With new ventures such as crowdfunding revolutionising the investment sector, investing can be seen as a more approachable and accessible option for many and not just for institutions, high net worth’s or those ‘in the know’ . There is the potential for earning a return on investment, when funds are pooled into a single investment, while learning how to access investments normally reserved for sophisticated investors.   

Equity crowdfunding can be a possible way to diversify your investments and build your investment portfolio.  However it is important to research and evaluate your options prior to investment, read the literature provided and the risk evaluations because with all investments there is the opportunity for gains but also losses, as your capital is at risk and returns are not guaranteed. In this article we’ll be looking at equity crowdfunding and its benefits to allow you to determine if it's an investment option suited for you. 

History of Crowdfunding

The idea of crowdfunding where a group of individuals provide the collateral to fund an idea, business, or project, possibly dates back to the late 1800’s when the Statue of Liberty was being erected in America. The statue had been donated by France but unfortunately, the group tasked with its placement and completion ran out of funds to build a pedestal.  An influential gentleman who owned the newspaper the New York World, ran an ad asking people to donate funds to complete the project.  

He said, “We must raise the money! The $250,000 that the making of the Statue cost was paid in by the masses of the French people—by the working men, the tradesmen, the shop girls, the artisans… Let us respond in like manner. Let us not wait for the millionaires to give us this money. It is not a gift from the millionaires of France to the millionaires of America, but a gift of the whole people of France to the whole people of America”.  

It proved to be an amazing success: in just five months $101,091 was raised from more than 160,000 donors, including young children, businessmen, street cleaners and politicians, with more than three-quarters of the donations amounting to less than a dollar.  The first modern successful instance of crowdfunding was believed to be in 1997 when an English rock band funded their reunion tour through online donations. This financial method was highlighted and picked up by ArtistShare that then became the first crowdfunding platform in 2000, shortly followed by platforms like Kickstarter and Indiegogo.

Equity Crowdfunding

Equity crowdfunding is the online offering of a small piece of a business/project by way of shares in return for investment into the project or business. Because equity crowdfunding involves investment into a commercial enterprise, it is subject to securities and financial regulation. Equity crowdfunding can also be referred to as crowdinvesting, investment crowdfunding, or crowd equity.   Opening the concept of crowdfunding to the masses brings power to fund projects and bring ideas to life that may otherwise have seen difficulty prior. An investor with less experience can benefit from the expertise of more experienced investors, pooling their knowledge and gaining valuable insights into property investment. Investing via an equity crowdfunding platform allows companies in need of funding to match up with individuals who want to invest.

However, investing in early-stage opportunities such as those available on the LEOcrowdfunding website involves risk as well as the possibility of rewards and therefore it is key to research in detail all the risks involved before deciding to invest.   This wealth of knowledge brought together through the amalgamation of multiple investors from differing backgrounds, sourced through crowdfunding platforms, has helped revolutionize the world of investing and its accessibility. With the emergence of equity crowdfunding offering up a compelling new way to diversify your assets by tapping into real estate investments, it’s a promising solution that could potentially lead to an increase of passive income.  

Could Crowdfunding Be A Good Option For You?

Crowdfunding like any other investment requires a level of understanding in order to correctly judge your risk appetite before investing. However, with crowdfunding platforms like LEOcrowdfunding, there is the opportunity to Learn while you Earn, with the ultimate outcome being to potentially Own property related assets.   Spreading your capital across multiple investment opportunities could potentially result in many streams of income. With the idea of diversifying your portfolio across varied crowdfunding opportunities, there is the potential to mitigate the risk involved, whilst also potentially increasing your investment portfolio.

How To Get Involved

In the past investment has been costly, restricted to High Net Worth/Sophisticated Investors or often carried out “behind closed doors”.  With the changes in regulations and the drop in the minimum amounts required to fund deals equity crowdfunding is ideally placed to offer all classes of investors the opportunity to get involved in property deals.  At LEOcrowdfunding our mission is to help the masses Learn while they Earn, with a view to Owning assets in the property market. By offering an investment platform for greater accessibility, encouraging Investors to network with Developers/Landlords in a mutually beneficial way, LEOcrowdfunding is opening up equity crowdfunding for all.