This site is aimed at individual investors who want to invest their own money and learn along the way. While many are experienced (and qualify as “accredited investors”) one of the most exciting things about this emerging ecosystem is how there’s opportunities for everyone to invest and help decide which companies and products get funding and financing. Rather than stay on the sidelines out of fear of losing money, there’s now ways to learn the ropes and try things out with very small amounts that won’t hurt (too much) even if you lose it all — and early on, the chances of that are pretty high.
The investment crowdfunding ecosystem is changing all the time, and we’re working to evolove along with it, including our metholdology for reviewing and rating investment crowdfunding and online alternative investing platforms.
In case it wasn’t clear from that highlighted paragraph you (hopefully!) just read, we’re not here to give you specific personal advice! Or imply that any particular platform or investment is the right (or wrong!) choice for you. We’re here to help you explore the growing ecosystem of investment platform options and become a more informed and educated investor. An investment that’s ideal for one person may be totally inappropriate for another.
In fact, one of the biggest challenges when navigating this ecosystem is making sense of which kinds of platforms offer the kinds of investments you’re looking for based on your risk profile and time horizon. It’s not enough to just know you’re looking for real estate — some real estate investments are 3-month loans secured by the underlying property, while others offer a higher potential return, but without the security of a lien on the property and requiring holding the investment for 5 years or more (and lots and lots of other variations in between).
Our reviews are intended to help distill the high-level info from each platform and put things from different investment types into a wider overall context around things like security type (debt, equity, etc) and regulatory frameworks.
Starting in early 2017, we began transferring what had been a Google spreadsheet into a first pass online database of about 50 different platforms. We’ve now looked at more than 80 different platforms so far (and invested on more than a dozen of them). Our original goal was to have a baseline entry for every platform we could find, and our first iteration of a rating/review system was to grade each platform across several criteria, like liquidity and cash flow.
But it soon became apparent that there was just too much diversity of investment types to make meaningful comparisons across those dimensions for all of the platforms, so we’ve phased those out in favor of more detailed narrative reviews and (for now) a single, bottom-line rating from 0-100% (0-5 Stars), with most platforms we’ve reviewed to date receiving a “Very Good” (3.5 stars) or “Excellent” (4 stars) rating. Reviews and ratings are the subjective opinion of the reviewer, and should absolutely not be relied on as financial advice.
What’s in each review?
All entries in our database include basic info about the platform, including which kind of securities they offer, and under which particular regulatory framework. We’ve also included company contact information and other data where available, like when the company was founded. Where available, we’ve also included links to relevant media coverage, and you can also browse a list of similar investment platforms from our database.
And for each more detailed full review (we’ve done more than 20 so far), we’ve presented information about the platform in the following structure:
- A brief summary
- A list of pros and cons
- Details on what kind of investments are offered (real estate, startups, litigation finance)
- Information on what kind of security investors receive (debt, equity, etc.)
- Details on the fee structure
- What kind of return investors should expect, including details on cash flow (if any)
- Breadth of selection (dealflow)
- Details on which regulatory framework(s) investments fall under
What helps a rating?
In general, we think the following are some of the positives when reviewing an investment crowdfunding or online alternative investment platform:
- A range of choices open to anyone (including non-accredited investors), ideally including some with relatively low minimum investments
- Substantial and approachable investor educational material
- Detailed FAQ that includes reminders of the risks, and walks prospective investors through the detailed steps of investing on the platform
- Multiple easy to identify support and feedback channels, as well as detailed information about a company’s ownership and executives
- A multi-year track record and/or substantial financial backing from institutional partners or venture firms
- Transparency about risks, fees, and investment details
- A clear indication of what kind of entity is actually selling the security (especially whether or not it’s a registered Broker-Dealer)
- Details about what (if any) due diligence and review process is done by the platform or related entities before listing offerings
- When appropriate, clear links to relevant SEC filings
- Leverage modern web and mobile tools to make their sites easy to use
What brings down a rating?
In general, we think the following tend to be among the negatives when reviewing an investment crowdfunding or online alternative investment platform:
- Low or very low deal flow, especially when there are long periods of time with no open investments
- High minimum investments
- Sparse FAQ and educational docs
- Outdated or insecure websites (eg using http and not https)
- Clunky interface for searching and evaluating investments (including detailed documents)
- Minimal details about prior investment performance
- A very narrow niche that may only appeal to a very small group of investors
Note that some of the items we consider negatives may well be positives for someone else (for example, a higher investment minimum may translate into lower costs and therefore higher returns, and a lower deal flow may mean more thorough curation of offerings). Again, these reviews are the opinion of the reviewer, and should not be relied on as financial advice.