The best way to get started in crowdfunding is to do what would be prudent for every investor - study the industry. Spending time on this page would be a smart move. After all, studying is a habit we fully recommend you develop as an investor in crowdfunding platforms.
But it is getting into full investment mode that we suggest you take time on. After studying crowdfunding, you can baby step your way by making small investments in the beginning. Having your own money on the line, no matter the amount, will help you learn faster. As your confidence grows, so would the amounts you’re willing to invest.
Here are the five steps to get started.
Step 1 – Know the industry
The way crowdfunding works is that we match fund seekers with the investors. Once a crowdfunding platform endorses a fund seeker, Investors would then put in their investments until the fund requested is attained.
Depending on how much the average investor puts in, the number of investors could be a few big ones, an array of smaller ones, or a mix of both. All the work involved in facilitating the match and gathering the investments rests on the crowdfunding platform.
While most crowdfunding platforms do not participate in any actual lending, SeedIn does participate in many cases. Thus, when it endorses a Fund Seeker, it does so from the point of view of an investor.
How that contrasts with traditional business is that business owners find their own investors who would be asked, usually, to shoulder substantive shares of the investment. The business owner would also have to do all the work of looking for these investors and enticing their investments.
Step 2 – Learn how to manage risks
First and foremost, you can’t manage what you don’t understand well. Risk is the uncertainty of a return or the potential for financial loss. Risk exists in every business. It’s an integral part of crowdfunding as well. So, it is critical to manage risk well.
Here are the areas that every crowdfunding investor needs to be fully mindful of risk: Fund Seeker, Platform, Risk Underwriting and Regulatory framework. Let’s cover them one at a time:
- Fund Seeker
The basic question is, can they return both the principal and the returns according to schedule? Even after crowdfunding platforms have done their evaluation (more on this later), you still should assess your own level of risk tolerance. Then, develop the skill to differentiate risky and safe fund seekers.
In the previous round of Lend or Fend, we asked contest participants to determine whether the three companies presented were risky or safe. Take time to go over the case studies we published about each company and why they’re either risky or not.
The risk about platforms is, can the platform really deliver? Won’t it bend under the sheer pressure of fund seekers and investors alike, not to mention the amounts of investor’s money that it must manage with integrity? When a platform goes down, so are your investments.
There are two things we would like to share with you about SeedIn as a crowdfunding platform.
Firstly, while most crowdfunding platform companies were tech companies first before venturing into business financing, SeedIn has been a business financing company first before it transforming itself into a tech company. Thus, we can say that business financing is at the heart of both the history and operations of SeedIn.
We had a chance to share our experience at Fintech Law Asia 2016 Conference – Nagoya, Japan where Eddie Lee, the Managing Director of SeedIn Technology Pte. Ltd. was invited to speak. Industry participants and legal scholars from New Zealand, Singapore, Australia, Hong Kong, Malaysia and Japan participated in that conference.
Eddie Lee (fourth from right) dining with Mr. Wardrop and representatives of Fintech platforms from New Zealand, Australia, Hong Kong, Malaysia, and Japan during Fintech Law Asia 2016 at Nagoya, Japan.
Secondly, to fully safeguard the integrity of all investment funds flowing to and out of SeedIn, we have appointed Vistra Trust as our escrow agent.
- Underwriting Process
The risk in underwriting is basically about this question: Is the crowdfunding platform endorsing high-risk fund seekers? This is where the rubber hits the ground, so to speak. This is also why crowdfunding is about trust relationships.
Crowdfunding platforms, SeedIn most especially, are very careful about endorsing fund seekers. We screen fund seekers pretty much the same way, or even more scrutinizingly so, than banks, which reject at least 85% of loan applications.
At SeedIn, we reject applications at a higher rate. Once an application is accepted, it is then forwarded to a credit review committee that is composed of private bankers, veteran entrepreneurs, former CEOs of listed companies and accountants who are highly competent in their respective fields. They pose tough questions to the fund seeker.
Previously, crowdfunding wasn’t regulated by the Monetary Authority of Singapore (MAS). Recently though, MAS has required all crowdfunding platforms to apply for Capital Markets Services (CMS) license to operate. That’s good news for all investors.
Step 3 – Sign up at SeedIn
Register at SeedIn and enjoy the following pillars of this platform:
- Short tenure
- Annualised returns from 7%
- Secured by Collaterals
- Monthly Interest Rates Repayment
- Be part of our ELITE CIRCLE
A fun way or registering at SeedIn is to stand a chance to win $10,000 in the on-going Lend or Fend contest. Make sure you register as an Investor. Once registered, download our iOS map would help you manage your investing activities on the go. If you have questions about how the crowdfunding platform operates, the FAQ page would be helpful.
Step 4 – Start with $1,000
Baby step yourself in crowdfunding. A starting fund of $1,000 may be a good start. If you’re the lucky participant of Lend or Fend though, SeedIn would credit an additional $10,000 to your investible funds.
Just make sure it is an amount that you can comfortably make some mistakes on. As an investor-member you will receive a continuous stream of educational mails as well as updates on new investment offerings.
Step 5 – Choose your first loan
Make sure you review the basic information about the Fund Seeker, which are provided by SeedIn. It is usually downloadable from the website. We also encourage you to study the industry of the Fund Seeker and gather more information about them on your own. These information are usually just a few taps away on Google.
We also encourage you to compare the Fund Seekers with those featured in our case studies. Watch out for similar patterns and take your cue from there.
Most importantly, test your skills about how to identify safe or risky fund seekers by participating in the on-going Lend or Fend contest. You might just end up with $10,000 to your credit at SeedIn for investing purposes.
At this point, we would like to be the first to greet you Congratulations on your first successful investment. Cheers!
Please note that the Lend or Fend contest has ended. We thank everyone for your participation. :)