In the U.K., angel investors are leveraging crowdfunding for the first time. This ultra-exclusive group of private investors is using crowdfunding to two ends: to pool its money with smaller investors, and to recruit and train new members.
The first has been made possible through partnerships like the one between Syndicated Room(SR) and the Cambridge Capital Group (CCG). The two come together on a crowdfunding system called “Syndicate Funding,” where the crowd of small investors and angel investors can co-invest on the same deals.
Membership in Syndicated Room is free. Its members can invest as little as £500 directly into real business angel investments.
The Cambridge Capital Group is an exclusive and leading business-angel group of 40 investors and private-venture funds. It has been investing in high-tech businesses and backing technology startups since 2001. Membership in CCG is an application process, and is normally initiated through introductions by existing members. Members have invested millions of pounds into its current portfolio of more than 30 companies.
While SR members will not be able to influence a startup company’s direction and strategy, they will get exactly the same economic deal, as well as make the same profit pound for pound, as the experienced and larger business angels of CCG. Small investors looking for financial returns through equity crowdfunding have access to the same deals led by the business-angel professionals who do it for a living.
Angel investors are now taking the lead in embracing crowdfunding. Knowing that these smart angel investors only invest their own money into businesses they believe will give them a great return, it’s only smart for the crowd to follow where the angels lead. Angel investors alongside crowd investors; it’s now the trend in the U.K. as well as in other parts of Europe, such as Belgium and Italy.
It’s just what I want to see, the European Business Angel Network (EBAN) embracing and starting to take a proactive role in this new ecosystem, where deal flows are coming in quicker and proof of concept brings in regular people investing alongside the angels.
Platforms like Syndicate Funding also allow the angel networks to find and train new angels. Crowd investors will eventually become angel investors themselves and join the angel networks.
When angels get involved with crowdfunding platforms, they take a proactive step toward growing the angel network globally.
Where will you find your next angel from the crowd?
What was once, “Go to college, get a job at a stable company, and work for that company for the next 35 years so the company can take care of you the rest of your life” has turned into a world of constant change in the workplace.
We can no longer count on our company to take care of us or even keep us employed.
The responsibility has now fallen on us as individuals to sort our way through the maze of investment opportunities that seem to be everywhere, and everyone has an opinion about where we should put our money. Over the course of this article, we’re going to discuss three things:
First are your money rules: Do you have rules around your money? What are they? How often do you evaluate them?
The second and third items will be about two “outside the box” investment options that the majority of the public do not even know exist.
Money rules are a systematic approach to determining your personal requirements for investing money. Here are 8 simple guidelines to use when creating your personal money rules.
1. What are your liquidity needs?
2. What are your current and future cash flow needs?
3. What asset classes are you interested to putting your money in (Real estate, businesses, stocks, etc.)?
4. What is the objective of your investment (Cash flow, appreciation)?
5. What level of participation are you interested in?
6. What is your level of risk approach?
7. What rate of return are you looking for?
8. What are you desired tax ramifications?
These questions should be able to get you to a place of establishing some rules that will work for you!
Now, with regards to alternative investment options, one of my absolutely favorite cash cows is Cool Trader Pro.
If you have not heard of Cool Trader Pro, let me introduce you to this unique company. After Ed Barsano, a former programmer for Microsoft retired in the late 1990’s with a bank account full of money, he handed it to a professional broker and set off for a great retirement in his late 30’s.
However, after losing 60 percent of his wealth when the tech bubble burst in the early 2000’s, he decided to make a tool that would allow the average investor to take control of their own investments. Thus, Cool Trader Pro was born.
The Cool Trader software is a high-frequency trader (just like the pros at Schwab use) that sits on your computer at home. This software will turn your computer on stock trade all day and turn your computer off. The awesome part about it is that it comes with built-in strategies that actually think– it’s true artificial intelligence. You need to know virtually nothing about computers or the stock market to take control of your investments. Awesome, right?
