The IPO Series: What's the difference between IPOs and Equity Crowdfunding?

The IPO Series:  What's the difference between IPOs and Equity Crowdfunding?

INVESTING IN EQUITY CROWDFUNDING DEALS AND IN IPO STOCKS IS A GOOD WAY TO DIVERSIFY AN INVESTMENT PORTFOLIO AND MITIGATE THE RISKS CONNECTED TO ALL TYPE OF INVESTMENTS.

Who can invest in an IPO?

The latest changes on the Australian legislation have helped filling the gap between an increasing demand for startup capital and people’s desire to invest in exciting early stage businesses, and not only.

The Australian investments world has become more inclusive and now retail, or everyday investors can take into consideration different investment options such as equity crowdfunding investments and IPO stocks, which were usually accessible only to sophisticated investors. Both IPOs and equity crowdfunding deals are available in equity crowdfunding platforms such as Equitise. The differences between these two types of investments are related to when the investor gets the money back, the stage the companies are at, and the minimum investment amount.

How is an IPO different from equity crowdfunding?

The process of raising capital through equity crowdfunding is similar to an initial public offering in that companies which issue shares to the investing public. However, with equity crowdfunding, companies do not list on a stock exchange and consequently are not subject to costly, ongoing reporting requirements. Equity crowdfunding, therefore, allows companies to raise money from the public while not having to through a large amount of time and costs associated with being listed on a stock exchange.

Keeping in mind that all kind of investments are risky, equity crowdfunding allows to invest smaller amounts across a range of companies and build a portfolio of investments, which enables investors to diversify their investments and mitigate some of the risk.

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