I’ve made my first Regulation Crowdfunding (Reg CF, also known as “equity crowdfunding”) investment in Troupe Jewelry. I’d like to encourage each and every one of you who was interested enough to read this post to follow me into this investment, and I’ll explain why below.
Reg CF allows ordinary people — non-accredited investors — to legally invest in startups alongside, or without, “professional” investors. Previous rewards-based crowdfunding platforms like Kickstarter and Indiegogo allow consumers to buy products or services in advance of their general availability, usually at a discount or with some other bonuses. Other platforms like GoFundME and Crowdrise allow what are essentially charitable contributions to individuals or organizations that are not registered as non-profits. But only since Reg CF became legal on May 16, 2016 have companies been allowed to sell stock or other securities.
What this means for individuals who buy Reg CF securities is that for the first time they can invest early in the next Uber — if they can identify it. I’m told that if I’d invested $1000 in the very first round of Uber it would be worth $5 million today (on paper, of course, since Uber is not yet publicly traded).
From the company point of view Reg CF is interesting in that not only does it bring in capital, but because there are so many more investors the social network reach of the investor group is much broader. And unlike with rewards-based crowdfunding investors can not only recommend the product (“please go to troupejewelry.com and buy yourself a custom pendant”), but can also say “if you like what you see, you can own a share of this great company.” And they have a financial incentive to do both.
If you’re here because you’re a non-accredited investor I encourage you to invest because I’m convinced Troupe is going to be big and you can make some money here. And the investment size can be as small as $100, so the risks can be kept manageable. The company hopes that you’re investing because you love jewelry and think that you can help your friends and followers see why this is going to work.
If you’re here because you’re one of my accredited investor friends and colleagues I encourage you to invest for those same reasons, but also because Reg CF is coming at us .We need to understand what’s happening and why it’s important, and to understand we need to get involved. I think it’s a reasonable diversification strategy to be placing a large number of smaller investments in Reg CF deals for those 100x returns while still investing larger amounts “regular” angel deals.
The difference between Reg CF and a lottery ticket is that the outcome is not random. You can assess beforehand the quality of the idea and the quality of the team using whatever criteria you choose — some might decide to follow other investors, others might travel their own path. More importantly, in some cases you can help influence the outcome. Try that with your lottery ticket. Probably a felony.
The bottom line is that world is changing rapidly around us and we need to be informed about Reg CF or get left behind. The best way to be informed is to be involved. Invest in Troupe, or find another cool looking company and jump on in!