Equity crowdfunding: Selling an ownership stake in a company to multiple people, also called peer-to-peer investing. This activity is regulated by the Securities and Exchange Commission and often limited to accredited investors. Two pending California bills would allow California companies to do equity crowdfunding with nonaccredited investors, meaning the general public — as long as the investors live in California.
Online crowdfunding: Kickstarter, Indiegogo and similar websites let people give money to creative endeavors in exchange for a small reward, such as a product under development or access to special events.
Peer-to-peer lending sites such as LendingClub and Prosper let borrowers seek unrelated investors to make unsecured personal loans with preset interest rates and payback plans.
Accredited investor: A person whose net worth is more than $1 million, not including a primary residence, or whose annual income is at least $200,000 ($300,000 for couples). The United States has an estimated 9 million accredited investors. SEC rules now limit many types of investments, such as equity crowdfunding, to accredited investors, on the assumption that they are financially savvy.
Nonaccredited investors: Anyone in the general adult population who wants to invest.