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Investment Crowdfunding: What Factors Drive Us To Invest?

Posted by John Panaccione, CEO, LogicBay on 6/26/19 11:05 AM

No investments are without risk, so investors must be highly aware of what any given investment opportunity entails. Whether it’s that “sure thing” our neighbor talked us into a few years ago or the highly coveted IPO only our broker has access to, there are no guarantees that any investment will amount to anything.

So, why do we do it? Obviously, we invest for the opportunity to make money by putting our own money to work, but what other factors drive us to invest our hard earned dollars?

The 4Ms: Mission, Management, Market, and Money

No matter if we’re an accredited investor, “one-percenter” or an everyday, “main street” investor, we’re all human. That means that while we try to remain pragmatic in our decision-making, emotion still plays a big part. When it comes to investing, acknowledging that fact is important and helps direct us to those investment opportunities that we find most attractive.

One of those emotional hooks is a company’s Mission. Maybe we like a business because it’s supporting a cause to which we’re connected, or the fact that it’s in our own back yard and will improve our local community or economy. We may believe in the positive impact that the business provides through its products or services. Or, maybe it’s simply that we want that new brewpub to open down the street from where we live because we like beer. Regardless, it’s the emotional triggers of those businesses that resonate with certain subsets of the investor population.

When it comes to Management-based investments, it’s that rock star leadership team that holds the appeal or maybe, on a smaller scale, a friend, neighbor, or family member that’s giving it a shot and needs our support. One way or the other, if we’re management-focused it means we’re investing in the leaders of a company – the founder, current owners, the CEO, or their management team. In particular, we may choose to support businesses simply because they are women-owned, minority-owned, or veteran-owned.

Then there’s always a specific Market opportunity that could be the driver of our interest in investing. As they say, ideas are a dime a dozen. Good ideas that drive successful businesses are validated by their performance in the marketplace. Many of us invest in businesses because we’re confident that their product or service offering will fulfill a market need that we understand or appreciate on some level.

And while we made the point earlier that Money isn’t the only driver in why people invest, we’d be remiss in not acknowledging it. Yes, we want to take the money we have and turn it into more but we also live in a world in which platforms like Kickstarter have raised over $4.3 billion through approximately 448,000 offerings – with not a single one providing a financial return to the investor.

The point is, there are many reasons to invest in companies that need our support. How we identify those companies and qualify them to be worthy of our investment depends on multiple factors specific to us as individuals. When we ask ourselves what investments we’ve made in the past – whether in straight stock purchases or mutual funds – chances are that we factored in mission, management, and market. Would we invest in a company whose mission we don’t agree with, that’s led by unknown or inexperienced managers, or that’s offering a product or service we don’t understand - even though the ‘promise’ of an investment return is high? Probably not!

Therein lies the value of investment crowdfunding – access to interesting perks, supporting local entrepreneurs and businesses in our own communities, supporting heart-felt missions, all with the potential of making a few bucks. It’s what makes the investment crowdfunding opportunity so unique and we invite you to explore your options HERE.

Topics: north carolina, business, investment crowdfunding