The best way to become familiar with equity crowdfunding sites is to explore a few of them. You can browse certain areas of a site without registering as a member. On most sites, from an investor’s point of view, here is the content that you can see without registering:

  • A list of the current offerings, with the following details for each Title III offering: company name and location, and industry category; equity or convertible debt; funding goal in dollars, funding deadline, minimum investment, amount of capital already committed to the offering, and percentage of the goal attained so far; a short description of the business, a videotaped pitch (usually under 10 minutes) and team profiles (including founders, executives, partners, key advisers); the company’s proprietary business plan, financial projections, deal terms, and risk disclosures.
  • Information about the crowdfunding site itself, its principals, its due diligence standards and/or issuer selection process, terms and conditions of use, privacy policy, how the investment process works, and how the site earns revenue.
  • Educational content as mandated by the JOBS Act, which should include the fundamentals of equity crowdfunding, Title III basics, explanation of risks and returns of investing in private securities, and other investing fundamentals.

Participation in the discussion forums and Q&A forums (where investors ask questions directly to issuers and their replies are open to all participants) is available only to registered members of the site. Upon registration, you will be prompted to set up a profile, similar to the way many social networking sites work. Initially you may enter as little or as much personal information as you wish in your profile. You can start with a skeleton profile (name and contact info) and add more personal information once you feel comfortable on the site.

Be aware that other registered investors (and some issuers) will view your profile and possibly conduct a more thorough online search of your background—maybe even call you for a brief chat to judge whether they can rely on your opinions. So eventually you will want to fill in your profile with (only accurate) information that will help other investors, with whom you will collaborate on due diligence, to judge that you are reliable. Be careful in the discussion forums not to unfairly disparage an issuer or other investors—they will be reluctant to share information and opinions with anyone whose profile is incomplete or suspiciously cryptic, or who rants and raves or unfairly criticizes a company or another investor.

Terms and Conditions of Use

When you register on an equity crowdfunding portal or platform, you must acknowledge that you have read, and accept, the site’s terms and conditions of use. This is one instance where you really should read the terms before you click “accept.” Accepting those terms and conditions, and completing the registration, constitutes a legally binding agreement between you and the site. Following are condensed versions of some of the most important terms and conditions common to equity crowdfunding sites:

  • The registration information that you submit must be accurate and truthful. Most, if not all, Title III portals require “real name only” registration. In any case, your user ID cannot be offensive, vulgar, or obscene.
  • You are responsible for protecting the confidentiality of your user ID and password.
  • You must be an adult to invest in an offering on the site.
  • Your activities on the site must comply with laws relating to taxes, securities, and contracts.
  • Statements of material fact that you make on the site, in discussions and forums, must not be misleading or untrue.
  • You must not reveal personal information about another investor.
  • You must not “further disclose” or otherwise disseminate private and confidential disclosures, to which you have been granted access, about offerings on the site.
  • You acknowledge that your investment may or may not produce a favorable result.
  • You are responsible for conducting due diligence on, and assessing the risks of, the investment opportunities presented on the site. If you incur a loss, you can’t hold the issuer or the intermediary liable (in the absence of fraud or negligence by those parties).
  • The site may suspend or remove an offering at any time for any reason, and shall not be liable for losses or damages that result therefrom. (If you have committed money in escrow to such an offering, you would receive a refund.) 

