This sponsored post is produced in association with MicroVentures.
No one can deny the role of crowdfunding platforms like Kickstarter and IndieGogo in the digital entrepreneur renaissance. Imaginative products like the Oculus Rift, Ouya, and Pebble would have never seen the light of day without the millions of dollars pitched in by those who believed in them.
According to a World Bank commissioned study, the global crowdfunding market could balloon up to $96 billion in the next 25 years — roughly 1.8 times the size of the global venture capital industry today.
And in light of incredible crowdfunded venture acquisitions like the $2 billion Facebook-Oculus VR deal, it’s easy to understand why the demand for equity crowdfunding opportunities is reaching fever pitch.
According to Berkeley Director of Research Richard Swart, equity crowdfunding is an attractive avenue for “Main Street USA” businesses to raise capital. Tech startups that would rather bypass venture capital funds also stand to benefit.
“Investors with a lower net worth than those who are currently allowed to participate in equity crowdfunding could lead to even more explosive growth in the category in 2015,” stated Kelly Rodrigues, CEO of Pensco, one of the largest self-directed IRA custodians.
However, due to the overwhelming influence of the VC industry, public crowdfunding campaigns are treated more like American Idol auditions for budding entrepreneurs. Once the initial backers help write their success story, the likes of Venture Capitalist Peter Thiels or entrepreneur Marc Andreessen jump in to scale it up and squeeze out the valuable equity returns. Crowdfunders are often left with nothing more than cheap merchandise and fancy ‘Thank You’ notes.
Enterprising investors, with limited resources, recognize that these reward-based crowdfunding platforms fall short on returns and that equity crowdfunding platforms and policies can provide them a fair financial middle ground on which to play.
MicroVentures, one of the first financial firms to work towards bridging the crowdfunding and venture capital industries, aims to turn over a new page in the chapter of equity crowdfunding. The online venture investing company lowers risk through pooled funds, offering investors a way to create a unique portfolio by diversifying among several startup.
MicroVentures’ recently-launched 500 Startups Fund — an early seed stage venture fund — challenges the elite investor status quo by allowing accredited investors to participate with a minimum investment of $10,000.
This innovative program divides investments in the following three 500 Startup Funds:
- Fund III – The primary investing fund for the 500 Startups program; which allocates 50% of the investments into companies that are participating in their accelerator program. The remaining 50% is directed towards early stage startups that fall into the investment thesis.
- Annex Fund I – Supplementary capital for the best performing companies in 500 Startups’ Fund I, Annex Fund I facilitates investments ranging from $50,000 to $500,000.
- 500 Luchadores Fund – Dedicated exclusively to funding companies operating in Latin America. 90% of the investments will be though the 500 Startups accelerator program there.
So far, crowdfunding campaigns have done well to elevate aspiring entrepreneurs and serve as litmus tests for venture capitalist interests. MicroVentures hopes to give the equity crowdfunding market a rewarding makeover by empowering aspiring average Joes of the startup investment world.
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