How do I reduce my risk when investing in crowdfunding offerings?

Want an easy way to meet and learn about the companies you are interested in investing in? Equity crowdfunding creates the handshake. Although risky, these transactions offer a potentially high return on investment. Donation-based crowdfunding provides perks and rewards such as presales. Equity-based crowdfunding provides ownership and dividends.

Five tips for choosing companies for equity-based crowdfunding…

  1. Review the company’s SEC filings, available to the public on the SEC’s EDGAR website. Compute performance ratios such as earnings per share to evaluate solvency and liquidity.
  2. Check out the backgrounds of the leadership team, including the CEO, CFO, COO, and other C-suite decision-makers. Look for upfront, reputable dealings.
  3. Understand the financials, taking into account that startups might not yet have reliable revenue streams. Do they have any assets that are able to contribute to revenue soon?
  4. Review their products and services online to assess the viability of future success. Do the products make sense for consumers?
  5. Ensure the company uses a transfer agent. Transfer agents track investors and issue share certificates for the companies. They also make dividend payments and ensure SEC compliance.

Popular crowdfunding platforms such as Kickstarter don’t offer equity crowdfunding, but Wefunder and Republic do.  Contact Colonial Stock to get started with a free consultation today.  We can help provide introductions and prepare you for your equity crowdfunding offering.

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