Starting Tuesday, the crowdfunding platform will begin taking advantage of a securities rule put in place last May that allows anyone, not just accredited investors, to invest in private companies in exchange for equity.
"In a lot of ways, this levels the playing field," Indiegogo CEO David Mandelbrot told The New York Times. "This was one of the few areas of the law where citizens were treated differently based on the amount of wealth that they have."
To be sure, there are significant risks: There's no guarantee these new--and largely untested--companies will succeed. And because private equity isn't easily sold off once purchased, investors could be stuck with company shares for years before seeing a payout. (That's why only individuals with an annual income of at least $200,000, or a net worth of $1 million, were previously allowed to invest in such companies.)
Currently, Indiegogo takes 5 percent of funds raised in a traditional crowdfunding campaign. An equity campaign will run businesses an estimated $7,000 in regulatory costs, plus Indiegogo will take payment in the form of the higher of two amounts: 7 percent of funds raised or 2 percent in equity of its own.
While roughly 20 other portals have become certified to offer microinvesting opportunities, Kickstarter, Indiegogo's biggest competitor, isn't interested in taking that route. "The purpose of creativity is not to become an investment vehicle," a spokesperson told the Times. "When creative projects escape the need to generate profit, the result is a more vibrant and diverse culture. We're more focused on a richer culture than richer investors."