Investing in innovative and emerging companies can be an exciting and rewarding experience.
Like with any form of investing, the potential for higher returns also means higher risk but with equity crowdfunding this risk can be mitigated somewhat as the minimum investment can be as low as $50.
Let’s understand more about equity crowdfunding and investing in early-stage innovative businesses.
When you invest in equity crowdfunding you receive shares in that business. You can do your own company valuation, analysing the market, the industry and the sector in which it operates and looking at its business model and team. If the market is hot, if the firm shows a positive level of growth and offers successful exits, it has the potential to be a good investment. Moreover, if an investment is listed on a funding platform, the team behind that platform would have also conducted a level of due diligence, helping to filter out the riskier investments.
Another important aspect of equity crowdfunding is that you can invest in businesses that you have an interest in. What is more fulfilling than seeing an idea or product that you believe in growing and becoming successful?
Research has also shown that strategically investing in early-stage, high-growth companies can be a good option in diversifying your portfolio. This improves the chance of a better return as through portfolio diversification you can find the balance between risks and returns, spreading your money across different investments and sectors. Another benefit to investing in startups is that their performance is less likely to be influenced by the general market.
Lastly, equity crowdfunding offers you a way to get more involved in your investment, acting as an advisor or mentor helping with connections and strategic management. Getting in early gives you a higher proportion of voting shares and influence over the direction.
Early-stage and high-growth companies are increasing across Australia and New Zealand. Have a look at the Equitise platform to see which exciting opportunities you could access.