Wish you could have invested in Facebook/Meta when Mark was skipping classes at Harvard? Now you can. Changes in regulations have opened up access in the US, UK and several other countries. But, how do you avoid falling for the Elizabeth Holmes of the world, losing your retirement savings, and needing to work until your 85? Curious? Read on.
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Investment platforms have been created to make sourcing the next unicorn possible, but not many people are in the know. I'll break down options you have to help perform due diligence and achieve diversification.
Investing in early stage startups was limited to Accredited investors or financial pros sitting in a smoky boardroom. Think Bobby Axelrod from Billions from Wall Street. Now, however, the regular guys like you and me can invest in the next Zoom while the founding team is still tinkering in a garage.
Do you have the faith to be an angel investor?
Investing in companies that are still wet behind the ears takes a lot of faith. Then after you have found the perfect investment - ideally something that you are passionate about - you have to face up to the risk. All the while you'll want to keep a level head.
Otherwise, who knows: One day you hear that deep voice of Elizabeth Holmes finding yourself all-in, you blink to find out you lost it all through a newscast. We'll never be able to see into the future and not all of our picks will be perfect, but there are tools that can help us find some of the turds. Let's dive into some of the options we have.
Jump in with these platforms
Ready to invest your money? Access equity in a startup on an number of platforms. The platform often charges fees which sometimes help to cover due diligence. There are regulatory obligations and potential liabilities for these investing portals, but each offer a varying degree of review. We have provided some transparency by collecting what we could find on each to help compare.
How much is a startup worth?
Nearly 95% of angel investors use third-party expert evaluation services according to a survey by Propel(x). At Fund Wisdom we have had the chance to work with third-party valuation expert Value Analytics & Design.
Get help in the background check
CrowdCheck offers a due diligence and disclosure platform for online investment offerings. They create greater transparency and investor protection to platforms, investors and entrepreneurs. Sara Hanks, Founder and CEO of the firm recently has shared, "We help to make sure the investor has the tools to make an informed investment decision. We thus protect the issue, the investor and the intermediary."
CrowdCheck, takes the hassle out of the due diligence process, and has partnered with some of the leading online investment platforms such as SeedInvest and WealthForge. CrowdCheck helps people on both sides of the ledger. For investors, the company provides them with a tool to combat against potential fraud, and presents the due diligence check investors are looking for in a simplified manner. Entrepreneurs seeking funding also benefit from the service, vetting potential investors.
If you feel you have found fraudulent activities you can report it to the platform, but what happens if they don't respond or if they are at fault? In the USA you can reach out to the SEC or FINRA with the below contact info:
- U.S. Securities and Exchange Commission (SEC)
- Office of Investor Education and Advocacy Telephone: (800) 732-0330
- US Financial Industry Regulatory Authority (FINRA)
- Complaints and Tips Telephone: (301) 590-6500
What has your experience been?
Now that we have let you in on the investing secret what do you think? The risks involved in this emerging market are high, but so too are the rewards. Finding something you are passionate about and getting involved with a team that is ready to disrupt an industry can be incredibly rewarding. Your opportunity to join a team of passionate and hardworking entrepreneurs in their journey awaits. We want to know how it's going. If you've had a chance to invest let us know how it went in the comments below.