Equity Crowdfunding, Wall Street's Latest Cash Grab
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- เผยแพร่เมื่อ 8 ส.ค. 2024
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In this video we go over the equity crowdfunding industry and the potential risks investors should be aware of before getting involved in this market.
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0:00 - 2:54 Intro
2:55 - 5:22 Investment regulations
5:23 - 8:27 The market for lemons
8:28 Crowdfunding examples - ภาพยนตร์และแอนิเมชัน
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Always remember, if someone is coming to you the average citizen to raise venture capital, it's because the professionals won't touch them.
While true, the company could still be legitimate. Venture Capital is a notoriously closed knit circle. One has to use discretion to understand why a startup can’t raise from VCs. Are they scammers or crackpots? Or are they simply female founders, for example, whose group receives very little of VC investment.
Or the private VCs will invest but at a lower valuation/worse conditions for the founders.
Partially true, but not necessarily a bad thing. Traditional VC terms are relatively predatory, with liquidation preferences, board seat allocations, etc. If a company wants to raise with everyone on the same terms, a VC likely wouldn't touch them. Not necessarily bad, just differently structured. Equity Crowdfunding raises also tend to skew higher in terms of valuation than exclusive VC comps. I don't mind that as an investor.
@@overseasafrican9899 well said.
Pretty much all startups start with friends and family rounds. VC funding often doesn't come until they see commercial traction. Doesn't make the company bad just early
I stay away from anything with Kevin O'Leary
If you invest in something you don't understand it's just gambling.
Unless it's a Wall Street Millennial video
That is a good policy.
He is one of many Ponzi schemers in this space
Like that Jim Cramer fund that invests contrary to his advice!
You know it'll be a good story when Kevin O'Leary is on the thumbnail.
And there's some burning money!
You know it's a scam when Kevin Oleary is involved
15:17 - I'm a tech entrepreneur and many of my friends who pitch VC's do this. I had trouble raising my first round and my friends walked me through the decks they used to raise millions of dollars on worse ideas/less traction. One of them made some absurd revenue projections where I simply asked "Where did you come up with those numbers!?" and he said "Oh theyre bs, but that's just the game. You gotta give them some really lofty goal so they can visualize how successful their investment could be." .... lmfao - entrepreneurship is broken.
If your friends can successfully lie to trick professional investors, that doesn't mean entrepreneurship is broken... it just means your friends are in the business of selling impossible dreams, and a lucrative business that is.
Investors probably know. If 90% of all startup fail, then pretty much its a gamble from the start. The investors probably just feeling out the founders and if they like them or not. Isn't that why there are Angel investors?
That’s sorta fraud but it’d be hard to get in trouble for it. Would be on the gov to prove you knew those numbers were misleading for the purposes of selling the deal and not just incompetence.
This video has been out for less than an hour and has more views than beanstalk has customers. This video must be worth millions
From my perspective I've seen equity crowd funding for both American and Canadian companies on Republic (American) and frontfundr (Canada).
With American equity crownfunding, you tend to get more selection on companies but rarely they go public or get bought out.
As for Canadian companies, they're more selective on which companies get listed on their exchanges.
I've invested in 20 American startups and 0 went public or bought out. As for Canadian startup, I've invested in 7 companies and 3 went public on TSX but all 3 dropped 90% in value after being listed.
My advice is stay far away from equity crowd funding and look at traditional investment vehicles.
What if you don't know how to trade any of these? I mean, see your point some people have the money and are willing to invest, the question is where to.
It's important for individuals tor consider diversifying their income streams, independent of government reliance, as a wise approach in the current situation. This is still a good time to invest in Gold, silver and digital currencies(BTC, ETH, XRP….
I agree, that's the more reason I prefer my day to day invt decisions being guided by a invt-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a invt-coach for over 2years+ and I've netted over 1.5million
People tend to lean towards spending money on things that don't generate income, like liabilities, rather than investing in assets that can bring in profits.
@@Nicholas.Durante This is huge!! Do you have a recommended advisor?
Agreed--if a company was really good, then they're not going to resort to equity crowdfunding.
