---
title: Crowdfunding Vs. Equity Crowdfunding
description: What's the difference between crowdfunding and equity crowdfunding? Learn the differences between crowdfunding, a rewards-based platform, and equity crowdfunding, an ownership-based fundraising method.
---

[Fundraising Insights](https://blog.netcapitaladvisors.com)

# [Crowdfunding Vs. Equity Crowdfunding](https://blog.netcapitaladvisors.com/crowdfunding-vs.-equity-crowdfunding)

 Written by [Kathy Kraysler](https://blog.netcapitaladvisors.com/author/kathy-kraysler) | May 29, 2018

**Kathy Kraysler**  
ValueSetters CMO

 

**Crowdfunding vs. Equity Crowdfunding: What's the Difference?**

While these terms are sometimes used interchangeably, there are huge differences between the two types of fundraising. 

**CROWDFUNDING: **  
Think of crowdfunding as a *rewards-based* platform.  Crowdfunding platforms such as Kickstarter are used to pre-sell products or fund projects.

Investors **aren't buying ownership** in the company. They are essentially **making a donation** in exchange for early access to a product, or even for a credit in a movie.

Sometimes these products are fun or artistic, such as a [pi-shaped pie pan](https://www.kickstarter.com/projects/pinojo/pi-pans-the-geekiest-way-to-bake-a-pie) or a [bear-shaped coat](https://grizcoat.com/products/griz-coat-original).

There is **no financial return** for people who donate to these products or projects. Even if the product strikes it big, investors won't share in the financial success. 

**EQUITY CROWDFUNDING:**  
Unlike crowdfunding, which is rewards-based from an investor's perspective, Equity Crowdfunding is **ownership-based.  **

Equity crowdfunding portals such as **[Netcapital](https://netcapital.com/)** are used to raise larger amounts of money to finance a company's **operational growth**. 

Companies who raise funds via equity crowdfunding are typically **innovators** who want to **disrupt an industry**.

If these companies are successful, **investors will share in the financial success** and could potentially see a huge return on their investment...but they could also lose their entire investment.

**To learn more about the differences between  crowdfunding and equity crowdfunding, download our infographic: Crowdfunding Vs. Equity Crowdfunding**

<https://info.valuesetters.com/ig/crowdfunding-vs-equity-crowdfunding>

[View full post](https://blog.netcapitaladvisors.com/crowdfunding-vs.-equity-crowdfunding)

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