Equity Crowdfunders Or Investment Bankers?

What with the dizzying pace of change in the alternative finance world, it seems like decades ago, but just a couple of years back in December 2013, when I launched BA to an unsuspecting world I had a couple of what you might call ‘heroes’ – namely the founders of Crowdcube and Seedrs. After all, these guys have been largely responsible for triggering the alternative finance revolution that’s still under way today. They laid not only the foundations but also the footings for an amazing industry that’s changing the lives of entrepreneurs all over the UK by enabling them to realise their business visions.

To say I have the utmost respect for those guys would be an understatement. They’re pretty much the source of my boundless enthusiasm for anything and everything to do with equity crowdfunding! There’s always a ‘but’ at the end of a sentence like that – and here it comes!

Lately, when I look at the way they’re running their businesses I can’t help feeling a hint of disappointment… I’ve started getting the feeling the revolutionaries have swapped their red berets and combat fatigues for red braces and pin-striped suits. Instead of blazing the trail for our most imaginative entrepreneurs by providing a ground-breaking alternative to the rigid mindset of the financial establishment they seem to be slowly merging into the establishment! I say this because it would seem to me that they’re now turning down more businesses than ever before, they are not at as open or collaborative as they once were and are cherry picking what they deem to be the best company investments.

Just to be clear – it’s not that I blame them. They want to protect their business and It’s easy to see how this happens. It’s not just the fear of getting things wrong; the fear of failure, it’s also the fear of outside pressure, reprisals from the press and remaining legally compliant, especially with recent events like the collapse of Rebus that was funded on Crowdcube last year.

For me this approach takes all the romance and exhilaration out of what we’re all trying to do – the fear of reprisals, lack of openness and sharing goes against everything I thought equity crowdfunding stood for. Worst of all, it puts the power to invest in exciting new ideas back in the hands of the ‘In crowd’ and limits the exposure to retail investors (the man in the street) from those opportunities.

In short, I believe this is stifling the development of equity crowdfunding and I think they should attack it head on, rate the companies they are funding on both investment and altruism. Don’t be frightened of backing the wrong horse; it happens. Open your doors to aggregators that offer opinions and ratings, let the crowd become a crowd don’t crush it.

Of course, it’s not an unfamiliar scenario, as companies make the tough transition from fired-up start-ups to corporate entities with outside powers holding the reins and the purse strings. But the truly great innovators have always understood that you sacrifice collaboration at your peril. When Apple, for instance, opened its doors to app developers through the App Store their business changed overnight… When Google created its ad display network it’s revenues soared exponentially…

And anyway, if not collaboration, what is Crowdfunding about? Equity Crowdfunding is about creating a genuinely free market, an independent place where people trade and where ratings and feedback are given to companies, and Crowdfunding sites alike. To keep the flame of inspiration burning I believe the entire community has to be able to communicate and share ideas with total freedom. In my view that means every business involved has to embrace openness wholeheartedly; has to collaborate enthusiastically; has to welcome collaborators and aggregators of all kinds and has to open their books and let everyone see their failures as well as their successes. That might sound daunting but a sense of community is important here if we are to create a sustainable liquid market and our regulator needs to support us not stifle the growth because of fear of failure.

It would be fantastic to be able to offer sensible advice online and the industry needs to promote the fact that this is not investment in traditional terms, the chances of getting rich are pretty slim (not impossible I might add!) but it’s fun, it’s tax efficient and you are helping people to fulfill their dreams. If you buy shares with this train of thought the industry’s reputation will not be affected by failure.

The original idea was about spreading risk, about the masses investing small amounts to make a big pot. There are millions of SMEs that are looking for investment and the major crowdfunders are touching a matter of mere hundreds. The market leaders have got to stop harping on about investment as the word could insinuate you will get a return.

