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Equity-Based Crowdfunding: Allowing the Masses to Take a Slice of the Pie

International Perspectives on Crowdfunding

ISBN: 978-1-78560-315-0, eISBN: 978-1-78560-314-3

Publication date: 20 July 2016



The purpose of this chapter is to expose the limitations of the equity-based crowdfunding provisions of the 2012 JOBS Act. These provisions have received much attention because they have the potential to open funding opportunities to countless underfunded entrepreneurs and small businesses. In addition, they can provide everyday investors with new ways to diversify their portfolios. However, the author asserts that the JOBS Act is unlikely to be successful in its current incarnation, because it overly burdens the entrepreneur with reporting and accountability requirements, among other things. The author resolves these issues by articulating a regulatory alternative to the JOBS Act.


This chapter reviews the general requirements for equity-based crowdfunding under the 2012 JOBS Act. It also reviews the various approaches individual states and other countries have taken to promote equity-based crowdfunding.


The existing law and proposed regulations for equity-based crowdfunding under the JOBS Act are overly burdensome and will impair the ability of entrepreneurs and small-businesses to successfully use equity-based crowdfunding throughout the United States. Regulators and other lawmakers need to adopt new rules focused on protecting consumers via spending limits.

Research limitations/implications

Most of the research is based on theory, because the equity-based regulations have not been finalized or implemented at the federal level. However, the United States can learn much from the equity-based crowdfunding efforts of individual states and other countries.


This chapter’s critique is designed to engage lawmakers, regulators, entrepreneurs, and small businesses in a new discussion about equity-based crowdfunding regulations.



Stemler, A. (2016), "Equity-Based Crowdfunding: Allowing the Masses to Take a Slice of the Pie", Méric, J., Maque, I. and Brabet, J. (Ed.) International Perspectives on Crowdfunding, Emerald Group Publishing Limited, Bingley, pp. 219-235.



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