how you can invest in startups w/o being bougie
I am not an accredited investor. An accredited investor according to the SEC is someone who meets the one or more of the following criteria:
“Individuals (i.e., natural persons) may qualify as accredited investors based on wealth and income thresholds, as well as other measures of financial sophistication.
- Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
- Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year
So you must be wondering “AATISH how on earth do I invest in startups???”
- Investment professionals in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82)
- Directors, executive officers, or general partners (GP) of the company selling the securities (or of a GP of that company)
- Any “family client” of a “family office” that qualifies as an accredited investor
- For investments in a private fund, “knowledgeable employees” of the fund”
Technology innovation has allowed us to make big strides in financial technology and that includes investing in startups.
Equity crowdfunding is when a startup or an early-stage company is looking to raise a certain amount of financing in exchange for equity. How much an investor puts is proportional to how much they would receive.
Let’s bring in our thinking expert ‘ The Thinker’ to break this down:
Say Company A is looking to raise $500,000 and each share is worth $10.
Thus company A is offering 50,000 shares for $500,000.
And you invest $1,000 into Company A.
You would get $1000/10 = 100 shares.
Whereas your buddy Louis (the trust fund baby) invests $50,000.
Louis would get $50,000/10 entitling him to 5000 shares.
If you are based in the United States; platforms like Seedrs, WeFunder, StartEngine are fantastic platforms to get you started.
Whereas in the United Kingdom; platforms like Crowdcube ( which I personally use for European Investments) are equally good alternatives.
Originally published at https://aatish.substack.com.
