By J.P. Dahdah, Founder & CEO of Vantage
Crowdfunding is the practice of funding a project, product or company through relatively small investments from a large number of people. The concept of Crowdfunding has been around for years. Efforts to raise funds from multiple sources range from donations for the high school band to contributing to political campaigns.
Two significant development concerning Crowdfunding, the Internet and the passage of the JOBS Act, have now made Crowdfunding an interesting alternative to investors. In this post, we will discuss the explosive evolution of Crowdfunding and the types of crowd funding available to you today.
The Jumpstart Our Business Startups (JOBS) Act allows private entrepreneurs and small business owners to publicly solicit funds from individual investors without the previously required SEC filing and certification. This has opened up the possibility of investing in a company before it reaches the IPO stage.
The Internet, typically used in Crowdfunding today, plays a significant role because it facilitates promotional investment opportunities to a vast number of individuals.
The types of Crowdfunding opportunities available today include the following:
Donation based – Typical of non-profit organizations seeking charitable contributions, donations are solicited via the Internet at both individual company sites and via Crowdfunding portals.
Reward based – This type of Crowdfunding provides a benefit to investors, typically in the form of a discount, gift or other similar item.
Lending based – Individual investors can loan money to businesses in need of cash through Crowdfunding. Loans are typically in the few thousand dollars range, come with competitive interest rates and are a favorable alternative to bank loans.
Equity based – This is the latest method available as the result of the JOBS Act. Equity based Crowdfunding give the investor real equity in return for their money.
This newest form of equity investing, previously unavailable to the individual financier, has attracted a great deal of interest from investors seeking alternative ways to put their money to work. A common source of investment dollars has been through one’s Self-Directed IRA.
Look for our upcoming posts on the topic of Crowdfunding. It presents a unique opportunity. Have you invested in a Crowdfunding opportunity? We would love to hear your feedback.
For more information on how you can discover your IRA investing alternatives, contact our team at (866) 459-4590 or Info@VantageIRAs.com.