With Title III now in effect, average individuals can now invest in small businesses and startups – something that had previously been limited to only accredited investors. Why should you consider investing in an equity crowdfunding campaign? What are the benefits?
Here are just a few:
1. Invest in companies and industries you care about and help drive innovation
Title III definitely brought exciting changes to the startup and investing world. Perhaps most exciting for you, as an average individual, is the fact that you can now invest in companies you’re interested in and industries you’re passionate about. There’s not doubt about it that startups are a huge source of innovation for the industries in which they exist. In many cases, they are what push their industries forward. Prior to Title III taking effect, only the company founders, employees, and accredited investors could contribute to this. Now, average individuals have the opportunity to participate in and promote innovation
2. Invest small amounts
Another benefit to equity crowdfunding is you don’t have to invest much. While the companies raising the funding can set minimum investment amounts, most only do so at $50-100.
Not only does equity crowdfunding give average individuals the opportunity to invest their money in a new vehicle, but it also allows investors to diversify within this new vehicle. While there are some restrictions in terms of how much you’ll be able to invest annually (minimum with no income is still $2,000), there is no limit to how many startups you invest in.
There are all types of companies out there trying to raise money using this mechanism. You can build a diversified portfolio which includes different industries and life-cycle stages. Some startups might be building a prototype, while others may be bringing their product to market, and others looking to expand. You can chose how much and how you want to diversify.
4. Get in early
With Title III equity crowdfunding, investors are really getting in on the ground floor. While there are risks and you could lose your investment, the potential returns can be significant if the company is successful and either is acquired or goes public.
This is a truly exciting opportunity to invest early in new technology, products, real-estate and more, which have all been limited to accredited investors until now.
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