Equity Crowdfunding should be marketed with more altruistic values. Yes a small percentage of these companies will make it and they will possibly make it big, but the majority I’m sorry to say will fail. This does not make it bad, it creates jobs, gives great ideas a chance, in most cases is a good tax write off with SEIS/EIS and if you spread your risk and invest in lots of companies one might be the next Google. All in all you should feel good about your investment you have helped someone get one step closer to their dream and in doing so you may fulfill yours by “possibly” choosing that 1 company that turns out to be the next Google.

Call me a naive sentimentalist – I may be both of those things, but I’m also a passionate advocate of the notion of people getting together to make great things happen! So, please, let’s not lose sight of what’s uplifting, exciting and truly inspiring at the heart of the equity crowdfunding revolution!

The Smartest Ways You Can Invest Your Money

Everyone should think about the answers to those questions, because there comes a time when money will be needed and some people will realize that their savings aren’t enough to cover the expenses.

There are three things to invest in.

1) Health Insurance

Health insurance is the most important one. You never know what the future holds when it comes to health. You can try to live a healthy lifestyle, but sometimes viruses, bacteria or other problems may cause problems that may require urgent treatment or medication.

Don’t let health problems catch you unprepared. Pay your health insurance and have all your medical expenses covered. Good health allows you to work at maximum efficiency, allowing you to earn enough to save even more.

2) Profitable Assets

If you wish to start a business or invest into other businesses in order to gain more profit, make sure that what you invest in is a good long-term investment. Investing in the right assets will allow for more savings for future needs. Your first option is to observe which businesses are the most successful and have the least competition. These types of businesses are worth investing in or getting involved in.

Your second option is to find a business that comes up with something original and buy it. This is how some companies acquire rights to video games or other software for example. Alternatively, if you have an idea for starting an original business or creating an original product, try to deliver the best quality by using the cheapest tools that will do the job.

3) Retirement

You have to think of the future, when you will be old and possibly unable to work. Or maybe you wish to relax and no longer work for the rest of your life once you retire. Saving up when you are young and capable of working is highly recommended.

The 401(k) saving plan is very useful for putting money aside for retirement; however, not everyone is eligible for this plan. If that is your case, then make sure to open your own saving plan. The earlier you start saving, the more likely you will be to cover enough of your daily needs of your retirement life, as well as extra expenses.

Save efficiently.

Avoid impulse buying. If something isn’t needed and brings zero profit, it is a waste of money.

Do not rely on fast foods and restaurants. Instead, cook your food at home to save money. Leave restaurants for special occasions.

If you have vices like smoking or alcohol, either quit them or reduce their use as much as you can. You would be surprised how much money you could save per month if you take these expenses out of the plan.

What Would Negative Rates Mean for You?

It used to be that you worked hard, saved your money, and then when you retired, you lived off the interest of your savings. Today, global central bankers are changing the landscape, where already in 15 countries, the term negative interest rates is a reality.

Japan is the latest country to do this, following Europe, as the largest economies to now have negative interest rates. And make no mistake, every other central banker, including the US Fed, & the Bank of Canada, is considering doing the same thing. So what does this mean for you?

Imagine that you have worked and saved all your life, and are now looking to retire, and live off your savings. If negative rates are imposed on us, instead of earning a decent return on your money from the bank, with negative rates, you would actually have to pay a penalty to leave your money in the bank. As bizarre as this sounds, it is exactly what is happening in over 15 countries today, and it is very likely coming to North America soon.

Why are these central banks doing this? Basically, the only solution that they have managed to come up with to reinvigorate an economy has been to lower interest rates, and pump over $12 trillion globally into assets.

The idea with low interest rates was that with rates low, businesses would borrow to expand their operations, while consumers would use low rates to borrow and buy homes, cars, and other big ticket items. All this borrowing and spending, theoretically, would create new jobs & grow the economy.

The only problem with the theory is it didn’t work; businesses didn’t like all the talk of increasing taxes, so they didn’t expand their business. In fact, most businesses cut and slashed jobs to avoid losses. Consumers also didn’t like all the increases in taxes and fees that governments were implementing, so they cut their debt load rather than increase it. So at the end of the day, all that stimulus that global governments piled on, didn’t achieve the desired results.

