Crowdfund Investing For Dummies - by Sherwood Neiss & Jason W Best & Zak Cassady-Dorion (Paperback) (2024)

About the Book

Want to rise above the crowd in crowdfund investing? This guide walks you through this new investing experience, explaining how to plan and launch a campaign; how to manage the crowd after a campaign is successful; and how to work within the SEC's regulations at every stage.

Book Synopsis

The easy way to get started in crowdfund investing

Crowdfund investing (CFI) is going to be the next big thing on Wall Street. U.S. investment banks, brokerage houses, and law firms are gearing up for the creation and regulation of new financial products that will be available to the general public starting in early 2013. The introduction of these products will revolutionize the financing of small businesses and startups for these key reasons:

  • Entrepreneurs and small business owners, who have had difficulty obtaining capital through traditional means (such as bank loans and angel investors) in recent years, will have access to investors around the world through social media.
  • For the first time, investors (so-called unqualified investors) will be able to purchase an equity stake in a business or new investment vehicle.

The Securities and Exchange Commission (SEC) is overseeing the creation of online portals that will allow entrepreneurs and small investors to connect. When these portals go live in 2013, Crowdfund Investing For Dummies will be on the front line to educate business owners, other entrepreneurs, and investors alike.

Crowdfund Investing For Dummies will walk entrepreneurs and investors, like yourself, through this new investing experience, beginning with explaining how and why CFI developed and what the 2012 JOBS says about CFI.

Entrepreneurs will find out how much funding they can realistically raise through CFI; how to plan and launch a CFI campaign; how to manage the crowd after a campaign is successful; and how to work within the SEC's regulations at every stage.

Investors will discover: the benefits and risks of CFI;how much they can invest; how a CFI investment may fit into a broader investment portfolio; how to provide value to the business or project being funded; and how to bow out of an investment when the time is right.

Crowdfund Investing For Dummies is an indispensable resource for long time investors and novice investors alike.

From the Back Cover

Learn about:

  • What crowdfund investing is and how you can raise money for your business
  • The risks and rewards of crowdfund investing
  • Maximizing the benefits and preventing fraud

Want to rise above the crowd in crowdfund investing?

Are you an investor or entrepreneur looking to get in on the newest big thing on Wall Street? Crowdfund Investing For Dummies walks you through this new investing experience, explaining everything you need to know about crowdfund investing: how much funding you can realistically raise; how to plan and launch a campaign; how to manage the crowd after a campaign is successful; and how to work within the SEC's regulations at every stage.

  • Crowdfund Investing 101 -- get an overview of how this form of private equity or debt investment works and what the potential benefits are to entrepreneurs, small businesses, and investors
  • Make a plan -- find out how to present a solid business plan, define your financial needs, and prepare for a crowdfund investing campaign
  • Manage your campaign -- discover how to market your pitch, tap into your social networks, prepare for potential problems related to your campaign, and successfully complete a crowdfund investing campaign
  • Run with it -- grasp how to communicate clearly and regularly with your crowd, avoid mistakes that could lead your investors to revolt, and keep your investors happy even when your plans are delayed
  • Put the "I" in investor -- get the 4-1-1 on how to measure risk and thoroughly examine opportunities available to you as a personal investor

Open the book and find:

  • How the crowdfund investing concept evolved
  • Why crowdfund investing gained bipartisan support
  • Advice on planning your crowdfund investing campaign
  • How to evaluate crowdfund investing opportunities
  • Best practices in crowdfund investing
  • SEC regulations you need to know
  • Tips for building your crowd and your team
  • Online links to informative videos

About the Author

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

Crowdfund Investing For Dummies - by  Sherwood Neiss & Jason W Best & Zak Cassady-Dorion (Paperback) (2024)

FAQs

How much money do I need to invest in crowdfunding? ›

Crowdfunding is a way for companies and individuals to raise capital from a large group of investors, with contributions starting as low as $10. There are restrictions as to who is allowed to fund a new business and how much they're allowed to contribute.

