Appropriateness of Investing In Crowdfunding
Is investing in crowdfunding for everyone?
The possibility of investing in startups can sometimes overshadow the most important question when making an investment: “Is this investment right for me?” There many factors that an investor should consider when determining the appropriateness of an investment in crowdfunding. PicMii loves to see investors getting involved with crowdfunding and contributing to companies on the platform, however we also have each and every investor’s best interest at heart. This means stopping for a minute to discuss considering the appropriateness of investing in startups.
Do you understand the risks?
Although investing in startups can be extremely lucrative, it can also go the other way! For this reason, it is important for each investor to understand the risks associated with an investment in a startup. Risks include but are not limited to:
- Illiquidity – Investments on the platform are generally illiquid. PicMii does not offer a market for selling securities once an offering closes and the regulation set forth by the SEC contains additional restrictions on resale of your equity.
- Speculative – The terms set by the issuer in crowdfunding are generally speculative. This just means that companies generally set their own terms, which includes their own evaluation. For this reason, among many others, it is critical that each investor do their own research and utilize all educational resources provided to them.
- Loss of Some or All of Your Investment – Investments on the platform are considered high risk. These are startups and, unfortunately, not all startups succeed! If a company is unsuccessful, you risk losing your entire investment.
Again, it is critical that each investor do their own research and utilize the educational tools provided to them through the platform and beyond. PicMii provides this educational blog, an extensive FAQ page, additional educational pages, as well as communication gateways with the issuers to ask additional questions. Please use all of these resources to your advantage!
Can you afford to lose your entire investment?
When making an investment in a startup on the platform or elsewhere, it is critical to consider if you can afford to lose your entire investment. Since the risk of losing your entire investment exists, as well as the inability to access the funds due to the illiquidity of your investment, you must ensure that you can survive without those funds.
Investments in startups should not be undertaken with funds that you need. Funds used to invest in startups should be extra money that you can afford to risk in return for the potential returns resulting from the issuer succeeding.
The PicMii Way
At PicMii, we believe it is important for each investor to pause prior to making an investment to ask yourself the following questions:
Here To Help
PicMii is always here to help and answer any questions you have about the platform or about crowdfunding in general. We must remind you that we are not authorized to provide investment advice or recommend a specific offering on the platform, but we are happy to provide you with as much information as we can to help you make the most informed decision you can. You can always reach us at firstname.lastname@example.org.
Great article, Braden