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Equity Crowdfunding for Investors: A Guide to Risks, Returns, Regulations, Funding Portals, Due Diligence, and Deal Terms

Book Description

Learn the ins and outs of equity crowdfunding with this informative guide

Equity Crowdfunding for Investors is a comprehensive, objective, and authoritative guide to the social and financial rewards of crowdfunding. Before now, angel investing – and the spectacular returns possible in this asset class – has been off-limits to all but the wealthiest Americans. Now equity crowdfunding portals allow the general public to buy shares in startups and fast-growing private companies for the first time in generations. This book provides the guidance individuals need to invest wisely, tempering the excitement of leading-edge technology, innovative business models, and exciting new brands with thorough, practical know-how – including investor limits and requirements, portfolio strategy, deal terms, and much more. Readers will learn the pros and cons of investing in equity crowdfunding so they can make an informed investment decision, as well as best practices for finding, researching, evaluating, and buying into potentially profitable startups. Digital components include tables, graphs, comparison charts, screen captures, checklists, and other tools that further enable readers to make suitable investment choices.

Equity crowdfunding is a new, exciting, and evolving way for growing businesses to raise capital and for average investors to buy equity in those businesses. It has been hailed as a "game changer" in the private capital markets, particularly the angel investment asset class, which includes angel investing. This book shows readers how to take full advantage of this new avenue of investment, without being taken advantage of themselves.

  • Make smarter investment decisions

  • Avoid being ripped off

  • Find the best information available

  • Understand the SEC rules and limits

  • Equity crowdfunding can produce huge returns. It also comes with huge risk. Some companies will succeed, but many will fail. Everyday investors can mitigate some risk and increase their chance of profit with the fundamental insight provided in Equity Crowdfunding for Investors.

    Table of Contents

    1. Cover Page
    2. Title Page
    3. Copyright
    4. Disclaimer
    5. Contents
    6. Foreword
    7. Preface: The New Angel Investors
      1. THE OLD RULES
      2. THE GAME CHANGER
      3. ENTER AT YOUR OWN RISK
      4. IPOS, EXITS, AND SECONDARY MARKETS
      5. FINANCIAL, STRATEGIC, AND SOCIAL BENEFITS
      6. REGULATIONS WILL EVOLVE
    8. Definitions of Key Terms
    9. Acknowledgments
    10. About the Authors
    11. CHAPTER 1: The Foundations of Online Crowdfunding
      1. THE INTERNET DOESN'T CHANGE EVERYTHING
      2. BUT THE INTERNET CHANGES SOME THINGS
      3. REWARDS CROWDFUNDING BLASTS OFF
      4. DEBT AND DONATION CROWDFUNDING
      5. EMERGENCE OF EQUITY CROWDFUNDING
    12. CHAPTER 2: Equity Offering Platforms (under Regulation D)
      1. DEFINITIONS
      2. REGULATION D BASICS
      3. PROFILE: MICROVENTURES
      4. PROFILE: CIRCLEUP
      5. SUSPENSE BUILDS AROUND TITLE III
    13. CHAPTER 3: Equity Crowdfunding
      1. PAVING NEW ROADS TO CAPITAL MARKETS
      2. A DEEPER DIVE INTO TITLE III
      3. THE CAUTIOUS OUTLOOK
    14. CHAPTER 4: Intrastate Equity Crowdfunding
      1. THE INTRASTATE EXEMPTION
      2. THE SURGE OF INTRASTATE EXEMPTIONS
    15. CHAPTER 5: Deal Flow
      1. STAGES OF BUSINESS DEVELOPMENT
    16. CHAPTER 6: Angel Investors
      1. ANGEL INVESTORS BEFORE CROWDFUNDING
      2. TRADITIONAL ANGEL INVESTORS
      3. ANGEL GROUPS AND ANGEL CROWDS
      4. WISDOM AND MADNESS OF CROWDS
      5. NEW ANGEL INVESTORS
      6. TWO KEYS TO ANGEL INVESTING SUCCESS
    17. CHAPTER 7: Equity Crowdfunding Portals
      1. SUITABILITY AND DUE DILIGENCE
      2. ORIENTATION TO EQUITY CROWDFUNDING SITES
    18. CHAPTER 8: How to Invest, Part I: Portfolio Strategy
      1. PRIVATE SECURITIES RISK AND REWARD
      2. RISK AND DIVERSIFICATION
      3. ALTERNATIVE ASSETS
      4. ASSET ALLOCATION
      5. DRY POWDER
      6. BEFORE YOU PULL THE TRIGGER
    19. CHAPTER 9: How to Invest, Part II: Identify Suitable Offerings
      1. NARROW DOWN YOUR SELECTION OF OFFERINGS
      2. SELECTING EQUITY CROWDFUNDING SITES
      3. GET GOOD ADVICE FROM INFORMED ADVISERS
      4. TYING IT ALL TOGETHER
    20. CHAPTER 10: Equity Crowdfunding Securities
      1. STRAIGHT EQUITY: STOCK AND LLC UNITS
      2. CONVERTIBLE DEBT, THE HYBRID SECURITY
    21. CHAPTER 11: Deal Terms
      1. NEGOTIATIONS AND STANDARDS
      2. DO ALL THOSE TERMS REALLY MATTER?
      3. DEAL TERMS FOR STRAIGHT-EQUITY OFFERINGS
      4. ECONOMIC TERMS
      5. CONTROL TERMS
      6. TERMS RELATING TO LIQUIDITY EVENTS AND FUTURE FINANCING
      7. OTHER TERMS
      8. EVALUATING DEAL TERMS
      9. THE JOYS OF DUE DILIGENCE
    22. CHAPTER 12: How to Invest, Part III: Due Diligence
      1. DIY, OUTSOURCE, OR COLLABORATE
      2. LEGAL DUE DILIGENCE
      3. FINANCIAL DUE DILIGENCE
      4. BUSINESS DUE DILIGENCE
    23. CHAPTER 13: How to Invest, Part IV: Funding and Postfunding
      1. YOUR RIGHTS AS A SHAREHOLDER
      2. MANAGEMENT PARTICIPATION
      3. MANAGE YOUR EQUITY CROWDFUNDING PORTFOLIO
      4. RETURN ON INVESTMENT
      5. YOUR INVESTOR NETWORK
    24. CHAPTER 14: Liquidity and Secondary Markets
      1. RESTRICTIONS ON TRANSFERS
      2. WHY SELL? WHO WILL BUY?
      3. SECONDARY MARKETS IN THE DIGITAL WORLD
      4. TITLE III SECONDARY MARKETS
      5. CONCLUSION
    25. Epilogue: Trends and Innovations
    26. Equity Crowdfunding Resources
      1. A. LAWS AND REGULATIONS
      2. B. RELIABLE CROWDFUNDING NEWS AND ANALYSIS
      3. C. TRADE ASSOCIATIONS
    27. About the Companion Website
    28. Index