Is Equity Crowdfunding Profitable?
Equity crowdfunding is an investment model where you contribute your money to an investment pool to invest in specific businesses.
Equity investment is not new. It has been around for decades, however, only institutional investors and people with deep pockets have been able to participate in it. All that is changing with equity crowdfunding, though
With crowdfunding, you can invest as little as $20 and see profit. But how profitable is it? That depends largely on where your money will go.
If you would only do research, you will see that different crowdfunding websites focus-invest in different industries. For example, websites like Indiegogo is a platform for raising money for startups. All startup businesses start out as promising investments but only few actually take off. If you have an eye for spotting profit potential in a startup, you can enjoy big profits provided, of course, that you also invest a large sum of money.
If there’s a specific industry you are intimately familiar with and that you know to be profitable you can search for crowdfunding websites for that industry.
We did some research and were surprised to find crowdfunding for solar panels, real estate properties for rent, among others. While these businesses have always been profitable (there’s no surprise about having crowdfunding around them), what is surprising is the entry amount. With certain websites, you can get started for as little as $20.
If you’re wondering where you can small amounts of money, crowdfunding is the way to go. However, it is not without its risk, the biggest of which is for the business being invested not taking off and becoming profitable. And there’s also the risk of the crowdfunding website being a scam.
But you can always minimize the risk by examining the business model and doing research on the market, if it is robust or is slowing. In different parts of the world, the status of the real estate industry differs. If you are investing in real estate crowdfunding, check the location of the properties and their future prospects, that is, if a boom or bust enough burst is expected.
As for eliminating the risk of scam, make sure to check the reputation of the crowdfunding website. You can easily do research by Googling the name of the website and the word “review”. On top of that, check the registration of the owning company. Does it have legal status in the company it is based in? Do further checks if there’s a physical address you can check and a landline number you can call. Often times having a landline number and the physical address is enough to show that a business is legitimate. But it doesn’t hurt to check the legal status of a company.
Anyway, the process of getting started in crowdfunding is quite straightforward. You only need to sign up with a website, choose a specific startup or real estate property you are interested in, and then pay. It is that simple.