As equity crowdfunding portals go, Crowdfunder is one of the best. To date, it has generated $160 million in capital commitments with an average capital raise of $1.8 million from more than 12,000 individual and institutional investors. If you’re looking for companies to invest in, Crowdfunder is an excellent place to source deals.
One caveat: Unless a company has filed for a Title III or Title IV raise, Crowdfunder investments require that you be an accredited investor. To be an accredited investor you must meet minimum income and net worth requirements.
However, as more Title III and Title IV raises happen, I’m sure it will become more accessible for more people to invest on its platform.
So, without further ado, here are two interesting equity crowdfunding deals from three different industries.
Companies to Invest In: NVIS
I have to admit that when it comes to technology, I’m a beginner. So, the idea of recommending a company that’s developed an utterly unhackable network seems like a crazy thing to do.
Yet, if you consider how much money the California-based company has been able to raise in its current campaign, you at least ought to do a little due diligence of your own.
NVIS is offering a SAFE note, which stands for simple agreement for future equity. SAFE notes are neither a debt or equity investment, but rather an opportunity to buy future equity. It currently offers a 20% discount and a $10 million valuation cap, which means if you invest, you will be able to buy shares at a 20% discount to the share price when it raises future capital. What does the valuation cap mean?If NVIS raises capital in the future at more than $10 million, you get to buy your shares at the $10-million valuation.
The campaign began on March 19. The goal was to raise $2 million. It has raised more than $8.6 million, more than four times its original target. Because of this, it will most likely close to new investors on July 18.
In the company’s pitch deck, it points out that the total addressable market for global virtual private networks (VPNs) is likely to reach $35.7 billion by 2022.
NVIS has an excellent management team and a group of advisors. It expects to break even within 18 months. If you are an accredited investor, it’s worth checking out.
Companies to Invest In: Digitzs
Digitzs is a company that’s figured out a painless way to integrate payments into merchant software platforms. The startup was created for white-label programs that require efficient payment processing. This includes things like ticket payments, municipal fines, school tuition, etc.
It can process all the major credit cards, automated clearing house (ACH) payments and Apple Pay. It charges merchants 2.9% of the transaction value plus 30 cents per transaction for U.S. cards and 3.9% and 30 cents per transaction on non-U.S. cards.
As someone who’s not a techie, I’ve got to lean on the management team for assurances that the investment is worth closer examination. Laura Wagner is the founder and chief visionary officer of Digitzs. She has more than 30 years of experience in the payments industry. She’s worked with companies such as Neiman Marcus, McDonald’s (NYSE:MCD) and First Data, now owned by Fiserv (NASDAQ:FISV), on payment initiatives.
Since May 2014, Digitzs has raised more than $5.5 million from investors, including former Shark Tank entrepreneur Kevin Harrington. The infomercial specialist invested because he knew how complicated the payment process could be for entrepreneurs.
“I’ve processed billions in card payments for my infomercials on behalf of clients and it’s never an easy process. Digitzs has the team, the technology and the traction to be the next big disruptor in the trillion-dollar platform payments space. I’m thrilled to have an early stake in this promising company,” Harrington stated in 2016.
Digitzs’ current fundraising campaign will close July 15. It has raised $3.95 million so far or 158% of its goal. The minimum investment is $25,000.
The Bottom Line
As with all investments, large and small, don’t consider making one without fully understanding the risks involved.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks