3 Reasons You're Not Crazy

By Matthew Milner, on Wednesday, March 12, 2014

Before the era of online brokerages like e-Trade, plenty of smart people said average citizens would never go online to invest in stocks.

They said you’d have to be crazy to use services like e-Trade.

e-Trade’s annual revenues today? More than $2 billion.

Before the emergence of e-commerce businesses like Amazon, the naysayers said consumers would never feel comfortable using their credit cards online.

They said you’d have to be crazy to buy something online.

Amazon’s 2013 revenues? $74 billion.

Then, along came Equity Crowdfunding – the practice of early-stage companies raising money online from a “crowd” of everyday investors.

What did people say?

Everyday citizens will never invest in a start-up online. They’d have to be crazy to invest in a crowdfunded deal.  

Guess what?

People are investing hundreds of millions of dollars.

And they’re not crazy at all. They’re smart.

Today we’ll tell you 3 reasons why…

Then we’ll show you a simple way to join them.

The Most Active Investor in the UK

While equity crowdfunding is a recent innovation in the U.S., other parts of the world have been embracing it for years.

The world’s first equity crowdfunding platform got started in the United Kingdom.

Launched in 2011, it’s called CrowdCube.

CrowdCube has raised funding for more than 100 companies.

More impressively, as of this month, it’s the UK’s #1 most active early-stage investor.

What’s this mean?

It means that, in the UK, equity crowdfunding is now responsible for getting more companies off the ground than “traditional” methods such as professional funds.

Not only that, but CrowdCube is already the UK’s #2 most active venture-stage investor (this stage is for more mature companies; companies that have proven themselves).

Although the UK got a head start in the equity crowdfunding market, it’s widely believed that the United States will follow a similar path – and will soon surpass them.

Zero to $300 Billion

In terms of dollars, the “activity” from CrowdCube and its global competitors is starting to add up.

Equity crowdfunding was a blip on the radar a few years ago…

But according to Massolution, a widely-followed crowdfunding research firm, consumers invested more than $200 million into such deals in 2013…

And are on track to invest between $500 million and $1 billion in 2014.

How big will the market become in the future?

No one can say for sure, but Dr. Richard Swart of the Crowdfunding Research Program at the University of California, Berkeley, reports it could be as much as $300 billion.

Considering the historical size of the early-stage market ($30 billion per year), the market for later-stage venture deals (an additional $30 billion per year), and CrowdCube’s quick ascent, reaching $300 billion doesn’t sound so farfetched.

The True Test

But unless investors are actually profiting, all that activity and all those billions have limited financial value.

Which is why it’s so exciting that investors are starting to make money

As my business partner, Wayne, recently wrote about, a crowdfunded company called TalentBin was acquired just seven months after raising capital on FundersClub.

FundersClub is one of the high-quality platforms we cover here at Crowdability, and their companies – including TalentBin – are backed by investors like you.

When an early-stage company gets acquired, its investors reap the financial rewards…

And now that there’s proof that equity crowdfunding can provide a financial return, more and more investors will get involved.

But you’re already ahead of them:

As a reader of Crowdability, you’re “early.”

Take Advantage of Being Early!

Despite the facts we’ve presented above, you might still be hearing this popular refrain:

Everyday citizens will never invest in a start-up online. They’d have to be crazy to invest in a crowdfunded deal.  

We don’t think they’re crazy at all.

We think they’re smart.

Join them. 

Take advantage of the fact that there are naysayers…

Relish the fact that your neighbors haven’t yet heard about equity crowdfunding…

Get in before the rest of the world catches on!

Because once people catch on, there will be far more competition for the most promising deals.

A “Mutual Fund” For Start-Ups

One type of deal that’s likely to see high demand in the future is the “mutual fund for start-ups” opportunity. We showcase these deals whenever we can.

As our regular readers know, these “funds” are similar to mutual funds. They offer an efficient way to diversify – perhaps the most important rule for any kind of investing.

Many of these opportunities are limited to about 100 investors, so they go quickly…

You wouldn’t be “crazy” to take a look!

You can find one here »

Happy investing!

Best Regards,
Matthew Milner
Matthew Milner


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Tags: Equity Crowdfunding Early-stage Investing Mutual Fund For Startups FundersClub Equity Crowdfunding News

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