Are crowdfunding investments worth it? ›

Startups and early-stage ventures can and do fail, and you could lose your entire investment. In addition, crowdfunding investments carry liquidity risks, as you'll be limited in your ability to resell your investment for the first year—and you might need to hold your investment indefinitely.

What do crowdfunding investors get in return? ›

Equity investment crowdfunding is a way to source money for a company or project by soliciting many backers, each investing a relatively small amount while typically using an online platform. In return, backers receive equity shares in the company.

Do crowdfunders get equity? ›

Crowdfunding is the process of requesting money from a large group of individuals (aka the crowd) via an online platform. Equity crowdfunding is similar in that you receive funds from the crowd; the main difference is that the investors will own a stake in your business.

Do you have to pay back crowdfunding money? ›

There are websites specifically for these types of campaigns. While crowdfunding websites take a percentage of the money raised as a fee, crowdfunding donations don't have to be repaid like a loan.

Can you actually make money from crowdfunding? ›

It's possible to make money from crowdfunding real estate. But as with any investment, you can lose money as well. Real estate investing involves a certain amount of risk. It's impossible to know what your return on your investment will be.

What is the biggest drawback about crowdfunding? ›

Scammers are by far the biggest con of the crowdfunding space. There are so many projects that have a successful raise, but do not pull through with the execution of the project. As a result, a lot of people have become jaded by the lack of follow through and reduced the trust between creators and early adopters.

Is crowdfunding high risk? ›

Investing through equity crowdfunding carries risks such as the greater risk of failure, fraud, doubtful returns, vulnerability to hacker attacks, and mediocre investments.

Can crowdfunding be trusted? ›

All investments carry risks, and crowdfunding, no matter how well-intentioned, is unfortunately no different. Some of the risks include: Fraudulent campaigns: when the company misleads investors and misuses the money.

Do crowdfunders get their money back? ›

Many platforms operate an all-or-nothing funding model. This means that if you reach your target you get the money and if you don't, everybody gets their money back – no hard feelings and no financial loss. There are a number of crowdfunding types which are explained below.

Is money from crowdfunding taxable? ›

Money raised in a crowdfunding campaign may be taxable if

Donors receive something of value in return for their contribution. The IRS could consider the donation to be a sale, which would mean any profits could be taxed as personal income.

Is crowdfunding legal in the USA? ›

Regulation Crowdfunding enables eligible companies to offer and sell securities through crowdfunding. The rules: require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal.

Which crowdfunding platform is best? ›

10 best crowdfunding platforms
  • Best overall: Kickstarter.
  • Runner-up: Indiegogo.
  • Best for small businesses: Fundable.
  • Best for Shopify stores: Crowdfunder.
  • Best for content creators: Patreon.
  • Best for UK and Europe: Crowdcube.
  • Best for personal fundraising: GoFundMe.
  • Best for nonprofits: Mightycause.
May 17, 2024

How much does crowdfunding cost? ›

Crowdfunding fees comparison

A platform fee is when a crowdfunding site takes a percentage of all the money you raise through your fundraiser. Typically, crowdfunding platform fees range from 5% to 12%. Look out for punitive fee structures. Some platforms increase fees if you don't meet your goal.

What are the requirements for crowdfunding? ›

Regulation Crowdfunding
  • require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal.
  • permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period.
Jun 21, 2024

What is the average return on crowdfunding? ›

The majority of crowdfunding research focuses on investments in the form of purchasing shares in startups, estimating the average returns on such equity-based investments at 7% to 8%.

How much will crowdfunding cost? ›

Crowdfunding platforms typically charge a fee based on the amount of money raised. This fee varies by platform but generally ranges from: 5% to 10% of the Total Funds Raised: This is the most common fee structure. Additional Payment Processing Fees: These are often around 3% to 5% of the total funds raised.

How much do I need to invest to be financially free? ›

The Financial Freedom Formula Is Simple To Calculate And Understand. According to the FIRE (financial independence, retire early) movement, you need to have 25 times your annual expenses in investments.

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