Opening Up New Asset Classes To Crowdfunding

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Typically when you think of crowdfunding investment opportunities you’ll think of equity in cool tech, a consumer brand, property or perhaps a renewable energy bond. However, thinking outside the box there are endless possibilities on what can get crowdfunded!

Crowdfunding can make it more accessible for individuals to get a share in some of the finer things in life! Through crowdfunding its possible that every day investors could own a share in fine art, classic cars, or even barrels of whiskey.

By exploring these alternative investment opportunities investors can have fun diversifying an element of their portfolio into assets that can be a bit more fun.
 

What About The Returns?

In the UK the classic car market is now estimated to be worth over £4B. The private bank Coutts calculated in 2014 that classic car values had increased by 257% between 2005 and 2013.

While the broad art market has provided compound annual returns of 5.7% in the last 30 years and 8.8% for the last 60 years, according to Michael Moses, founder of consulting firm Beautiful Asset Advisors.

For some the advantage of investing in art or classic cars or a barrel of whiskey is the pleasure you get from it rather than it all being about the financial returns.

 

It Is Not Without Its Risk

The cost of direct ownership (buying and selling) can be steep, plus you need some expertise in these particular areas to make sure you know what you are doing.

Bob Stammers, director of investor education at the CFA Institute in New York, says, “Although investing in fine art is becoming very popular due to its return potential and low correlation with other asset classes, it also comes with significant asset specific risks that many investors are not equipped to identify and manage.”

These risk include identifying forgeries, your asset could go quickly out of fashion or it may not be popular with other collectors. There are also the ongoing costs such as insurance, maintenance, repairs and storage have to be met according to Danny Cox of Hargreaves Lansdown.

 

An Alternative To Direct Ownership

For some the thought of all that education, potential risks and the amount of money that needs to be spent is daunting, but perhaps owning part of one of these exciting assets through a crowdfunding platform could be the answer.

The crowdfunding platform Arthena gives individuals access to collect and invest alongside art world experts. By investing you own a share of a fine art collection. You’ll be able to see what works and track the performance of your collection against the overall market.

Through the platform CrowdRacing, investors are given the opportunity to own a share in a race horse for as little as £90. By investing you’re able to enjoy full racehorse ownership by receiving a share in any prize money and proceeds from sale of the horse.

There are even platforms now where you can invest in justice. LexShares is an online marketplace for investing in litigation cases. If the plaintiff prevails, investors receive a share in the recovery.

It takes a great deal of time, effort and preparation to directly invest in these areas, but by investing through the right crowdfunding platform it could alleviate some of those pressures.

 

If you are an expert in a particular asset class that you feel could be ripe for crowdfunding drop me an email Hillary@ShareIn.com or call on +44 (0)131 641 0018. We could help you open up your opportunities to a whole new wider audience.

 

Photo credit: Sylen via Pixabay

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