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Equity Crowdfunding for Investors: A Guide to Risks, Returns, Regulations, Funding Portals, Due Diligence, and Deal Terms by Matthew R. Nutting, David M. Freedman

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CHAPTER 9

How to Invest, Part II: Identify Suitable Offerings

In Chapter 8, we discussed portfolio strategy and laid out a seven-step plan for building an equity crowdfunding portfolio. Before you register on an equity crowdfunding site and start looking for offerings to invest in, we urge you to think seriously about the first four steps of the plan to develop your first-year budget and identify your motivation for investing in startups and early-stage companies.

Your primary motivation may be social or financial—that is, you may be motivated primarily by the social impact of your investments or primarily by the potential return on investment. We want to reiterate here that you should not reasonably expect to achieve both social and financial objectives in the same investment or to the same degree of success—if it happens to work out that way, consider yourself very lucky. Instead, most opportunities will be principally one or the other.

Portfolio construction, which we talked about in Chapter 8, is about finding a mix of investments. You can hold a mix of social-impact and financial-return investments, but each investment should be optimized for one objective or the other.

NARROW DOWN YOUR SELECTION OF OFFERINGS

Before you pinpoint the kinds of offerings you will consider investing in, browse through the offerings on a few equity crowdfunding sites to get a feel for what kinds of companies appeal to you—and why.

The following two lists (derived from the “New Angel Investors” ...

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