Crowdfunding as a source of capital seems increasingly appealing to entrepreneurs, but growth has been inconsistent among the kinds of crowdfunding platforms that exist, experts say.

Equity crowdfunding has yet to gain traction, according to Ethan Mollick, a professor of management at the Wharton School, but he thinks some of the most interesting changes are occurring in that specific subset of crowdfunding. Equity crowdfunding offers an alternative to traditional ways of raising equity, allowing investors to purchase securities in companies through online portals, sometimes for as little as $100 and without being accredited.

The U.S. Small Business Administration defined the three basic types of crowdfunding in a 2015 report. Reward crowdfunding means money is exchanged for a clearly defined good, but in equity crowdfunding, money is exchanged for a piece of the venture. The third subset, peer-to-peer crowdfunding, occurs when money is exchanged for a loan agreement.

The Jumpstart Our Business Startups Act put equity crowdfunding on the map. In 2012, Title III of the JOBS Act put in place crowdfunding provisions that let early-stage companies offer and sell securities. The Securities and Exchange Commission then adopted Regulation Crowdfunding to implement the JOBS Act's crowdfunding provisions, which apply to equity crowdfunding. The Financial Industry Regulatory Authority, for its part, says its role is to oversee the registration of crowdfunding portals and monitor their compliance with federal securities laws and FINRA rules. FINRA currently lists 29 SEC-registered crowdfunding intermediaries that it regulates.

S&P Global Market Intelligence tracked Regulation Crowdfunding program activity based on Form C filings submitted to the SEC from May 2016 through July 2017. The number of monthly filings peaked in May 2017 at around 100, and the aggregate target offering amount topped $9 million in April 2017, according to the data.

Mollick suggested that the spike in Form C filings is significant but still small relative to the popularity of the other forms of crowdfunding. More established rewards-based crowdfunding platforms, like Kickstarter and Indiegogo, continue to grow steadily, Molick said, and charitable crowdfunding sites like GoFundMe have also accelerated.

"Equity crowdfunding is the biggest change. I think people hoped it would take off like wildfire since the rules were finalized last year, but it hasn't, as a way of funding companies," he added. "There are a bunch of people using equity crowdfunding to do interesting things and that's still evolving."

Equity crowdfunding platform WeFunder calls itself the "Kickstarter for investing." On the company's website, CEO Nick Tommarello says WeFunder has become the largest Regulation Crowdfunding platform since helping pass the JOBS Act in 2012.

As of now, there is no clear winner among equity crowdfunding platforms, according to Mollick. These companies face both legal and platform restriction headwinds, he added, and limitations imposed by SEC regulations include the amount of money companies can raise and the fees attached to audits.

In the rewards space, Kickstarter positions itself as a platform specifically for creative projects. The site gives "backers" rewards like copies or limited editions of a project, or experiences related to the project.

Justin Kazmark, vice president of communications at Kickstarter, said the company plans to stick to its rewards-based crowdfunding model.

"If we ventured into the equity space, that would be very limiting to a number of ideas," Kazmark said in an interview. "We know that this model works and it brings to life a certain type of project."

He pointed out that the rewards-based model mitigates risk because participants can fund their ideas and validate a market without bringing direct investors in. The platform is also an entry point to other forms of capital, Kazmark said. Creators get validation on Kickstarter, then some are discovered by venture capitalists and other investors, he added, noting that Kickstarter is also an alternative funding source for those creators in need of a "second look" after trying and failing to get funding elsewhere.

E.J. Reedy, director of the Polsky Center for Entrepreneurship and Innovation at the University of Chicago, said the broader alternative finance industry has room to grow. The Polsky Center, the Booth School of Business at the University of Chicago and the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School are in the midst of collaborating on the "2017 Americas Alternative Finance Industry Survey." The study builds on the group's 2016 report on crowdfunding, marketplace and peer-to-peer lending, and other forms of alternative finance in the Americas.

Stay abreast of capital markets activity with this downloadable spreadsheet, which features summary and detail views of completed offerings from financial services companies.