The Investor Dashboard

Once you register on an equity crowdfunding site you will have access to your account, sometimes presented as a “dashboard,” where you can build or revise your profile, change your account settings, and maintain an archive of your interests and activities on the site. We will show you a couple of hypothetical examples based on the design of the EarlyShares site. We chose EarlyShares because we believe it exhibits high standards of professionalism and compliance.8 EarlyShares launched in April 2012, when it was one of the first equity offering platforms in the United States (though it could not feature Title III offerings at that point). The platform started with 506(b) offerings and expanded to 506(c) offerings in December 2013. Its first successful 506(c) offering was Boatsetter, an Airbnb-like service for boat owners and renters, which raised $1.104 million from 24 investors (whose funds were pooled into an investment vehicle called EarlyFund-Boatsetter LLC) over about six months. Notably, Boatsetter offered rewards, in the form of discounts on boat rentals, to its investors. (EarlyShares currently allows issuers to integrate rewards-based crowdfunding campaigns with their equity offerings, but not to list freestanding rewards-only campaigns.) Joanna Schwartz, EarlyShares’ CEO, was previously the founder of Silver Hill Financial, a commercial mortgage lender with 550 employees and $1 billion in annual originations.

From the EarlyShares dashboard, you will see the following information for Title III offerings (assuming the final SEC rules are favorable):

  • Current offerings that you have expressed interest in. When you come across an offering that you might want to invest in, on that offering page you can check a box to “watch” the offering’s progress. A section of your dashboard titled “Offerings I’m Watching” (also called a “watch-list”) shows company names, descriptions, and updated information about each of your selected offering’s committed capital and funding goal (see Figure 7.1). This is a convenient feature especially on sites that list dozens of offerings in various categories. You can follow the funding progress of equity offerings that you selected while you decide whether or not to invest in them.
  • Offerings that you have committed to investing in. This section of the dashboard shows offerings that you have pledged to invest in, with instructions for transferring money into escrow. After you send your payment, you must wait for the offering to reach its funding goal before the deal closes. The progress bar continues to show how close the offering is to closing (see Figure 7.2). If the offering fails to reach its funding goal, escrow money is refunded to committed investors.
  • Closed offerings that you have invested in. After the offering reaches its funding goal, the deal closes, escrow money is released to the issuer, and you are finally an equity investor. The dashboard keeps an archive of the deals you have invested in on this site, with access to all deal documents, postfunding notifications from the issuer, and ongoing discussion forums.
  • Accounting of the money you have invested on this site over the past 12 months. Using an embedded calculator, this feature helps you keep track of your invested capital to be sure you do not exceed your yearly limit—on this particular site at least—based on your income and net worth. (Each investor is ultimately responsible for tracking his or her total capital invested in Title III deals and complying with yearly investment limits, on one or more sites.)

FIGURE 7.1 Dashboard Lets You “Follow” Selected Offerings Sources: Used with permission from

FIGURE 7.2 Dashboard Tracks Your Commitments to Invest

Sources: Used with permission from

Application for Issuers

As an investor, you should become familiar with an equity crowdfunding site’s application process for issuers. On most sites, registered members can see the application that issuers must complete if they want to list their offerings. The application will give insight into the intermediary’s screening process. 

Before an issuer’s application is accepted, an equity crowdfunding site must conduct background checks on the issuer’s team: officers, directors, 20 percent equity holders, and “participants” in the offering. If any one of these team members is a “bad actor,” the offering is disqualified. The issuer may reapply after removing any bad actors from the team.

In the case of EarlyShares, background checks are farmed out to CrowdCheck, the due diligence service. On behalf of EarlyShares, CrowdCheck also reviews the applicant’s records to confirm that its board of directors authorized the offering of shares, its articles of incorporation (or operating agreement in the case of an LLC) are on file with the state, its capitalization table is accurate, it is not involved in disruptive litigation, its intellectual property is registered as claimed, and other key compliance issues. The issuer pays CrowdCheck’s fee directly for this service.

In later sections we will describe more features of an equity crowd-funding site, including: (1) Q&A and discussion forums, where you can communicate with the offering teams and collaborate with other investors on due diligence, and (2) transaction processes.

This information is also available on the company’s Form C, published on EDGAR, the SEC’s searchable database of company filings: /search Edgar/companysearch.html.

In Figures 7.1 and 7.2, the issuers’ names and offering details are fictional. Neither author has any personal, professional, or financial interest in or commitments to Early Shares.