Invest Your Money Where You Know It’s Going

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Posted by The Savvy Retiree on April 21, 2017 in Money Saving Strategies, Personal Finances

Adam Sharp writing on investing your money…

Americans spend a whopping $70 billion per year on the lottery.

That’s bigger than the entire U.S. venture capital industry.

Imagine if instead of wasting money on lotto tickets, we invested that money in startups and small businesses.

Thanks to equity crowdfunding (ECF), we all now have the opportunity to invest as little as $100 in promising startups.

Think about it from a local perspective. Thanks to ECF, you may soon have the chance to invest in a neighborhood restaurant, shop, or craft brewery.

For an example, let’s use the craft brewery. So, pretend a small brewer near you has an amazing line of beers.

It wants to expand capacity to meet demand and decides to raise money via equity crowdfunding. You invest.

You’re now more likely to buy the product, recommend it to a friend, and frequent establishments that stock it. Now imagine thousands of your fellow investors doing the same, and adding value in countless other ways.

In fact, this exact scenario has already played out in the U.K. Five years ago, BrewDog was a small craft brewer.

Then it decided to try equity crowdfunding. Since then, the company has raised five rounds of capital from more than 40,000 investors. Annual revenue has grown from almost nothing to more than $100 million, and the company is solidly profitable.

BrewDog is now the fastest-growing food and drinks company in the U.K. for four years running. Today the business employs more than 700 people. And early investors have done extremely well.

Now think about this “crowdfunding effect” on a global level.

I believe within a few years we’ll see tens of billions of dollars being invested in small businesses through equity crowdfunding.

Imagine thousands of entrepreneurs raising money this way…with the public deciding who gets funded, not a bank committee.

Over the last few decades, bank loans to small businesses have slowed to a trickle. Alternative financing companies have picked up the banks’ slack, but their loans come with high costs. In 2015, an estimated $445 billion was racked up by small businesses on credit and charge cards.

This is why I believe equity crowdfunding is so important.

Needless to say, it’s a lot easier to run a company without crippling debt.

And having hundreds of investors on board can do wonders for a young company.

It’s a sustainable way for small companies to get funded…as well as a neat way for the small time investor to get in on the game for as little as $100.

Editors Note: Andy Sharp is co-founder of Early Investing.

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