5 reasons why equity crowdfunding is good for Hong Kong Investors

Hong Kong is a country of diverse cultures, emerging trends, and an unrelenting desire to learn. Yet despite this, many eyes, including those within Hong Kong itself, remain firmly pointed towards the West when it comes to innovation.

This has to change, and we see the population itself as having the greatest opportunity to disrupt its own piece of the ecosystem in order to highlight the huge talent pool and potential that Hong Kong has to lead from the front.

Financial innovation, and in particular equity crowdfunding is one of several areas that Hong Kong has the ability to be at the forefront of. Not only does equity crowdfunding support young companies develop and expand, it also democratises a form of investing that up until now has been exclusive and out of reach to the majority of investors.

So, what is it, and why will it be good for Hong Kong investors?
Equity Crowdfunding enables companies to raise money from a wide pool of investors. In exchange the investor becomes an equity stakeholder in what is commonly an early stage company that they believe in, and want to support. It is high risk, but potentially high reward investing.

Here are 5 reasons why Equity Crowdfunding will be good for Hong Kong investors

1) Interesting investment opportunities come to you

More and more companies aren’t going down the traditional small business loan route, and instead see the power of allowing their future customers to invest and evangelise about their product. Crowdfunding investors have the option to pick and choose from a wealth of companies that they never would have had the opportunity to previously invest in.

2) The crowd helps you decide

You may well think that a company has great potential, but feel like you lack all the required skills to make an informed decision. Whilst you should always still do your own due diligence, with crowdfunding you have the transparency to find out if others agree with you, and how likely it appears that the company will raise the funds that they require.

The crowd is a great early barometer of the support a company is likely to receive.

3) Why not diversify?

Investing in start ups and early stage companies is not for everyone, but if you have money that you’re not sure where to invest it, and you already have more liquid investments, such as shares in the stock market, then equity crowdfunding is a great alternative. Risks are higher, and your investment period is longer, but rewards can be far far greater.

4) It’s Fun

This may sound flippant, but the reality is that investing in a company that you have researched, supported, and can then watch grow from an early stage can be a really exciting journey to be part of. The limit as to what type of company you invest in is endless. Having an equity stake in an online clothing store, a chain of restaurants, and a micro brewery is never going to be boring.

5) It’s Free!

The majority of crowdfunding platforms are free for investors to join. You provide details of your credentials as an investor, some background checks are done, and then you get signed off to invest. Often fees are only charged to the company once the investment is raised, so investors can enjoy the freedom to invest in an array of companies, without worrying about being charged for the privilege.