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5 Tips to help investors pick the right crowdfunding platform

In my role as an Investor Executive at CircleUp, an equity based crowdfunding site focused on the consumer and retail market, I spend most of my day talking with investors. One question I’m asked all the time is what Robe de Soirée is the difference between the various crowdfunding platforms? Here are some guidelines to help investors navigate the landscape:

1. Distinguish between equity-based and donation-based crowdfunding platforms

There are a number of crowdfunding platform options and not all are created equally. One of the core differences is what you get back for the capital you invest. Do you receive equity or a product? Kickstarter, for example, is a donation-based site where one receives a sample or product in return for a monetary donation.

CircleUp, in contrast, is an equity-crowdfunding site. Investors become direct shareholders in the companies listed on our CircleUp. If you’re looking to make a financial investment with potential for a return on your capital, then equity-based platforms are what you are interested in.

2. Review the types of companies featured on the crowdfunding platform

Among the equity-based crowdfunding sites, there are a number of options. Do you  ISC CISSP exam dumps have a specific industry that you would like to target? What about the lifecycle stage of the company?

CircleUp, for example, focuses exclusively on consumer and retail companies that are in a high-growth stage. We believe there is a dearth of capital for companies in this space that have roughly $1-10M in revenues because they are  Microsoft 70-410 too small for traditional private equity firms and don’t have the same attention from the venture capital community as technology companies. CircleUp focuses on companies that already have an established brand, a few years of revenue and distribution networks.

Other platforms focus on earlier stage startup companies or work with companies in a variety of industries.

Other sites, like Lending Club, focus on peer to peer debt.

It’s important for potential investors to understand the differences and strengths of the various platforms.

 3. Consider the platform’s investor base

These will be the people that you will be investing alongside.

At CircleUp, we only work with accredited investors and consumer and retail products companies. Focusing on one vertical has helped us attract sophisticated consumer and retail product investors.

 4. Who works there?

The crowdfunding teams are as different as the companies featured on their platforms. At CircleUp, our backgrounds are heavily weighted in the finance industry. The team that picks the companies Robe de mariée grande taille for our site is made up exclusively of people with private equity backgrounds. Investor facing professionals all hold securities licenses and have worked with retail or institutional investors in the past.

Platform teams at other crowdfunding platforms include successful serial entrepreneurs with lengthy experience managing a variety of different companies, as well as people with backgrounds in a specific industry the platform is focused on.

Personally, I don’t think any specific background would make a team better or worse, but I would consider whether the team’s background matches with what the platform offers.

5. Ask how the platform selects companies

Consider how the platform identifies opportunities and whether there is any sort of review process before an investment is added to the platform.

Some platforms have a philosophy that any company looking for funding should be made available to investors and ultimately investors can decide whether to participate.

At CircleUp, only about 2% of the companies that apply for funding are ultimately added to the site. The company team utilizes their private equity backgrounds to curate the most appropriate companies for the investors on our site. Therefore our investor base does not see every company that applies for funding.

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About Megan Zito

Investor Executive at CircleUp.

View all articles by Megan »

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