Equity crowdfunding: the democratisation of investing

Posted on

I love the internet!  I get excited by the massive potential of the technology and this enthusiasm hasn’t left me since I got started in this business over ten years ago.  To me the internet has always been a kind of Wild West frontier where anything is possible.  The early buzz and subsequent dot.com bubble may have given the sceptics some fuel that this was another fad but I agree with Roy Amara’s often quoted rule:

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

The internet has been a game changing technology for many long established business models.  Free access to information has become nearly ubiquitous, transaction costs have fallen and consumers have been empowered.  Book selling and ecommerce, Advertising, Music consumption and distribution, Telephony and social networks are just some of the industries where the incumbent operating model was swept away as a result.

At ShareIn I see this game changing activity happening in the finance industry!  The essence of equity crowdfunding is the democratisation of investing.

Early stage investments have the potential to produce truly staggering returns.  The early investors in Google that still hold shares are sitting on a return on investment (ROI) of 46,000%.  Yes, 46,000%!  If you invested as a member of the public in the Google 2004 IPO your return would be approximately 1000% based on todays market value.  Also an excellent return.  However in this example the privilege of being an early investor was worth 45 times that of being an IPO investor.  Now of course not every company will deliver the returns of the mighty Google and some companies will fail, but this is a risk true of all investments (those that understand the risk know portfolio diversification is the key).  My point is that the ability for some investors to get into deals early gives them massive advantage when you look at ROI.  The connected, privileged few accrue the lion’s share of gains.  This doesn’t seem fair, but things are changing.

Investing can be a complex process, where information about investment opportunities is limited and search costs are significant.  The investment process itself has high barriers to entry such as minimum capital requirements and often necessitates membership of venture capital groups or angel investment clubs, all with their own membership criteria.  This effectively rules out early stage companies for the lay investor as a serious investment opportunity, and so they  miss out on massive potential returns.

Equity crowdfunding lets investors “get in on the deal”.

ShareIn lets everyone (who understands the risks) have the opportunity to invest in early stage companies.  We’ve removed the barriers to investing in high growth early stage startups.  Most companies listed allow a minimum investment of £10.  All of the company’s information will be open and available on the ShareIn.com website.  You can contact the entrepreneurs directly if you have particular questions to ask.  You don’t need to be a member of a venture capital firm, angel network or investors club.  These opportunities are open to all savvy investors.  That’s game changing!

Andrew

andrew@sharein.com'

About 

    Find more about me on:
  • googleplus
  • linkedin
  • twitter


Tags: , , , , ,