Any typical private equity investors knows the capital lock-up of his/her investment may not result in a return, ever. And, if it does, in most cases it is not likely to come for several years. With Crowdfundraiser, we use publicly traded equity to invest in private, crowdfunded businesses for both institutional and individual investors. This strategy benefits our investors in a number of ways.
First, non-accredited investors can invest alongside seasoned institutional and accredited investors giving them access to the same deals more frequently reserved for the investing elite. Second, our shares in the various private, crowdfunded companies are purchased through a voting system. Shareholders, large and small are able to weigh-in to some of the most promising start-ups, private business lending and debt opportunities posted on some of the more popular equity crowdfunding sites. Crowdfundraiser then invests by proxy on behalf of our investors. Finally, public equity equals liquidity. Liquid investors significantly decrease the risk that they will lose some or all of their investment. Investors and interested entrepreneurs are invited to reach out to us to discuss opportunities with working with us.
Sound investment theory requires diversification. Diversification requires spreading investment risk among the largest possible market. Active and passive mutual funds utilize this principle to decrease–to the extent possible–non-systematic risk.
Investing in crowdfunded businesses is about as risky an investment as any single investor would ever hope to pursue. Therein lies a major problem with the crowdfunding investment model, especially for non-accredited investors: it exposes them to too much risk. While some might argue that diversification may decrease overall returns, it also helps to hedge against the downside possibility of investing in one single corporation that goes belly-up. Our investment model involves investment across a series of diverse and meaningful debt and equity crowdfund businesses opportunities on multiple crowdfunding portals. Because Crowdfundraiser proxy invests for its clients, the client is able to better diversify his/her investment risk across various business types and asset classes.