as promising.
For decades, venture capital has been the undisputed kingmaker of startups, a world where a select few held the power to determine which companies thrived and which withered. But a quiet revolution is underway. Investment crowdfunding, once dismissed as a niche funding mechanism, is reshaping the startup ecosystem and redefining how investors evaluate opportunities.
Underpinned by Regulation Crowdfunding (Reg CF) introduced in the JOBS Act of 2012, platforms like Wefunder, StartEngine, Honeycomb, and Republic have emerged as key players in this new wave of financing. These platforms enable startups to raise funds from everyday investors, democratizing access to capital in ways that were previously unimaginable. Crowdfunding deals now span nearly 2,000 cities across the United States, with more than 100 platforms offering opportunities to invest.
Critics argue that crowdfunding lacks the rigor of traditional venture capital. They point to the deep diligence VCs perform before committing millions to a startup and the strategic guidance they often provide. But proponents of crowdfunding counter with a compelling argument: investor sentiment within Reg CF campaigns is becoming a leading indicator of a startup’s potential. Deals with hundreds of investors and larger-than-average check sizes suggest a combination of market validation and deep trust in the founding team—data points that even the most seasoned VC would find hard to ignore.
Some of the biggest names in venture capital are paying attention. Andreessen Horowitz, a household name in Silicon Valley, has participated in crowdfunding deals like Levels Heath despite having ample resources to fund its portfolio companies outright. The reason? Crowdfunding offers a unique advantage: direct engagement with a startup’s potential customer base. For companies already backed by institutional capital, crowdfunding provides something VCs alone can’t—marketing buzz and a built-in community of brand advocates.
Take, for example, take the 60 startups that have raised $5 million or more in a Reg CF campaign. These deals often attract more than 2,500 investors, many of whom are future customers. Their financial commitment signals strong confidence in the team and product, creating a form of validation that resonates beyond balance sheets. For VCs, this investor enthusiasm can serve as a powerful indicator, surfacing opportunities that might otherwise go unnoticed.
Another feature of crowdfunding that sets it apart is its geographic reach. Traditional VC has long been concentrated in hubs like Silicon Valley and New York. But crowdfunding platforms are changing the game, channeling capital into underserved markets, including rural America where nearly 500 startups have leveraged Reg CF. Startups in these areas now have access to funding that previously would have been out of reach, helping to unlock innovation in overlooked corners of the country.
Crowdfunding is also leading the charge in diversifying entrepreneurship. In 2023, nearly 40% of crowdfunding campaigns included at least one woman or minority founder—an achievement far beyond the 2% representation these groups typically receive in venture capital. For many founders, crowdfunding has become not just a financing tool but a lifeline, enabling them to grow their businesses on their terms.
Despite its promise, crowdfunding is not without risks. Herd mentality can influence campaigns, and platforms must ensure transparency to protect both founders and investors. Still, the data flowing from crowdfunding platforms offers a treasure trove of insights. For venture capitalists, it represents a new frontier for diligence, allowing them to identify trends, validate markets, and de-risk their investments by backing companies already tested by the crowd.
The relationship between crowdfunding and venture capital is evolving. Far from being rivals, the two are proving to be complementary forces. Crowdfunding helps early-stage startups gain traction, while venture capital provides the scaling power necessary to dominate markets. Together, they are redefining what’s possible for startups and investors alike.
The question is no longer whether crowdfunding will disrupt venture capital. It’s how quickly the two will learn to work together. For now, the startups stand to benefit most, with more funding options, greater market validation, and unprecedented access to capital—no matter where they are or who they are.
If you are interested in the data behind this story, reach out to: data@theccagroup.com
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