We often hear that the financial landscape is changing with the emergence of new technology; and this technology is making it easier for companies to access financing.
Since the inception of crowdfunding, and the predominance of reward based crowdfunding with the likes of Kickstarter.com, it was noted that some of the companies who received contributions went on to be extremely successful, some of them even listing their shares for an IPO. This left the supporters of a project wishing that they had the opportunity for ‘ a piece of that pie.”
Since then new innovative crowdfunding models have emerged. Predominantly, there are four different types of crowdfunding models, which you can read about here. In this article however, we will explore the benefits of Equity Crowdfunding, and explore how investors definitely can get a “piece of that pie.”
Equity Crowdfunding is when a company raises financing in exchange for equity over the internet from the ‘crowd’, thus allowing a wider pool of investors to get in earlier with promising startups and more established small/medium sized companies.
So why invest in Equity Crowdfunding?
Well here are 4 good reasons why we think you should:
Simplicity
Its sheer simplicity. The process of investment has been reduced to a few clicks off your computer screen.
Getting clear and concise information on the company is refined and clearly portrayed on the investee page to help investors review their decision before they invest.
Communication
Access to information is made easier as the Equity Crowdfunding platform accommodates for a quick and simple way to communicate with the investee through a messaging system.
Opportunity
“I would have rather bought a few shares of Oculus rather than my now-worthless $300 obsolete VR headset,” Oculus Rift backer Carlos Schulte wrote in 2014.
Imagine being able to invest in the pre-ipo crowdfunding campaign for many of the successful companies in the new ‘Sharing’ or ‘Collaboration Economy’ like Airbnb, or Uber. The stuff of investors’ dreams.
The facts are that there is so much talent here in Southeast Asia, and with Equity Crowdfunding, investors now have the access to exclusive startups who may be the next big thing! Be it global, regional or local, investors now can have access to investing in the future Grab/ Iflix / or even the next Google. The future is bright!
Diversification
Equity Crowdfunding is not risk free. The business risk is the same as if not more than conventional investment. However using the technology available, investors can innovate to reduce the risk better than that of conventional investments.
You can choose to invest big or small amounts, each carrying their respective risks. But Equity Crowdfunding in Malaysia allows investors to make smaller amounts, a minimum of RM 1000! Having a smaller piece of many pies!
Equity Crowdfunding is here to stay, as entrepreneurs are increasingly looking to alternative financing platforms to help support their ever growing demand. Investors should look to widen their horizons and be more receptive to investing in mediums such as Equity Crowdfunding, or they just might miss out!
