Crowdfunding and the Stock Market

With crowdfunding emerging in recent years, stock market volatility and general turmoil can present a lot of new opportunities for investors. Companies need access to capital, recently it has become very hard gain access to capital via the more traditional ways. Right now equity crowdfunding attracts only a very small part of the population. More people have started to invest in startups vs the traditional stocks. You can argue versus the risk and returns associated with each. But diversifying yourself across multiple startups can be very lucrative as well. Here are some things to note about investing via crowdfunding.

Stock market and Crowdfunding
Stock market and Crowdfunding

Equity crowdfunding involves putting money into unlisted companies. Investments can vary from very small amounts to large sums. It does also depend on the location and regulation in place within specific country or region. Most companies will be start-ups or existing companies launching newer products for example.

One of the first things to note is that investing in start-up companies is very risky. There is a lot more risk associated and again these are unlisted companies that need to be researched out well in terms of due diligence. Note as well that you are investing for the long-term, you will have to be patient and wait out as company progresses over the years.

Tax breaks will be different and don’t expect any dividends in these companies. However beyond all this and the risk, the gains could be extremely rewarding. You could be for example investing in the next facebook at ground zero. Patience and diversification are one of the keys to success. If you can find an great startup it can truly be rewarding, watching it out grow into a huge company making billions of dollars.

So depending on which way the markets continue and if equity crowdfunding does continue to evolve. Then we will certainly see more investors look to alternatives when trying to invest their money. Crowdfunding is very unique and can be controlled even more. But it has enormous amounts of potential, allowing many companies and investors to get together. Whereas in some other conditions they may never have the opportunity of starting up.