A new form of crowd funding

Bad idea. With sites like Kickstarter, Indiegogo, Patreon, etc. your "investors" are essentially just customers. Their contributions are really just very expensive pre-orders. If they become "real" investors, they will have a stake in your project. They will have a say. And these aren't investors that you met with and know, they're random people on the internet. Who may become very demanding when a project needs to be changed or a release date needs to be delayed.

I can see why a project backer would like this idea, but the one-time cost of the rewards system seems way more palatable to me for creators.

It will always be a crap shoot, though. Whether you get lame key-chains and T-shirts as a reward or if you get a share of the profits, there will never be a guarantee that the project will be successful or even that it will be completed. Some people promise beyond what they can provide. No amount of "financial power" (or whatever you want to call it) can force a creator to make the impossible happen, even if the creator promised they could.

I see your point and it's a fair one. I should have clarified in my first post: as a backer, I would rather share in the profit, too. But I think a creator would have to be an idiot to ignore the Kickstarter-style options in favor of something like Equity Arcade.

If I read everything correctly, Equity Arcade is just like oldschool fundraising, but with internet. The backers would be shareholders. Shareholders need regular updates and in depth info on how a project is doing/where it's heading. As opposed to customers (Kickstarter), who may like having that info, but aren't entitled to it by any means. What's worse - these are shareholders you've never met!

I can't imagine why a creator would choose that over the other options. Equity Arcade mentions keeping a higher percentage of the raised capital, but the cost of the rewards gets factored into the total goal on Kickstarter anyway. So it makes no difference.

This actually isn't that fresh of an idea. Tim Schafer, the man behind Psychonauts despicted in the pictures below:

Has his own scam crowdfunding platform called Fig. Which works under the exact same business model (Except for Shcafer which is excempt of the rules because he is running the scam crowdfunding platform).

There are a lot of issues with this model, however the main couple of issues is that:
a) Tim gets all the hoes, weed and dough.
a) The return on the investment really isn't that big and as a matter of fact making $500 Tim dollars back takes forever.
b) It's in-house only as in foreigners (Which  weirdly enough are majority in this site for some reason) can go trim Tim's hedges invest in some other crowdfunding site because every single cent gets deducted into taxes and/or dissapears entirely because the system relies 100% on the investors being US taxpayers.

Overall I can't say I'm entirely in love with the business model, I actually preffer the normal crowdfunding method as it's healthier in the long run for both people investing and developers in the long run.

dschult3 That's true. With the current fundraiser they have live on the site, 100 grand gets you a 30% share!

Obligatory Monty Python sketch: