Crowdfunding, or crowdfund investing, is a relatively new way to make money for individual investors. Which of the top crowdfunding sites is best for you? Depending on the projects or people you want to invest in and your risk profile, different crowdfunding platforms might be a better fit.
In this blog post, we will discuss five of the top crowdfunding sites and what makes them stand out from the rest. We’ll also give you a few tips on how to choose the right platform for your campaign. So without further ado, let’s get started!
Wefunder is one of the top crowdfunding sites and allows people to invest in startups and small businesses. You can get started for as little as $100, though some ventures require a more moderate minimum of $500 to $1,000.
It is sort of like the stock market for companies still in their infancy. As such, there is an extremely high risk. Along with that risk, however, comes the potential for great reward. As Wefunder likes to say, companies either go big or go bankrupt. This is the same investment attitude shared by all the top crowdfunding sites.
Here are some key points about Wefunder:
- Minimum investment: $100.
- Fees: 2% of initial investment with a minimum of $8 free and a maximum of $100. You can add an additional 1.5% if paying by credit card.
- Current investor count: 1,437,414.
- Types of businesses to invest in: technology, software engineering, robotics, recreation, platform, operations, marketplace, leisure, games, film, events, engineering, education, B2C, and B2B.
- Classes of investment contracts: debt, convertibles, stock with dividends, stock without dividends
- Average returns (accredited investors): 23% unrealized IRR
- Return multiple (accredited investors): 5.9x
Microventures is another one of our top crowdfunding sites that specializes in investing in early-stage companies. Like Wefunder, the minimum investment on Microventures is $100.
You don’t have to be an accredited investor to get involved with Microventures, but you can invest a lot more if you are. What sets Microventures apart from its rivals is the fact that it is a broker-dealer.
Being a broker-dealer opens up the door for secondary trading. This means you can buy and sell private stock on the platform. If you’re selling, you get access to accredited and institutional investors. If you’re buying, you better bring at least $50,000 to get started and you’ve got to be accredited or institutional.
Here are some pertinent facts about Microventures:
- Minimum investment: $100
- Fees: there are no fees for equity crowdfunding investors. Instead, companies pay a commission per marketplace transaction. However, Regulation D (accredited) investors pay placement fees, management fees, carried interest, and offering costs.
- Current investor count: 200K+
- Total amount transacted so far: $450M
- Investment opportunities: over 900
- Classes of investment contracts: preferred stock, convertible notes
- Average return: like many of the top crowdfunding sites, the average return rate is not published
- Liquidity: average startup exit is about seven years. Regulation Crowdfunding offerings must be held for at least 12 months.
- Famous exits: Pinterest, Uber, Spotify, Lyft, Anaplan
Fundrise is one of the top crowdfunding sites that focuses on real estate investments. The platform features various account levels with varying capabilities. Here is a rundown of their tiers, required investment, and account capabilities:
- Starter ($10 initial investment): dividend reinvestment, auto-investing, access to one Investor Goal type, and investing in their registered products (basically blue chip funds).
- Basic ($1,000 initial investment): same as Starter but with unlimited Investor Goals, IRA investing, and the opportunity to purchase ownership stake in the Fundrise company itself.
- Core ($5,000 minimum): same as Basic but you can customize your portfolio strategy, directly allocate, and invest in non-registered products (like private objective-specific investment funds).
- Advanced ($10,000 to start): everything in Core plus access to Plus plans, which involve intricate real estate strategies that evolve over time based on present market opportunities.
- Premium ($100K): all features of the Advanced package with the addition of priority access to their Investor Relations team and access to periodic specialty accredited offerings (illiquid, varying time horizons and risk profiles).
Points to know:
- Minimum investment: $10 (Starter), $1,000 (Basic), $5,000 (Core), $10,000 (Advanced), and $100,000 (Premium)
- Fees: annual advisory fee of 0.15% and a flat 0.85% management fee. To put that into perspective, Vanguard has one of the lowest advisory fees around at 0.30% and a typical real estate investment management fee usually runs about 1-1.25%. There are no commissions or carried interest fees.
- Current investor count: 1.2 million
- Total real estate value invested: over $7B
- Equity assets under management: $2.4B
- Net returns earned by clients in 2021: $364M
- Average return (2021): 22.99%
StartEngine is one of the top crowdfunding sites for investing in startups and early-growth companies. Unlike platforms like Kickstarter, for example, you are actually buying pieces of companies that can become worth more as the companies grow.
You do not have to be an accredited investor to invest on StartEngine. In fact, the platform is open to anyone over the age of 18. However, non-accredited investors are limited by the regulations set forth here.
Like Microventures, StartEngine is a broker-dealer offering secondary trading on their SEC-registered Alternative Trading System. This means you can buy and sell shares of private companies.
This is open to both accredited and non-accredited investors alike. There are no fees for account creation or buying shares on StartEngine Secondary, but there is a 5% transaction fee incurred when selling.
- Minimum investment: varies by company and is as little as $100.
- Fees: StartEngine makes its money off charging the companies who are being invested in. That said, some companies choose to offset this cost by passing along to the investor a “processing fee” of 3.5%. There are no additional fees for paying by ACH or credit card.
- Current investor count: 760K.
- Current investment opportunities: 215.
- Total funded as of March 2022: over $500M.
- Types of securities offered: common stock, convertible notes, debt, and revenue sharing.
- Average return: not published
Holdfolio is one of the top crowdfunding sites that allows people to invest in fractional ownership of properties. The company claims that everyone should have access to highly profitable investments, so it is open to non-accredited investors.
If you’re looking to invest in industrial or commercial properties, this is not the platform for you. Holdfolio allows investments in only multi-family residential properties, which can be good for its consistent passive monthly income from rents and reduced risk versus single-family homes, but bad due to management and turnover costs.
The typical Holdfolio investment is an apartment complex with 80 or more units. The company makes the majority of its money from rents collected and from asset appreciation when properties are sold.
Here are some things to know about Holdfolio:
- Minimum investment: although the company claims investing should be open to everyone, its minimum investment is not in alignment with this goal. You have to bring $20,000 to the table to get started on Holdfolio.
- Fees: there are acquisition fees of 1-2% and asset management fees of 2%, both of which are industry standard.
- IRA investing: yes.
- Liquidity: most investors regain their principle through property sales or loan refinances. The usual timeframe for this is 3-7 years. Meanwhile, earnings are distributed quarterly.
- Total investment opportunities: 6,442 units.
- Total asset value: $1.1B.
- Average return: 19.33% is the current average cash return, though the company claims that it aims for solid double-digit returns (10%+).
We have provided the scoop on five of the top crowdfunding sites for those who like high-risk, high-reward investments. Wefunder takes the cake in terms of size, but Microventures and StartEngine provide additional liquidity through their secondary trading platforms.
If you’re looking to diversify into some passive real estate income and you’re sitting on a pile of starting cash, Holdfolio is worth checking out. No matter which way you go, remember that you could lose your entire investment so these are not for the faint of heart. That said, you just may end up investing in the next Uber or Spotify.