Even though negative rates didn’t work, these central bankers are now venturing below zero, and have introduced what a few years ago would have seemed unfathomable, negative rates.

Negative interest rates are a sign of desperation, a signal that traditional policy options have proved ineffective, and new limits need to be explored. They are a tax on deposits. They punish banks that hoard cash instead of extending loans to businesses or to weaker lenders. Rates below zero have never been used before in an economy as large as Europe or Japan..

The logic is that with rates below zero, businesses and consumers will finally borrow. Are we going to see a scenario where your take out a mortgage, and instead of paying interest, you actually get paid?

As a consumer, are you going to leave your money in the bank and have to pay a penalty, or do you decide to make some purchases. For seniors, what do you do with your savings, leave it in the bank and lose money every year, or do you take it out and hide it in your back yard? In Japan, there has been a massive run on safes, as people are taking their cash out of the bank and keeping it at home.

To deter people form withdrawing their money and hoarding it, instead of spending it, central banks are now removing large denominated bills, such as the €500 in Europe, & the $100 in the US. They claim that they are doing this to fight terrorism, but it seems a little too much of a coincidence that they are doing it just as negative rates are being implemented.

By eliminating large bills, it will become very difficult to hoard cash easily.If banks add a small 0.25% fee on deposits, it means that if you had $500,000 and left it in the back for a year, at the end of the year you would only have $498,750. It would have cost you $1250 for the privilege of keeping your money in the bank. So the temptation would be to move your money out of the bank, but by eliminating large bills, you would need a lot more space to stash you cash.

Globally, there is now over $8.3 trillion of Government bonds that are paying 0% or less. There is $5.5 trillion that is paying negative yield, meaning that about one quarter of all global bondholders will end up paying their government custodians for the pleasure of parking their cash in the “safety” of government bonds.

These latest moves by central banks of negative rates, and eliminating cash all feed into the growing trend of a loss of confidence in government that will lead into a massive Sovereign Debt Crisis.

As all of these events play out, we will see more and more capital pull out of the perceived riskiest areas, and into the perceived safest areas. Ultimately, that means out of public investments (gov’t bonds), and into private investments (stocks, commodities, precious metals etc).

Stay tuned!

Tips For Selecting the Best Investment Company

In terms of making the best investment, most individuals do not know exactly where to start. Bear in mind that investing is a fierce industry. Those who are not fully aware of what they are doing might end up losing their hard-earned money. And it is for this reason that most investors would want to get help from a reputable investment company.

3 Important Factors

If you start looking for an investment company, you must determine the 3 essential factors. First, you need to clearly identify your goals. These experts cannot actually help you if you do not have a clear goal. Second, new investment must perform some research regarding the background as well as the reputation of the company they want to work with. You have to make sure that it has an excellent track record and has received optimistic reviews from other investors. And third, you need to know that kind of relationships you want with the investment firm. Determining these factors will greatly help you in boosting your chances for success.

Choosing Your Goals – Your goals will have a huge impact as to what investment firm to work with. Most people today invest with 3 goals in their minds – to increase their wealth using minimal start-up funds possible, to reduce their chances for risk or loss, and to hire experts who can capitalize on all of the great opportunities accessible to them. It is actually okay for you to have different goals; however, those goals must be clearly laid out in a list prior to choosing an expert to work with.

Perform Research – Due to the fact that most people do not invest, they do not actually know how to perform research in an investment company. Well, there are also 3 things to consider – marketing materials, public trading records, and financial statements. All of these elements will yield a larger picture of how well an investment company is doing. It is important for you to look into how the company was performing in the past 5 years. Also, observe how the group performed while the market was both down and up. These pieces of information will help you properly evaluate your options.

Consider The Brokers – Few brokers are well-known in most markets. New investors like you must familiarize yourself with the career paths of the top performing brokers. Be reminded that it is normal for brokers to change companies from time to time. You must know how the companies were performing when such brokers worked with them. Moreover, you must also be aware of how the companies performed after they have left.