SyndicateRoom, is one of the top three platforms in the UK. The site has taken a different approach by involving a professional investor in every single deal. Not all platforms take that approach. But some of the largest have used the creation of “syndicates” or a more VC centric approach to bring added perspective that may help retail investors decided whether, or not, they should invest.
According to de Vasconcelos, investment crowdfunding platforms must:
- Provide Equal access to opportunities: This means the deal the smaller investors is receiving is the same one as the pro.
- Fairness: All investors should share risk and potential reward. The class of share and the price paid should be equivalent across the board.
- Transparency: This one is pretty basic. The best regulation will always be the light of day. Removing information asymmetry is key towards creating a transparent and level playing field. Issuers should never knowingly mislead investors.
“Crowdfunding is a beautiful funding and investment mechanism for both companies and investors. It is more efficient than traditional sources of capital, it is more democratic and it provides access to a type of investment that ultra-well-connected, wealthy individuals have been enjoying for decades, but in which the vast majority of us have never had a chance to invest.”
Most platforms in the UK do strive to accomplish these goals – but to varying degrees. Inevitably the platforms will be measured by the success generated for both issuers and, more importantly, investors.