Most of you are likely aware of crowdfunding. It is essentially when a company or individual enlist the help of the public to donate in order to help their efforts.
This could help to get a company off the ground, help deal with a medical emergency, or several other things. The crowdfunding industry is massive, and only getting larger. In fact, over $17 billion was raised via fundraising yearly in the USA alone.
However, when people give their money to individuals on GoFundMe or to Kickstarter products, these are seen as donations. Most donors won’t get anything back other than a good feeling and a potential thank you. But a new type of crowdfunding, called investment crowdfunding, can allow crowdfunders to get real returns.
Investment crowdfunding is when a public investor will invest a bit of cash and receive a small piece of equity in what they helped to fund. It is no longer a donation, but an investment that could net you a return. It can be done in several different niches and industries. For example, real estate crowdfunding is increasingly popular as it allows for a lower barrier to entry. If you want to learn more about real estate crowdfunding, be sure to check out this guide from Retirement Investments.
They are more accessible than ever before and open up a whole new world for investors. But what are the other potential benefits and reasons to invest in crowdfunding in 2020? Well, that is exactly what this article is going to go over.
Potential for Large Returns
One of the biggest reasons to invest in crowdfunding is the potential for large returns.
If the product or company you invest in is a success or gets acquired, your small investment could grow by hundreds or thousands of percentage points. For example, if Oculus Rift was backed by investors instead of donors, those investors could have made some serious money when Facebook acquired it.
However, with the potential for large returns also comes the possibility of losing it all. Investing in these start-ups has a lot of risk, and there is no guarantee you will ever see your money again. Before you invest (crowdfunding or otherwise), always do your research.
It is Quite Convenient
In the past, investing in start-ups has been incredibly hard and tedious. It can also be quite intimidating for new investors.
However, investing in crowdfunding has made this much easier and open to everyone. Crowdfunding platforms for investing give you easy access to thousands of different companies looking for investments.
There is no need to perform your own unique research to discover information about the company, as most platforms will provide all the links and information that you need. Streamlining the process of investing in crowdfunding makes it much more approachable for investors of all levels, not just accredited investors.
Can Teach You Things About New Markets
Start-up investing can be tough to break into a learn about, but these crowdfunding platforms change everything.
They give you immediate access to a variety of companies in a variety of niches. Not only can you invest in these companies, but you can also learn about them.
Spending a few hours on these platforms simply browsing the different companies can teach you a lot. It can allow you to expand both your knowledge and your portfolio, all without having to jump through tons of hoops and spend a lot of money.
It Can Give You an Increased Level of Satisfaction
While it can always be a satisfying feeling when an investment pays off, this is especially true when investing in start-ups via crowdfunding.
You truly feel like you made a difference for this company and your money helped them succeed. If you invest in a giant corporation or make another popular investment, you just don’t get the same feeling.
Investment in crowdfunding also allows for very targeted investments, so you can invest based on your morals and values. If you invest in a research company that resonates with you, and your money helps them discover some valuable information, you will likely feel great.
You Are Helping to Create More Jobs
While we all hear about the large companies, it is actually small or even medium-sized businesses that are incredibly vital to the American economy.
They employ a ton of people and service millions of customers. Thankfully, it is these SMBs that often benefit the most from a crowdfunding investment.
It can be tough for these companies to gain funding through traditional routes like a bank or a VC firm. By participating in crowdfunding investment, you are helping these companies grow and succeed, creating a lot more jobs for people across the country and the world.
In conclusion, the reasons in this article have hopefully been able to show you some great reasons to invest in crowdfunding in 2020.