The second unique strategy I’d like to introduce you to is called Life Shares.
Any person who owns an insurance policy has the legal right to sell it. Many insurance companies will often offer to purchase your life insurance policy for a fixed cash amount, thereby avoiding having to pay the death benefit.
The Life Shares strategy buys policies at a rate higher than the insurance will pay you for it, then continues to make the payment until the death benefit is to be paid out. Due to the strict guidelines around which policies they will purchase, they can guarantee investors a 65 percent pay out. This may take several years to realize, but is just comforting to know that you have a guarantee on a return of that size.
Now, why are these money rules and alternative investment strategies so important to you?
Consider this: According to a report in Forbes magazine in 2013, the average 401K balance for 65-year-olds in America was $25,000. Another report by Time magazine calculated that for every $1,000 in monthly income you want over a 30-year retirement, you need at least $269,000 in the bank.
With savings accounts earning maybe one percent per year, and 70 percent of mutual funds reported losing money in recent years, and does anyone really trust real estate?
I sure don’t…
It may be time to seriously look at some alternative investment strategies. Just make sure that you have all your money rules in place before you do.
And the sale of small businesses is jumping miles.
Although the recovering economy isn’t producing an abundance of jobs to please the average person looking for work, it is pleasing entrepreneurs by causing the buying and selling of small businesses to rise.
The amount of deals that were recorded on the marketplace website BizBuySell. com surged to 1,685 in the third period of 2013, that’s a whopping 42 percent more than that same period in 2012.
So, what’s causing the sudden increase?
There are a few different trends that are to credit. First, with the improvement of sales, many business owners who hunkered down through the recession are now eager to sell their small businesses too. They want to get in on the action while it’s hot and then retire.
Second, banks are increasing their lending. According to the U.S. Small Business Administration, 13 of the country’s largest banks expanded their lending by upwards of $17 billion in the past two years.
Whether you are a buyer or seller and want to jump into this trend, here are a few tips to remember.
TIPS FOR BUYERS:
1. Act Now. Although there are still an amplitude of outstanding deals available in the marketplace, the gap between asking prices and sale prices are closing due to improved company financials. If you wait too long, you may be too far behind any good deals. But, you don’t want to rush anything, either. Make sure you consider the business’s cash flow. It should cover your expenses AND your suitable salary. If it doesn’t, you may want to look elsewhere.
2.Don’t Get a Big Head. With the economy in the boom it is, it’s easy to get caught up in your desire to buy. If you become blind to reason, you may end up purchasing something that you can’t really afford. Don’t underestimated the true amount of money you need to buy to try to justify a compulsive purchase.
TIPS FOR SELLERS:
3.Think in Reality. Don’t go into selling your business with the mindset you will be selling it for pre-recession money (unless you have outperformed the recession). Potential buyers will evaluate your business based on the previous three to four years and that means they will be looking at how your business did during the recession. Even if your business grew tremendously in the past year (which is should do before going onto the market), if your sales plummeted during the recession, buyers will take both things into consideration, not just the good.
4.Know Your Needs. If you are planning on retiring from the money you receive from your sale, make sure you know exactly how much you will need to do so. Remember that you may be pocketing less money than you think due to the expiration of the Bushera tax cuts in 2012. The tax has increased to 39.6 percent. Do your calculation of your business’s worth with that percentage in mind, and compare it with the amount needed for you to retire.
Today, a new Gold Rush is underway in states where cannabis has been legalized for medicinal or recreational use. A majority of Americans now live in states with such policies, and modern-day Forty-Niners of every entrepreneurial stripe are looking to strike it rich.
As was the case with thousands of men who went bust two centuries ago seeking to pan their way to riches near Sutter’s Mill, most who endeavor to find wealth in the cannabis business will not succeed. This failure will arise from the fact that while growing a plant is a fairly simple process, the relentless intricacies of managing a successful cannabis enterprise are remarkably complex.
Managing finance, supply, distribution, human resources, a retail channel and the difficult and ever-changing aspects of compliance prove too much.While some may have adequate capital to launch the initial steps required in a cannabis business, few have the managerial acumen and business expertise to sustain it. Denver, the epicenter of the industry, is littered with half-completed cannabis greenhouses and under-performing retail dispensaries.
The conclusion is clear: Tending plants is one thing; nurturing an enterprise so that it may thrive is entirely another, and most growers are wholly lacking in this critical area.
Colorado-based Growth Industries Inc. is leveraging cannabis-legalization by providing turnkey business services via an exclusive franchise model to prudent cannabis growers who recognize the need for managerial prowess to fully exploit operational potential.
Growth Industries comprises three divisions. Our lead generator is our Real Estate division, which owns cannabis-production facilities and leases them to growers. These customers (and others) are further assisted by our largest unit, Business Services, which applies proven business expertise on a consulting basis to ensure maximum cultivation productivity, retail results, customer retention, regulatory compliance and human resource management.
Our third segment is a venture group that identifies and incubates significant industry innovations to bring them to market. Each of these three units, including lead generation, which is typically a cost, is engineered to be solidly profitable. We already own the state’s largest licensed greenhouse grow and are working with a number of its leading dispensaries, and we are actively pursuing the select opportunities for continued expansion.
The economics of cannabis are profoundly alluring: A 10,000 square-foot grow facility, excepting real-estate costs, requires roughly $1.2 million in investment. In its second year of operation, conservatively assuming five harvests per year, this grow will have an annual production capacity of 2,500 pounds. Each pound of dried cannabis flower has a wholesale value of $1,800 and hard costs of $400, which works out to a gross profit of $3.5 million.
This product, though legal for recreational uses in a handful of states, is far more valuable for its medical applications, which far more states allow. Cannabis can be used to treat arthritis, hypertension, obesity, multiple sclerosis, Parkinson’s disease and HIV. Cannabis has proven to be cytotoxic to several forms of cancer. It is also a well-tolerated analgesic and an appetite stimulator. These uses, however, only touch on the plant’s healing ability: Indeed, medical science has discovered receptors throughout the body that specifically respond to special cannabis compounds known as cannabinoids.
Further, new product breakthroughs allow patients to use cannabis as an inhaled vapor or in edible products, which obviates the need to smoke it. Once the forbidden devil’s plant, cannabis is now recognized as a great healer, and is helping scores of millions of patients overcome debilitating illness and disease.
Accomplishing this, however, necessitates more than pushing a few seeds into Styrofoam cups. It requires a highly specialized team capable of meeting and mastering the industry’s unique challenges. Growth Industries’ unparalleled and unrivaled combination of cannabis-related assets and our highly skilled team offer an enticing opportunity for sophisticated, high-net-worth individuals to achieve a substantial and sustainable return on long-term investments.
Here are some basics to keep in mind when investing in early stage companies.
1. Don’t invest if you can’t afford it. Angel investing is a high-risk, high-reward game. You must be able to financially with stand and be prepared to lose 100% of your money.
2. Don’t invest in lifestyle companies. Lifestyle companies are service companies, i.e. law firms, local deli. These businesses have limited scalability. The high-risk, high-return game only works if the company is scalable and could return high multiples of your money. You will never get an exit or IPO out of a local restaurant.
3. Don’t put all your eggs in one basket. Angel investing is so risky that you have to diversify risk by making a number of investments.
4. Don’t invest if you don’t believe in the team. The biggest factor in early stage investing. Good ideas are commodities – a dollar a dozen. Invest in A teams with B ideas and B teams with A ideas. The ideas can always change, but it’s the best team that perseveres and executes that will succeed.
5. Don’t be overly optimistic. Be skeptical of everything a founder tells you. It’s their job to infect you with their passion and make you excited about their startup. It’s up to you to dig in deep and do your homework (due diligence) and find out whether they’re the real deal or not.