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How to Begin Startup Investing With $100
Investment Crowdfunding Is a Powerful Tool for Social Impact
You can make investments in startups and other small, private businesses. Here’s how to get started with $100 to make your first investment.
Mindset: you want to start with the right frame of mind. Investing in startups and other small, private businesses is risky. If you approach it with some charity in your heart with a social mission in mind, the risk is reduced a bit. Your investment may not yield a big financial return—or even get you your money back—but perhaps it helps provide a job to someone who needs it or plants a tree somewhere. Remember, when you donate money to a charity, you have no chance of getting your money back. Build on that mindset.
Screen: At any given time, there are hundreds of companies raising money via Regulation Crowdfunding. Picking companies to support takes time. Use a screening tool to begin. I like the Kingscrowd search tool. The search tool allows you quickly find deals that will allow you to invest just $100. I like to screen for female and minority founders along with social impact. With those screens in place, hundreds of deals are quickly narrowed to about a dozen. You can now begin to look at the details of those that pique your interest on their portal pages.
Research: The work you do to determine if an investment makes sense is called “due diligence.” The term comes from the notion that when professionals make investments on behalf of others there are fiduciary responsibilities that require them to do so with due diligence as opposed to willy-nilly. You’ll want to spend some time learning about the company, its management and products before you invest. I love to find the management team members on Linkedin to get a sense of their backgrounds. Spend as much time as risking $100 justifies for you. One great way to reduce the work load is to join an investment club like the Impact Cherub Club I host each month.
Open an Account: After choosing to make an investment, you’ll need to open an account on the portal offering the shares. The process varies in difficulty from site-to-site but I haven’t found one that takes more than about three minutes. It is similar to setting up an account with an online retailer with just a bit more information about your financial acumen and wherewithal. Don’t worry about answering honestly. Crowdfunding is for novices.
Make an Investment: On most portals, the process of actually making your investment is quick and painless. Click on an “invest” button, indicate how much you’d like to invest and perhaps a few more questions about your financial situation. The final part of this step is connecting your new portal account to your bank account to fund the investment, usually no more difficult than finding your account number and routing number for your bank.
By following these five simple steps you can begin investing now. Remember to use a philanthropic approach. If you can’t afford to give the money away, don’t invest it this way. In the long run, I recommend you build a small portfolio. If you invest $100 four times a year, in three years you’ll have a dozen investments. You may even be able to see growth and progress with one or more of them by then.
If you would like to join the Impact Cherub Club, there is no cost or obligation to invest. Join us to learn more about the process and get comfortable with the idea. No matter how new you may be, we are confident you can bring valuable perspective to the group. Many of our members have deep investing and entrepreneurial experience you can learn from—but don’t be intimidated. Your opinion counts equally!
Our next meeting is August 23, 2022 at 3:00 PM eastern. Register for free now.
July Meeting Report
At last month’s meeting, we heard diligence reports from club members on just one company, Cabinet Health. The other two companies we considered, WeSolar and Solar for Us 1, completed their rounds before our meeting. The club members discussed the pros and cons of investing, ultimately voting to not to recommend an investment this month.
Typically, we don’t announce our investment recommendations. If you’d like to know what we’re seeing, selecting and recommending, please join us on August 23 at 3:00 Eastern. There is no cost to participate; you don’t have to invest anything ever. When members choose to invest, I don’t touch the money and don’t earn any fees, commissions or favors.
Crowdfunding lawyer, consultant and portal owner Jenny Kassan joined us last month to show members how to find and read the Form C disclosure document filed with the SEC. This disclosure document should be part of your due diligence before investing. The Form C should include disclosure of risks that may not show up elsewhere.
Jenny explained and demonstrated that portals are required to link to the Form C on the SEC website where it is publicly hosted. It may be difficult to find the link. You can also search for the Form C in the database here. Be sure to confirm that you’ve found the right company—there are so many companies in the database some have similar names.
Typically, the Form C includes a variety of exhibits and attachments. Best practice is to name the digital files descriptively, as in, executivecompensation.pdf or stockownershipplan.pdf. Typically, however, the files are named Exhibit1.pdf or attachment14.pdf. You’d be wise to check them all, Jenny said.
New Company Screening
In July, we took a first look at the following three companies. Club members volunteered to conduct some due diligence and report on two of them. We determined not to further consider one of them. (Join to learn details.)
Black co-founder and CEO Chris Thompson leads Sober Sidekick, an app that guarantees quick peer support for people working to overcome addiction. The app is a social media tool that allows someone to post their struggles and get nearly instant feedback from a community of people who have been there. Based in Los Angeles, the company is raising money on Wefunder.
Founded by Melanie Akwule, an African American entrepreneur, Minwo operates a robust directory and networking tool for the Black business economy called Rialto. She has an MBA from UC Berkeley. The company is raising money via Wefunder.
Founded by Narayan Iyer, a former aerospace engineer, Laminar Scientific is developing patented technology for capturing energy from waves. Located in low-cost Iowa, the company is working at the University of Iowa. The founders have agreed to work for free for up to five years until the company generates revenue. The company is raising money via Wefunder.
Next Meeting—August 23, 2022, at 3:00 PM Eastern
At our next meeting onAugsut 23, 2022, at 3:00 PM Eastern/Noon Pacific, consistent with our plans for future sessions, the agenda will have three items:
Preliminary Consideration of New Candidates
We’ll begin with the due diligence reports from the Impact Cherub Club members who volunteered to do the research. After hearing the members’ reports, we’ll vote to determine whether or not to recommend investment in the companies. The decision will be made available to everyone who registers to attend, including those who don’t make it. Register here.
This month, we’ll take a look at the Kingscrowd screening tool I mentioned above. We’ll demonstrate the ease of use and power it offers for finding the sorts of deals you want. This will be fun. Join us.
Preliminary Consideration of New Candidates
At our August meeting, we’ll be following the pattern of past months to conduct a preliminary review of three companies raising money via Regulation Crowdfunding on FINRA-registered portals. If you have identified a social enterprise or community-building company raising money via investment crowdfunding, feel free to recommend it to me for consideration next month.
Here is a bit of information about each of the three we’ll consider this month.
Based in Minneapolis and founded by Maria Burns Ortiz and Ann Maria De Mars, 7 Generation Games develops educational games and the tools to make them. With a platform that allows for faster, cheaper development, the company makes it possible to create educational games around any topic people are passionate about - not just those themes with the largest mass market. Their premise is that such games improve educational outcomes. The company is raising money via Wefunder.
Founded and operated by a young family in North Texas, Wicked Bold manufactures vegan chocolates starting with making chocolate from cocoa beans. Deric and Brooklyn Cahill are the founders with their children Ophelia and Landon. BOLD is an acronym for their names. The little company already distributes through 14 Whole Foods stores and recently got picked up by some Walmart stores. The company is raising money on Mainvest.
Aqua Equity, based in Watts in the Los Angeles area, is a a Black and woman minority-owned bottled water brand and a certified Minority Business Enterprise that exists to close the social equity gap in under-resourced communities. The company plans to build a bottling plant for its aluminum water bottles in Watts. Founded by Ryan Morgan, who discloses his time in prison up front, and a diverse team, the company uses the motto “drink good… do good.” The company is raising capital on Republic.
Please join us for the monthly Impact Cherub Club meeting on August 23 at 3:00 PM Eastern. There is no cost or obligation. We’re genuinely having fun! Register here for free.
Don’t forget that we’re hosting the biggest impact crowdfunding event of the year, SuperCrowd22, on September 15 and 16, 2022. Our readers can register for the event for just $99.50, half off the $199 public price. Join us today!