Does crowdinvesting bring too little?

When analyzing the work of several hundred companies that have attracted investments with the help of such a popular tool as crowdinvesting, it turns out that in this case companies sell far fewer shares than in the case of using other instruments to obtain financing, Vedomosti writes . According to Beauhurst, two of the three companies that collected up to £ 500,000 through crowdinvesting sold no more than 20% of their own shares to investors. At the same time, a start-up fund gives 44% of its own shares to private equity funds, and 28% to business angels.

Private investors, as follows from the results of the study, quite often may become a victim of over-valuing the business. In this case, you can exclude small projects that have collected less than 100 thousand pounds, but the picture will remain the same.

“This is quite consistent with the anecdotal situation that we were told about: crowd-investing platforms attract companies in part because here you can dictate your own business valuation. Direct investors agree to get less shares for the same money than business angels or venture capitalists, so companies lose a smaller stake and are less controlled by investors, ”commented on the situation in Beauhurst.
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Now crowdinvesting is developing pretty fast. Last year alone, about 84 million euros were invested in small businesses. But many participants in the investment process are concerned about the overestimation of some projects. In this case, the investor does not receive returns, even if the investment makes a profit. In order to tell potential investors about difficult issues in the initial stage of investment, the crowdinvesting resource SyndicateRoom opened the “Investor Academy” at the end of last month. Here, in conjunction with the law firm Taylor Wessing, the site talks about the process of conducting company valuations. It also tells about the pre-emption right. “Investors have a huge lack of information. We want to help them make an informed decision. This includes refusing if the project does not suit them, ”says SyndicateRoom CEO Goncallo de Vasconcelos.

According to Vasconcelos, investors who invest in different companies without understanding the principles of investing risk losing all their money.

Now crowdinvesting is at a crossroads - this type of financing can either take a substantial market share or become just exotic.