Investing in Crowdfunding Sites can make Big Bucks? (Moolahsense)

Mention the word "crowdfunding" and I can easily tell you what are the companies that provide such services. There is Moolahsense, New Union, Coassets, Funding Societies, Capital Match, Fundnel, Smartfunding, Invoice interchange, Fundedhere and much more in the market. 

So what exactly is "Crowdfunding"? According to Wikipedia, "Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people. Crowdfunding is a form of crowdsourcing and of alternative finance. In 2015, it was estimated that worldwide over US$34 billion was raised this way. (Source: Wikipedia)


To put it in easier terms, Crowdfunding is having a large group of people pool the money together for a certain purpose. It can be to support a charity organization without asking for any returns back or to lend money to a corporation with principal and interest returned which in this case is done via Moolahsense.

Moolahsense is a platform that allows individuals to invest their money for returns higher than bonds and for corporations to borrow money instead of banks who may not lend to them due to some reasons. The minimum amount required to be an investor on the platform is $1000. There are other crowdfunding sites that allow as little as $100 to get started. 

How it Works for Investors
When a campaign is available on the platform to invest, you will be able to find out information about the company to help you decide if you want to invest in. The important information to look out for is as such

• Company Name
• Paid up Capital
• Income Statement
• Target Rate
• Repayment Frequency
• Tenor
• Guarantor

Based on the information provided which may or not be accurate, you will have to make your own judgment on whether if you are willing to accept the risks for the rewards. The usual scenario is that the higher the risk of the company, the target rate or the interest that you get in return is higher. 

Personal Methodology
For me, I have invested in 4 different campaigns. Out of these 4 campaigns, 2 has matured, 1 has defaulted and 1 is still ongoing.

Ever since I used the platform, I have probably seen more than 30 different campaigns on offer from a large variety of companies ranging from listed to SME. To decide if I am willing to invest in it, there are a few key things that I take note of which are 

• Target Rate
• Repayment Frequency
• Tenor
• Guarantor
• Turnover
• Debts
• Cash in the bank
• Cash flow from operations

When all these information is in line with my criteria, then I will go ahead to invest in them. Generally, I would prefer offers with shorter tenor, low debt, high frequency of payment and positive cash flow from operations. Do take note that investing blindly without doing proper research is similar to gambling. And do not invest money that you will be needing it in the near future. 

Do you invest via crowdfunding sites as well and what are they? Go ahead to comment about it and don't forget to subscribe via email or like our Facebook Page for the latest updates! Do also let us know what you would like us to blog about next!