When you register and are approved to invest through The Startup Hour™, you may participate in “equity crowdfunding”.
Unlike donation and rewards-based crowdfunding (such as Kickstarter, Indegogo and others) where people donate funds toward a project or campaign in exchange for a product, t-shirt, or goodwill, equity crowdfunding allows each investor to participate as part of a “crowd” that invests in a private company not listed on the stock exchange. Together, these individual investments combine to form a valuable source of seed capital for a business.
Once invested, the individual investor may have a partial ownership in the business (in most cases) with common stock. If the company does well, shareholders stand to share in the success. Of course, investors should note that investing in startups always comes with some degree of risk.
Today, regulations exist to help protect investors by attempting to limit the amount invested in relation to total assets. Accredited investors have fewer restrictions on them when making investments in seed capital, limited partnerships or hedge funds. It is still important that investors do their due diligence in any investment they intend to make.