Equity crowdfunding has emerged as a transformative financing tool, reshaping the entrepreneurial and investment landscapes. For startups, it offers an accessible pathway to secure funding without the traditional constraints of venture capital or bank loans. For investors, it democratises participation, enabling individuals to support early-stage ventures with modest contributions. Despite its promise, the full potential of equity crowdfunding remains untapped due to its fragmented, localised nature.

The globalisation of equity crowdfunding is essential to creating a seamless, borderless investment ecosystem. By enabling cross-border transactions and harmonising regulatory frameworks, this shift can democratise access to capital, spur innovation, and foster global economic growth. This article explores why globalising equity crowdfunding is necessary, its benefits, and the steps required to achieve it.

What Is Equity Crowdfunding?

Equity crowdfunding allows individuals to invest in startups and small businesses in exchange for equity or equity-like returns. Unlike reward-based crowdfunding, where backers receive non-monetary incentives, equity crowdfunding aligns investors with a company’s financial success. It also differs from debt-based crowdfunding, where investors lend money in return for fixed interest payments.

In recent years, equity crowdfunding has gained traction as a viable financing alternative for entrepreneurs. According to Business Research Insights the equity crowdfunding market was valued at approximately USD 1.41 billion in 2023 and is projected to reach USD 4.51 billion by 2032, growing at a compound annual growth rate (CAGR) of 13.8% during the forecast period (Source: Business Research Insights, December 2024). This growth is driven by the increasing awareness of crowdfunding’s potential to democratise capital access, particularly in underserved regions.

The Current State of Equity Crowdfunding

The equity crowdfunding ecosystem has witnessed significant growth, with platforms like Seedrs in the UK, Republic in the US, and Birchal in Australia offering innovative ways to connect investors with startups. However, the landscape remains fragmented due to differing regulatory requirements across regions, complicating cross-border investments.

While some platforms have made strides in enabling global deals, they still face operational challenges in complying with the securities laws of each jurisdiction. For instance:

  • Seedrs and its parent company, Republic, are pioneering the ability for businesses to raise funds simultaneously in the US, UK, and EU. Randal MacDonald, head of Seedrs’ Dublin office, highlighted to BeBeez International that Republic and Seedrs are positioned as the only global provider offering this capability. The first global raise under this model occurred in 2024.
  • Despite these advancements, platforms must still address local regulatory nuances, which often require establishing a presence or partnerships in the target country.

While platforms like Seedrs and Republic have demonstrated operational capacity and innovation, the broader industry is hindered by the lack of harmonised regulatory frameworks. These barriers make it challenging for startups to attract international funding efficiently and for investors to build truly global portfolios. Inconsistent due diligence practices and the absence of interoperability among platforms further exacerbate these challenges, stalling the seamless globalisation of equity crowdfunding.

The Case for Globalising Equity Crowdfunding

  1. Economic Benefits
    Globalizing equity crowdfunding would unlock significant economic value by connecting startups and investors worldwide:
  • Access to Capital: Startups in underfunded regions, particularly in developing economies, could attract international investors, bridging capital gaps.
  • Investor Opportunities: Globalization allows investors to support innovative companies from diverse markets, increasing portfolio diversification and exposure to high-growth sectors.
  • Efficiency: A larger investor pool reduces funding gaps, accelerates fundraising timelines, and enhances capital efficiency.
  1. Technological Advancements
    The rise of blockchain technology and digital platforms enables secure, transparent, and efficient cross-border transactions. For instance:
  • Blockchain ensures tamper-proof records of ownership, increasing trust among investors.
  • AI-driven platforms can streamline due diligence processes, reducing friction in cross-border investments.
  1. Promotion of Innovation
    Globalization fosters innovation by funding startups with unique ideas across diverse cultural and economic contexts. Increased competition drives higher-quality ventures, elevating standards across industries.

      4. Cultural Exchange
        Equity crowdfunding creates opportunities for cross-cultural collaboration. Investors and entrepreneurs can share ideas, fostering mutual understanding and            global innovation. Ventures funded globally also contribute diverse cultural influences to their target markets, enriching the global economy.

