What the Trump Administration Means for Investment Crowdfunding and Startups

With Donald Trump’s anticipated return to the White House, there’s growing curiosity in the investment crowdfunding space. Industry stakeholders are wondering: what could another Trump administration mean for startups, small businesses, and the alternative investment landscape? As a data-driven entity, our team at Crowdfund Capital Advisors and CCLEAR has tracked every offering and daily transaction in the investment crowdfunding space since its inception in 2016. Leveraging this data, we can make informed projections on what this administration might bring to the industry—and the future looks promising.

Learning from History: The Impact of Trump’s First Term on Investment Crowdfunding

The investment crowdfunding industry saw substantial growth during Trump’s previous term, with policies favoring deregulation and reduced corporate taxes creating a positive environment for alternative funding. These policies allowed startups and small businesses to access capital more easily. From 2016 to 2020, the percentage of successful campaigns grew from 49% to over 70%, while the average amount raised per successful campaign nearly doubled, from $185,639 in 2016 to $292,755 by 2020. Investor participation also surged, with investor checks increasing from 21,750 in 2016 to 360,702 by 2020, demonstrating a marked rise in retail investor interest.

While it’s true that investment crowdfunding has grown as part of broader trends in alternative investments, data shows that it grew disproportionately during years with favorable policy shifts, including during Trump’s administration. For example, from 2019 to 2020, the industry saw a jump in total funds raised from $133 million to $247 million, correlating with Trump’s tax policies and deregulation efforts. In comparison, traditional VC investments saw a less steep growth trajectory in these years. This suggests that while economic factors contributed to growth, specific Trump-era policies also played a significant role. We wouldn’t be surprised to see total Regulation Crowdfunding investments jump from an estimated $563 million in 2024 to nearly $750 million in 2025 under similar circumstances.

Projecting a Positive Narrative for Startups and Small Businesses

Investment crowdfunding is uniquely positioned to thrive under an administration focused on stimulating small businesses. Trump has frequently spoken about his intention to reduce regulatory burdens and enhance tax incentives for U.S.-based companies—especially startups and small businesses, which are the backbone of the American economy.

If these pro-business policies are enacted, we anticipate a ripple effect throughout the investment crowdfunding space. When startups have fewer regulatory barriers and better tax incentives, they’re more likely to seek funding and find success on online investment platforms. We’ve already seen this correlation: in years with favorable policies, investment volumes, campaign activity, and investor participation have all increased. For example, in 2021, the number of retail investors participating in crowdfunding reached an all-time high of 529,000, reflecting heightened enthusiasm and accessibility for retail investors.

However, in recent years, investor participation has slowed as economic uncertainties, supply chain issues, geopolitical crises, and regulatory challenges created a more cautious environment. We expect that a Trump administration, with its focus on deregulation and pro-business policies, would help bring back more retail investors, rejuvenating the investment crowdfunding space. Renewed retail participation would provide startups and small businesses with the grassroots support they need to grow while giving everyday investors the chance to participate in entrepreneurial ventures that align with their values and financial goals.

VC Resurgence and the Path to M&A and Follow-on Investment

Another encouraging factor is the likelihood of increased VC (venture capital) activity. After years of economic uncertainty, VC investor participation, according to PitchBook, peaked at 25,133 in 2021, but it has since declined to 11,425 as of Q3 2024. A pro-business administration could help revive VC interest, creating a more dynamic funding ecosystem where investment crowdfunding serves as a crucial bridge for startups seeking initial capital before moving on to larger VC rounds.

A recovering VC market would create more opportunities for Reg CF-backed companies to secure follow-on investments or achieve exits through mergers and acquisitions. Our data shows that with more VC involvement, crowdfunded companies have a higher likelihood of securing these follow-on investments, which can accelerate their growth. This “ladder effect” in funding helps startups scale, benefiting both the early retail investors who participate in crowdfunding and the VC investors who enter later.

While we acknowledge that external economic factors will continue to affect VC activity, historical trends suggest that pro-business policies—such as those seen during Trump’s first term—do encourage a more robust investment environment. A return of VC participation could renew the flow of capital, leading to further scaling opportunities for crowdfunded companies.

The SEC Chair’s Departure: A Breath of Fresh Air for the Industry

The anticipated departure of SEC Chair Gary Gensler marks another positive development for the industry. Gensler’s tenure saw heightened scrutiny of alternative investments, which many in the industry viewed as restrictive for startups and small businesses relying on investment crowdfunding. A shift in leadership could mean reforms that align with the industry’s growth needs, including streamlined regulations and expanded opportunities for issuers.

Three critical areas for reform under the new administration and SEC leadership are as follows:

1. Increasing the Reg CF Cap: Raising the maximum amount issuers can raise under Reg CF from the current $5 million cap to $20 million. This increase would allow more companies to secure substantial funds and scale. This would fill the void that Tier 1 of Regulation Crowdfunding left for issuers seeking to raise up to $20 million through a qualified offering.
2. Tax Incentives: Adding tax incentives and credits for investment crowdfunding to the next iteration of the Tax Cuts and Jobs Act (TCJA) could provide same-year deductions on a percentage of an investor’s contribution and remove capital gains taxes on these investments. These measures would attract more investors without removing any investor protections.
3. Establishing a $2 Billion Co-Investment Fund: This fund would allow the government to co-invest alongside retail investors, bolstering the economic impact of crowdfunding while mitigating risk for individual investors.

These reforms would not only support entrepreneurship and job creation but would also have a measurable economic impact. According to our data at CCLEAR, every dollar invested in startups through crowdfunding translates to $5.70 in economic output through corporate expenditures. Given the total funding raised in recent years—$526 million in 2023 alone—raising the cap could see even more capital deployed into job-creating companies.

Investment Crowdfunding as a Tool for Revitalizing U.S. Manufacturing

Investment crowdfunding has a unique role to play in Trump’s vision for reviving U.S. manufacturing. Many of the companies raising funds through crowdfunding platforms are local manufacturers, producers, and innovators looking to grow on U.S. soil. By supporting these companies, investment crowdfunding can help rebuild domestic manufacturing, a priority Trump has often emphasized.

Not only does this keep jobs in America, but it also supports supply chain resilience and strengthens local economies. For example, several recent crowdfunding campaigns have successfully funded small manufacturing businesses in states like Michigan and Ohio, contributing to Trump’s stated goal of a manufacturing resurgence. If the administration recognizes the value of investment crowdfunding in building U.S. manufacturing, it could incentivize locally focused projects on these platforms. This would be a win for both the industry and Trump’s broader economic agenda, creating a symbiotic relationship where small businesses, local communities, and the American economy all stand to benefit.

A Vision for the Future: More Jobs, More Growth, and More Opportunity

In summary, a second Trump administration holds great promise for the investment crowdfunding industry. With the right combination of policy shifts—such as increased funding caps, reduced regulatory burdens, and tax incentives for startups—investment crowdfunding could continue its upward trajectory, supporting job creation and local economic growth nationwide. As venture capital activity picks up and SEC reform allows for more expansive crowdfunding opportunities, the industry is well-positioned to become a cornerstone of America’s small business and manufacturing revitalization.

By backing this narrative with the data we’ve gathered at CCLEAR, we can confidently say that the incoming administration has an opportunity to amplify the positive impact of investment crowdfunding. If leveraged correctly, this sector can become a powerful tool for U.S. economic growth and innovation, driving meaningful change for startups, small businesses, and the investors who believe in them.

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