Equity Crowdfunding (ECF) and Peer-to-Peer (P2P) Financing are two distinct methods of raising capital and connecting investors with businesses or entrepreneurs, but they differ in significant ways, primarily in what investors receive in return for their investments.

 

In ECF, investors purchase shares or equity in a business. They become partial owners of the company and have a potential stake in its future profits. This type of investment is typically associated with startups or early-stage businesses looking for growth capital.

 

P2P financing is more focused on debt-based financing. In P2P financing, investors provide loans to individuals or businesses, and in return, they receive interest payments or profit payments. These loans are typically repaid over a specified period, and investors do not acquire ownership stakes in the borrower's business.