129: 9 Equity Crowdfunding Questions to Consider Before Investing

Learn 9 things to consider before investing in a crowdfunded company, how small investors can be venture capitalists and the 2 classifications to buy shares.

2 Classifications:

1) $100k of income and $100k of net worth. Can invest up to 10% of lesser of income or net worth, up to $100k maximum. For example, $100k income, $500k net worth, could invest ($500k x 10% = $50k).

2) Under $100k income and $100k net worth. Can invest up to 5% of lesser of income or net worth, whichever is less. Compare that to $2k and choose larger number.

So if you make $50k and have $150k net worth. 5% of $50k = $2,500 vs. 5% or $150k = $7,500. Lesser is $2,500 and is more than $2k so $2,500 investment is allowed.

See more details at www.ZacksInvest.com for a crowdfunding portal.

9 Reasons to consider before investing in a crowdfunded company:

1) No liquidity

2) High risk of loss

3) Early stage companies are not fully tested in the marketplace

4) Long-term commitment

5) Questionable accuracy of information

6) Investing in a product or a company?

7) Is there a wide moat?

8) Dilution

9) How specialized?