Why Globalisation Is Necessary Now

  1. Economic Interdependence
    The global economy is more interconnected than ever, with startups and SMEs driving growth. Industries like renewable energy, fintech, and healthcare are increasingly reliant on international collaboration and funding. Equity crowdfunding can catalyse these sectors by providing seamless access to global capital.
  2. Regulatory Developments
    Recent initiatives, such as the European Crowdfunding Service Provider Regulation (ECSPR), demonstrate the feasibility of harmonizing crowdfunding regulations. These frameworks can serve as a blueprint for global standardisation, enabling smoother cross-border operations.
  3. Demand for Diversification
    Investors increasingly seek to mitigate risk by diversifying across geographies and sectors. Emerging markets, in particular, present lucrative opportunities for high-growth investments. Globalising equity crowdfunding can meet this demand by providing access to a wider range of ventures.

Challenges to Globalising Equity Crowdfunding

  1. Regulatory Barriers
    Divergent securities laws and compliance requirements remain significant hurdles. Startups often face duplicative or conflicting regulations when raising capital internationally, while investors encounter barriers to accessing foreign markets. Standardising these frameworks is critical.
  2. Technological and Operational Hurdles
    Ensuring platform interoperability and data security across jurisdictions is a technical challenge. Additionally, addressing language barriers, currency exchange complexities, and cultural differences requires significant investment in platform development.
  3. Trust and Transparency
    Fraud and governance concerns can deter investors from participating in cross-border equity crowdfunding. Establishing globally accepted ethical standards and robust due diligence practices is essential to building trust.

How Globalisation Would Positively Impact the Industry

  1. Economic Growth and Job Creation
    Startups can scale faster with access to international capital, creating jobs and driving economic development. For instance, globalized crowdfunding could help renewable energy startups expand operations, contributing to the green economy.
  2. Global Standards and Best Practices
    Harmonised regulations improve investor protections, streamline compliance, and reduce friction for startups entering international markets. Standardized practices also foster greater investor confidence.
  3. Broader Investor Participation
    Globalisation enables retail investors to access diverse opportunities traditionally reserved for institutional investors. By expanding the retail investor base, crowdfunding platforms can achieve higher funding volumes and greater market reach.
  4. Cultural and Social Impact
    Equity crowdfunding empowers entrepreneurs from marginalised regions, giving them visibility and funding opportunities. It also encourages global collaboration, enriching perspectives and fostering innovation through diverse experiences.

Strategic Path Forward

  1. Developing a Global Framework
    Intergovernmental organisations like the WTO, UN and IOSCO can play a pivotal role in fostering harmonised policies. The ECSPR offers a model for developing global standards, with lessons applicable to other regions.
  2. Leveraging Technology
    Platforms should adopt blockchain for secure and transparent transactions and AI for fraud detection and enhanced due diligence. These technologies can address operational challenges and improve efficiency.
  3. Building Trust
    To overcome skepticism, platforms must implement rigorous vetting processes and provide investor education. Promoting success stories of globalised crowdfunding campaigns can also build credibility.
  4. Encouraging Collaboration
    Partnerships between platforms, regulators, and stakeholders are essential for developing shared goals and standards. Industry alliances like the Global Equity Crowdfunding Alliance (GECA) can spearhead efforts to create a unified ecosystem.

Conclusion

Globalising equity crowdfunding represents a transformative opportunity to unlock the future of borderless investments. By connecting startups and investors across geographies, it democratises access to capital, fosters innovation, and drives global economic growth. While challenges remain, strategic efforts to harmonise regulations, leverage technology, and build trust can pave the way for a seamless investment ecosystem.

Now is the time for regulators, platforms, and stakeholders to act decisively. Together, we can shape a future where equity crowdfunding transcends borders, empowering entrepreneurs and investors to collaborate on a truly global scale.

Join the movement and become a supporter of the Global Equity Crowdfunding Alliance (GECA). By uniting with industry leaders, you’ll gain access to resources, forums, and opportunities to help shape the future of equity crowdfunding.
👉 Apply to become a supporter here.