Crowdfunding?

Well I am new to forex, forums, etc. I'm really excited to get started in forex. Looking at demo accounts now.

Also looking at other ways to invest. A friend of mine suggested crowdfunding as an option. Supposedly he's done pretty well with it. The idea's pretty new- you can help to fund new startups with the help of different sites that sell portions of equity in the companies. I know of a few sites already that seem interesting like kickstarter, crowdcube, seedrs, and uinvest. The last one seems to be the one I was most interested in. Their people seemed really ready to help, and I liked their approach to the whole crowdfunding thing.

The whole thing seems like a really good idea with possibilities... but has anyone else out there had any experience with this? Any suggestions?

Re: Crowdfunding!...?

uingun said:

Well I am new to forex, forums, etc. I'm really excited to get started in forex. Looking at demo accounts now.

Also looking at other ways to invest. A friend of mine suggested crowdfunding as an option. Supposedly he's done pretty well with it. The idea's pretty new- you can help to fund new startups with the help of different sites that sell portions of equity in the companies. I know of a few sites already that seem interesting like kickstarter, crowdcube, seedrs, and uinvest. The last one seems to be the one I was most interested in. Their people seemed really ready to help, and I liked their approach to the whole crowdfunding thing.

The whole thing seems like a really good idea with possibilities... but has anyone else out there had any experience with this? Any suggestions?

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I wouldn't do that. If a new company is properly set up and has half a chance of succeeding, it will be able to loan money from a bank, or win the attention of venture capitalists. It wouldn't need a new and unusual way of finding funds. It feels very wrong.

Re: Crowdfunding!...?

Gringotts Bank said:

I wouldn't do that. If a new company is properly set up and has half a chance of succeeding, it will be able to loan money from a bank, or win the attention of venture capitalists. It wouldn't need a new and unusual way of finding funds. It feels very wrong.

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I wouldn’t be so quick to dismiss them. I don’t know of many (any…) banks that lend to the very early stage companies that you often see on these sites for a variety of reasons (too small to spend time on, it’s very hard to lend to a company that has very few revenues to fund repayment etc). Not to mention, in many markets, even the best, profitable and well established SMEs struggle to get bank funding of any sort.

I was seriously looking at investing in a boutique brewery through one of these platforms recently. They were extremely small, but they’d recently become profitable, had a strong and growing B2B distribution platform and a strategy for growth. They required additional investment to buy equipment to increase production. For me, this came across as a good little equity story and appeared quite investable. That said, a VC would never ever look at it – it was too small, was never going to earn them millions and wasn’t in a particularly sexy sector. So there are plenty of decent opportunities that aren’t touched by banks or VCs.

That said there are plenty of opportunities on these platforms that could fit the profile for VCs. I guess VCs can’t fund everything and what these platforms support is a replacement for the ‘friends and family’ round that often happens in the early stages of a start-up. In fact, I know of a few start-ups that have used this platform for the friends and family round as it gives them a standardised set of documentation that they can take advantage of to formalise the funding.

The thing to remember with these investments is that they’re extremely high risk situations, so use caution!