Crowdfunding with High Interest Rates
No expensive reporting requirements, a broader pool of potential investors and brand ambassadors, and no aggressive venture capitalists taking over your board – considering these benefits, there’s little wonder why equity crowdfunding has grown so popular for startups and early-stage businesses in recent years.
Since equity crowdfunding entered the layman’s lexicon, Series A investments have never been quite the same. The once VC-dominated startup investment scene now has an equally viable alternative in equity crowdfunding platforms, and more and more startups are flocking to this new class of private equity investment latter in hopes of securing higher returns while avoiding the rigidity of traditional funding methods.
Equity Crowdfunding is the New Venture Capital
Venture capitalists themselves have been diversifying into equity crowdfunding at an unprecedented rate since 2017, adding to the permanence of this new funding vehicle to the investment market. In the UK alone, equity crowdfunding transactions leapt up 22 per cent through 2018, pooling massive cash injections upwards of £333M.
They’re not doing so, however, just to follow the hype. They do this for two reasons: first, many high profile startups and high-quality equities have moved on to investment crowdfunding, and second, crowdfunding campaigns simply offer better APRs that easily hit double digits. On the second point, the average equity campaign offers around 10-12 per cent in interest for hopeful investors, while more generous campaigns max out investor returns at 15 per cent.
If trends continue, equity crowdfunding is expected to grow along with Europe’s alternative finance sector, enabled by modern technological developments.
TFG Crowd Offers Even Higher Returns
It’s important to understand, however, that not all campaigns are created equal, and the same is true of platforms. As a rule, the annual percentage rate of a campaign depends largely on how much equity the borrowers are willing to part with. For crowdfunded businesses, this number is unusually high at 12.4 per cent, empowered to do so by lower overhead costs. Despite this, it’s still pretty rare to come by APRs above 13 per cent, considering platforms also take a cut from the equity after the loan term or a liquidity event.
At TFG Crowd, however, it’s not uncommon to find campaigns with return rates up to 17%.
The reason is simple: we want you to succeed. We stay true to the primary principle behind crowdfunding, and that is to liberate borrowers from excessive regulations and enrich the lives of small-time investors everywhere. We do that by taking the lowest possible portion of the equity when the loan is paid in full, giving startups the room that they need to grow while maximising the investor returns.
Why do we do this? Because we want TFG Crowd to be a place of safe investments. We dedicate a lot of time and resources to properly study, vet and approve each of the investment opportunities you see on our site to make sure that you get as much return for your trust and generosity as possible.
Even now at square one of our platform, we strongly believe that TFG Crowd can be the place where great ideas go to become amazing success stories, and we can get there with your help and support. Click here and browse through our list of investment opportunities and start your investment journey today!