The Rise of Investment Crowdfunding

So tempting when you think of crowdfunding thinking purely in terms of Kickstarter; the project where candidates only a freebie or two from the startups they’re backing and the buzz from seeing a project they believe in making it to market. In the recent years, there has been a crowd-investment platforms groundswell particular with the passing of Jobs Acts 2012.  The rise in platforms enabling investors opportunity o club together and invest in buy-to-let and even commercial properties. The investors in some platforms are able to support all from legal battles to university education.

The common thing in all of these is that they offer citizens a chance to bunch together with other people to support a project expected to yield the good rate of return.


It’s one of the interesting platforms, although its remains at the margin of a much larger crowd-investing movement. As revealed by CrowdExpert there several platforms offering investors the chance if backing interesting companies using the approach.

The platforms generated $2.1 billion startups investing in 2015 and have shown considerable growth in 2016.  Crowdfunding has been labeled potentially the most disruptive of all the new modes of finance and World Bank predicting that crowdfunding investment increase to $96 billion by 2025.

The questions to review are;

  • What is equity or investment crowdfunding?
  • The difference between investment crowdfunding and the rewards-based crowdfunding?
  • How does investment crowdfunding fit your fundraising strategy?
  • What is the JOBS Act?
  • What are some examples of investment crowdfunding successes?
  • Can anyone invest in companies on Crowdfunder?
  • Does Crowdfunder comply with the securities regulations?

What of equal funding?

The growth is supported by leveling effects crowdfunding has on who can attract investment, the study showing women can do better when it comes to crowdfunding. The success is largely attributed to the fact that women are better at telling a story to persuade investor for the backing of the project.

The road to success

The significant of appealing to the heart plus head is reinforced by a study done. The results showed things such as good audio-visual support use is critical to a successful win fund-raising via the crowd. Experience and the previous record of the success proved crucial success markers.

Understand the sources are important as the crowdfunded projects have limited access to market data than typical private equity investors. For private equity investors, you have to follow a rigorous due diligence process to access the quality of startup help, thus crowdfunding backers rely more on the information on the campaign web page.

Building trust in the market

The crowd based market are fairer, to achieve the growth levels predicted, they will need to ensure high trust levels both in the quality of fundraiser and in the due diligence or simply worthiness of the lender. It’s argued that the hint of distrust arising in the industry placing the firm brake on growth levels, especially during the early stages with a legal status of the industry is yet to be fully formed.

The risk is strong considering early incident provoking an excessive response in terms of investor protection thus strangle the industry.  There are different prices and cost that come with investment crowdfunding across the industry. The market has developed a simple subscription model, where entrepreneurs activate a deal,and this start taking commitment online from the many accredited investors- Angel Investing.

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