How to Invest, Part IV: Funding and Postfunding

If you are investing in startups and early-stage companies in a systematic way, with your objectives being portfolio diversification and maximum return on investment, then you will complete the following steps before you commit to an equity crowdfunding deal:

  • Decide what percentage of your overall investment portfolio you will devote to angel investments via equity crowdfunding. Plan to invest in a variety of equity crowdfunding deals over three to five years, and create an equity crowdfunding budget for the coming year. (These steps are covered in Chapter 8.)
  • Identify your primary motives for investing in startups and early-stage companies. Select one or more appropriate equity crowdfunding portals and/or broker-dealer platforms and search for investment opportunities that match your (1) motivation for investing, (2) business or industry expertise, and (3) risk/liquidity profile. (These steps are covered in Chapter 9.)
  • Select offerings that you may want to invest in, understand the kinds of equity securities being offered (most likely stock, LLC units, and/or convertible debt), and make sure the terms of the investments are as favorable to investors as possible while still being fair to issuers. (These subjects are covered in Chapters 10 and 11.)
  • Conduct (or collaborate with the crowd on) due diligence for each offering that you want to invest in, or ensure that due diligence has been completed by a reliable party who ...

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