Early in December we attended The First ever, Crowd Invest Summit at the LA Convention Center in the City Of Angels. It was a two day summit that opened our eyes to all the new possibilities of economic opportunity that’s now available to us, & also to a flawed system that perpetuates income inequality. First thing’s first….
What In The World Is CrowdFunding?
Crowdfunding is essentially what the words entail, it is a way to utilize the internet to generate a large audience of people to raise funds for a specific business idea, startup company, film project, etc. Unlike GoFundMe.com which is a charity/donation platform, crowdfunding is designed to be an exchange of value between two parties. The Person or Organization acquires necessary funds to complete their business, & the person investing the funds can acquire equity in the company, effectively becoming part-owner of the company with the potential to receive a financial return on their investment and ultimately receive a share of the profits in the form of a dividend or distribution.
Why Is This Important to Me?
The reason why CrowdFunding is important to you because crowdfunding has the potential to revolutionize the business landscape when it comes to small businesses & startup companies being able to grow & develop their products/services faster with the help of the internet. Just like Bitcoin, UBER, & AirBnB; Crowdfunding has the potential to be the next new wave of internet “Disruption” that can give investment opportunities to average everyday citizens.
Lets take UBER for an example, UBER was founded in 2009 & already has a projected valuation in the range of $50-60 Billion, and it has a little over 3 years left until it reaches its first decade of existence. The founders of UBER were able to acquire funding through the “Traditional” way of raising capital from “seed” & “series round” funding from private accredited investors (Commonly referred to as Angel Investors) & Venture Capital Investor Groups (Think Shark Tank) Although it is still in the infant stages, it’s safe to say that UBER is here to stay for the long haul & those wealthy groups of VC’s & Angel Investors with the access & means to invest early will eventually reap huge profits, so basically “The Rich Get Richer.” Back during the early years of 09-11, the only way you could have invested in an up & coming company like UBER (Or any Private Company for that Matter) you had to qualify as an “Accredited Investor” meaning you either had to have a minimum net worth of $1 Million or a minimun yearly income of $200K. These qualifications only apply to 15% of the American population. Crowdfunding is the avenue that can level the playing field, giving everyday Americans access to young & developing companies that (Until the JOBS Act was passed in 2012) was only accessible to Wall Street, Big money VC’s, Angel Investors, & Corporations.
The JOBS Act
Although it is still in it’s infant stages, the “Jumpstart Our Business Act” is the bill that has opened the possibilities of more access to funding for aspiring entrepreneurs looking for funding. With the approval of President Obama, “the JOBS Act requires the Securities and Exchange Commission (SEC) to adopt rules to implement a new exemption that will allow for crowdfunding via accredited & non-accredited investors.” – www.crowdfunderinsider.com With this bill being passed the Pandora’s Box has been opened for non-accredited investors to affect small businesses & increase their individual wealth in the process.
America Doesn’t Want More Investors
When it comes to investing, the US Government & the SEC have placed many restrictions & regulations on how working class American Citizens can “Invest” their money. Apparently spending & giving away you’re money is more important to the Government than investing it to earn more money in the future. It is much easier to have you’re money going into Banks, Churches, Charities, and Non-Profit organizations as opposed to businesses that could yield you anywhere between 7-10% compound interest over a period of time. As a matter of fact, you’d have a much easier time “donating” $300 to the World Changers Church International group for Creflo Dollar’s new Jet, than you would investing that $300 into UBER Technologies Inc (Which is currently still a Private Company.) So while the 85% of American citizens who aren’t qualified to be “accredited investors” are saving their money in banks & debating whether or not to buy those lottery tickets at their local gas station, Saudi Arabia’s Public Investment Fund is investing $3.5 Billion into UBER, to help generate wealth for the Islamic country
Although there is opportunity to still earn a solid ROI on currently Public companies like Alphabet (Google), Facebook,Tesla, etc., it still pales in comparison to the amount of returns one could have received with the opportunity to invest at the early stages of a companies development when it was still a private company & relatively unknown to the masses. Why is it that Major Corporations, Venture Capitalist Groups & Angel Investors have the opportunity to legally invest in private companies in the early development stages, but the working class of people of America have to wait years, possibly a decade until it is publicly traded on the Stock Market? Some say that these restrictions are in place to protect what Wall Street & Bankers refer to as “Unsophisticated Investors” from various scams, fraud, & pyramid schemes. This is a false narrative that is pushed to justify making early access to growing companies exclusive to the 15% of “Sophisticated Investors” in America. As a matter of fact, a lot of these so-called “Sophisticated” investors weren’t smart enough to realize giving their money to Bernie Madoff was setting them up to be apart of the biggest Ponzi scheme in U.S. history. The current system is set up for the wealthy few individuals of America to sit back & wait for up & coming start ups & entrepreneurs to come to them for funding so they can reap the benefits while the consumers are only left with the cost of the product, & no ROI.
Crowd Invest Summit 2016
Luckily for the people of America, the internet is changing the very fabric of how we live. Most people don’t even realize that the internet has only been around for a little over 20 years. Furthermore, considering that the internet was already being used by Banks & Government to hold & distribute fiat currency, it was only a matter of time before people were starting to push for more investment opportunities for everyday Americans. Now with various crowdfunding platforms like startengine, kickstarter, indiegogo, & wefunder; you can make investments with potential startup companies & earn early access to companies products/services & acquire shares of those companies to have & to hold through sickness & in health (of the business of course) until the business is thriving & ready to give you a lucrative return on investment, or the business fails & you lose the money. Here are some interesting start ups & images captured by the POS team while at the Crowd Fund Summit.
One big advantage for Crowdfunding is that it allows people of African, Native American, Hispanic descent & other marginalized groups of people in America to be able to raise capital for businesses outside of traditional means of raising money that is overwhelmingly dominated by white Male Investors.