This week we take a look into the similarities and differences between venture capital and equity crowdfunding in relation to startup investments on a state-by-state basis. Venture funding has been more difficult for startups to get a hold of, and that was one of the many reasons regulation CF started. It was supposed to provide a better opportunity for startups outside of the traditional tech hubs to raise capital. So with 3 months of data to comb through, we wanted to see if it was actually making a difference.
Remember, before plunging into your next investment, it is always wise to educate yourself on what you are putting your money into. This week, we will dive into which companies provide a convertible security, along with a quick explanation into how it works.
Read Time: 2 - 4 Minutes
The final installment in our securities series is also the newest type of security being offered on FlashFunders. Before heading into your next investment, it is a good idea to see what type of securities startups are offering. Once you educate yourself on what the offering consists of, you will be able to make a better judgement on whether or not the investment fits your needs. Click through to see how the revenue participation note works.
Before you plunge into your next investment, it's always good to educate yourself on what security types are offered on FlashFunders. We will dive into which companies provide a convertible security, along with a quick explanation into how it works.
Read Time: 5 minutes
Successful entrepreneurs know that a solid strategy is the foundation for success. When putting together our last piece on what a successful invesment strategy may look like, I also saw the ugly side of investing. Reading through an abundance of horror stories, I started to notice something. Athletes seem to have an amazing penchant for bad investments.
Check out our list of some of the best and worst athlete investments, and make sure to check out our tips for how to invest in startups.
Read Time: 10 minutes
In its first 5 years, Shark Tank pulled in an average viewership of 6 million. The show promotes innovation and helps young entrepreneurs who are hungry to succeed. With its success it’s also created two big aspirational goals for Americans to strive for: running your own business and becoming a successful investor. With the launch of Regulation CF, you would think that same fervor would translate into Americans making a big splash in investor crowdfunding. While startups raising capital under Reg CF have seen over $1,000,000 in funding, we wonder if the rest of America will catch on. Is it lack of awareness, or a lack of confidence?
Read Time: 5 minutes
Since funding started in May, the adult beverage industry has seen the biggest cumulative amount of investment dollars. Alcohol, along with other heavily regulated industries, haven’t had this type of success with traditional crowdfunding, which makes us wonder why equity is changing that narrative.
The investment world has finally caught up with the mainstream, slapping the word millennial onto gobs of daily content. Being of the said generation, where home loans have been replaced by student loans, I was shocked. Call me pessimistic, but I tend to lean toward the glass is “exactly this full” approach. If we look into the data behind those 80 million Americans, there is a story that becomes very clear. Many millennials don’t have money.
The average income for a 20 - 30 something comes in at $30,000, and is most likely coupled with long or short term debt, and a -1% savings growth. How do these new adults actually live? The stats provide a pretty bleak short term outlook for new investors. They also show that marketers are vying to reach an audience that is about the size of the population of Washington. Whether this marketing strategy is brilliant or misjudged is yet to be seen. But there is a silver lining for a long term outlook, and for equity crowdfunding platforms looking to grab a larger piece of the investment market.
May 16th, 2016 marked the launch of equity crowdfunding. Like any new opportunity, Title III saw its fair share of critics and promoters. Instead of arguing about something that hadn't actually started, we decided to wait and look at what the numbers said.
Since the launch of equity crowdfunding, we’ve put the majority of our focus towards startups looking to raise capital. But ever since the launch, investors have been the group with the most questions. The most frequently asked question we've heard from people looking to invest in startups is “What’s the return on my investment, and how will I get paid?”
Before we get into the different avenues of seeing potential returns:
- Do your research on the company, industry, and team
- Try to invest in businesses you use or have a thorough understanding of
- While not foolproof, try to manage risk by diversifying their portfolio
- Understand that there will never be a guaranteed return on any investment
Unlike the stock market, you don’t have the ability to sell your shares with the click of a button. In most cases, equity funding will be a long term investment. The best case scenario is that you can make a potentially healthy return on a startup you choose to invest in, while the worst case scenario is losing all your money on investments that don’t pan out.
Now that you have a better understanding of how things work, let’s look at the different ways a company could “exit” and possibly return capital to equity investors.