What are the steps involved in investing through Crowdfunding? Here are the key steps giving you an overview of the crowdfunding process as an investor.
When an entrepreneur wants to launch or grow their business or concept, a good way to get investment from a group of people is to do Crowdfunding. A large number of people can invest relatively small amounts of money in exchange for “equity”, which is a percentage of the company.
Investors become part-owners of the company and receive shares of the business, proportional to the amount of capital they have put in the business. You can read more about crowdfunding with this helping article on Fundable.
For first-time users, the process of investing in a company via a crowdfunding platform can seem difficult. This outline of a standard investor journey from signup to successful investment will make that process clear and demystify what is, in fact, an easy, uncomplicated and potentially rewarding procedure.
The first step is to ensure your account is set up so that you are able to fully engage with campaigns that you like. After sign up, you should take a few moments to fill in your profile page. Entrepreneurs receive questions from a lot of investors - they will prioritize people who look more likely to invest. A complete profile will show you are serious and will help you get quicker responses from entrepreneurs. Also, other people may see your profile and want to follow you and any investments you make, so it's a great way to grow your network and increase your investment power.
Once your profile is all filled out, the next step is to look at our latest proposals. We only showcase deals of the highest quality where you can invest alongside leading investors. Due to our unique relationship with Angel Investment Network, SeedTribe members are now able to invest in exclusive Angel deals that would not normally be available to smaller investors. As such, we guarantee a carefully curated list of investments so you don't waste your time choosing between mediocre opportunities.
If you like a company you can choose to 'follow' it and receive updates by adding it to your shortlist; you can request documents and ask the entrepreneur questions; and you can pledge investment. You can pledge by clicking the ‘Invest now’ button and entering the amount you’d like to invest. Don't worry, you will be able to review this later - pledging at this point is not a final commitment.
You will then be sent an email requesting a signature so that you can go onto our nominee share structure. This structure means that you will avoid having the headache of paperwork and having to engage your lawyer. We manage all of this for you.
When the company reaches its fundraising target, you will receive an email notifying you that the funds you pledged will be taken from your account. If you can no longer make the investment, you will have 48 hours to withdraw if you need to. If you take no action, the funds you pledged will be transferred to the company.
If this is your first investment, our payment provider will then conduct AML (Anti-Money Laundering) and KYC (Know Your Customer) checks on you. For this you may receive an email requesting information about your identity. Once the checks are completed, you will receive an email informing that you are cleared (hopefully!).
As soon as the company signs our nominee shareholder agreement the process is complete and you are a shareholder in the company. According to our terms and conditions, the company will then send you an introductory email.
To keep you up to speed with the progress of your investment we require that companies send you a report at least biannually. But the chances they will update you more regularly. You will be able to visit the ‘Funded’ section on ‘My Portfolio’ to view updates and download the latest report.
If the company exits and your share value is realised, you will receive your returns from SeedTribe as soon as the funds have been transferred by the company and we have taken our success fee of 7.5% of any profit you have made.
You have passed the test and you may continue your with your investment.