Chapter 6: Investment Types

I’m not a financial advisor; nothing I write in Superpowers for Good should be considered investment advice. You should seek appropriate counsel before making investment decisions.

Each Friday, I’ll be sharing my new book, How to Make Money with Impact Crowdfunding, exclusively with the “Impact Members of the SuperCrowd” (our paying subscribers). You can read last week’s chapter here.

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When I used crowdfunding to raise capital for my business, The Super Crowd, Inc., a public benefit corporation, one of the questions people frequently asked was, “What do I get?” Prospective investors wanted to know how the investment would work.

It’s a great question. The answer isn’t quite as simple as we might wish. When you invest via regulated investment crowdfunding, you receive a promise of repayment in the form of a security. It is a legal obligation from the company to you.

There are six common securities or investment types that I’ve seen used in the impact crowdfunding community. They are:

1. Term Loans

2. Revenue-Based Financing

3. Convertible Debt

4. Simple Agreement for Future Equity (SAFEs)

5. Preferred Stock

6. Common Stock

In the following several pages, I’ll explain how each works. You likely understand much of this already. I’ll try to tap into the familiar aspects to help you learn the features of these six investment types that may be new to you.