Where to find the best crowdfunding deals and how to cut through the noise

Its also pretty easy to forget about property crowdfunding but this is an investment instrument that hasnt reached anywhere near its potential yet. The platforms that lead the way here in the UK are Property Partner, CrowdLords, The House Crowd and Property Moose.

There are typically two ways to invest in property based crowdfunding deals. The first is simply equity investments in commercial or residential properties where investors realise returns in the form of a share of the rental income. And the second is debt where investors invest in the mortgage loan associated with a particular property. Loans are repaid with interest which finds its way back into the pockets of investors. Generally speaking, equity investments offer higher returns but they are traditionally higher risk.

The difference with property or real estate crowdfunding is that investors can see likely projected returns on their investment. Of course, when you make an investment in a startup, the end goal is to earn your returns through the achievement of an exit. For a more risk averse investor, property might be the way to go, but if you consider yourself a verifiable risk taker, then the potential returns of having a share in the next unicorn would probably tempt you towards traditional equity finance.

How to cut through the noise

I would actively advise you to do research into previously successful companies, look for shared characteristics between these and newly fundraising companies. As crowdfunding continues to grow, its general infrastructure is rapidly expanding, bringing forth aggregators, the emergence of intermediaries and advisories for both investors and startups alike as well as the introduction of ratings agencies that actively evaluate existing deals. Making use of these new independent, external sources will absolutely help you find and invest in the best crowdfunding deals.

Start with a focus on companies in sectors you know. This will ease you into the crowdfunding process and you can start to understand which platforms are more aligned to your preferences. Before delving too deep into a possible investment opportunity, set a threshold in terms of the percentage that a particular project is funded. For example, a campaign that has reached 80 per cent of the funding goal is significantly more likely to be successful than a project that has been running for the same amount of time but has only received 20 per cent of the total investment.

Recent research from LSE has claimed the crowd are making economically rational decisions and the likelihood of investors blindly investing in seemingly the most popular pitches is fairly low. As such, this threshold approach will send signals of quality to you as an investor that a certain pitch warrants greater attention. With OFF3R you can keep tabs on the funding progress of liked deals as well as receive notifications each time one of your liked deals hits a certain threshold.

And finally, take some time to review who the lead investors are. A number of platforms are becoming increasingly transparent regarding who’s investing in certain projects, and they do this for a reason. It adds weight. If experienced, successful investors are leading certain funding rounds, and are proven in a particular sector, this can give you real confidence that this could be a company worth your time and money.

With the global crowdfunding market predicted to reach $96bnby 2025, the rise of alternative finance has undoubtedly contributed to OFF3R’s meteoric success set up by a serial entrepreneur and investor, it became one of our Everline Future 50 2016 success stories.

Lex Deak is founder of OFF3R.

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