4 Factors To Consider Before Investing in Crowdfunding Deals
“Don’t jump into that deal before thinking through these points!”
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- The writer of this article admits that equity crowdfunding is a “misnomer”. The reality is most crowdfunding is outright donations followed by debt capital.
- If equity crowdfunding is occurring then the time and cost of due diligence to verify if they are ALL accredited investors is required. But not required in DPO finance.
- True PPM securities equity finance means you as an investor would have to wait at least 5 years to be paid. But if no M&A or IPO occurs you may never get paid back.
- Crowdfunding despite the hype is nothing new. It mimics DPO’s or Direct Public Offering’s which have successfully existed for decades and are a tradable security that can be resold on secondary markets should the investors want to sell shares. No accredited investors are required as everyone can participate.
- Here is our prior blogpost 3 years ago on DPO’s; http://SinCityFinancier.wordpress.com/2014/05/06/nytimes-com-seeking-capital-some-companies-turn-to-do-it-yourself-i-p-o-s/