That's true of all equity funding
I think there will be some startups that will go against all odds and make the normal investors millionaire (less than 1%) I am betting AtomBeam will be one of those
@@samsonsoturian6013 Where would they get funding from otherwise? Lol
Package it up and present it any way you want. " A fool and his money are soon parted." is just as true today as it was 200 years ago.
At this point, companies should pay Kevin O'Leary to not be a spokesperson for them)
No idea how you can put out so much good content.
crazy work ethic, hired staff, subscriptions to some business articles, combo of all 3?
I’m an accredited investor.
I never invested in any of these scam companies, despite researching dozens of companies. I’ve attended pitch meetings for Angel Investing groups too.
The only people who should even consider investing in companies like this are individuals with over $10,000,000 in liquid assets.
For everyone else, it’s basically the same odds as playing the lottery.
Edit: Nope, the ROI on basically every one of these startups has been $0. The odds of investing $1,000,000 and making money is basically Zero, since not a single person has made money from investing in any of these companies.
Not quite lottery, that's 0DTE long options. More like panning for gold odds
Yeah, I have spoken to people who do this type of investing/gambling. They expect 90% to go to zero. So they invest in 10x opportunities. They only need 1 out of 10 to work for them to make money.
@@tarekyared4404 Yes.
But NONE of the companies on any of these platforms have made investors any money.
Basically, if you can’t get money from good Angel Investing firms, then your business idea isn’t very good.
Also, the “10 company investment” is a BEST case scenario. There are people who invest in 20 or 30 companies and none of them make money.
Contrast that with the stock market where it’s much easier to make money on your investments, and it’s also easier to SELL your bad investments.
Crowd funding is an easy way to launder money which happens there far more than most realize.
Crowd funding sounds like a complicated way to launder money since you have to keep track of all the alleged owners vs just pretending to have customers making payments. Customers are long gone while investors stick. Easier to find a paper trail
lol. Wrong.
The reason companies approach VCs for investment isn’t just for money it is also for their connection and expertise.
Which you get neither of with CFing. All you get is the equivelent of a YT comments section. lol.
If you can’t do your own DD or are incapable of understanding the business, best to just leave it alone.
It is worth pointing out that venture capital does more than just supply money. In the earliest stages it also provides a network to founders. Any reasonable company that can raise money and get a network or just raise money would opt for the first choice. The only companies that will do crowd VC will be the lemons
The stock market is a form of crowdfunding.
The difference is target audience, but a downside of crowdfunding is it doesn't allow investment in mature firms
I was interested in BeanStox, until I saw O'Leary's pic 😀🤣
Just love this channel. WSM always does his homework and explains things in such a clear and concise manner. Always interesting vids on a variety of topics. I try to never miss one.
Notice how there was no politicians fighting to get Jobs Act cancelled. But they want to get Affordable care act cancelled. You can see and smell scams coming a mile away.
Coz wall street is VERY influential in politics.
Because the ACA is a scam. They force hospitals and clinics to take a smaller cut every year, but prices keep going up. It is the reason why healthcare costs went up when it went into effect and even more every year after that. In front of the public, they act like it's a wonderful thing. Behind the curtain, it's an ugly monster.
The real issue, is that politicians in DC are too lazy to really look at the problem and come up with a solution.
Search something like why is obamacare bad or a variant here on yt. A doctor wrote a book about it, but I don't remember which channel I saw him.
NO acorns is not superior. Acorns promised me a certain amount of referral credit based on who I referred, but guess what, they denied that I did the referrals, when I did.
Copying the portfolios in acorns with different ETFs or whatever ETFs just have similar titles can work, though.
I saw a business doing this...
was very weird. they had a website up where you could buy stocks at a certain valuation.
weird because the more people who invest the more diluted the stock gets.
Do you do any due diligence when promoting sponsors?
Wait for the check to clear
These so-called companies now only raise money and make no profits. Pay no dividends and raise the stock prices. Intial investores make their money,and they sell their shares, make money, and the company fails.
Do people think crowdfunding will improve the 90% failure rate of startups???
As a retired professional money manager, who had a 5-star Morningstar rating for a lot of the time that I ran Fidelity Diversified International Fund (1992-2001), my hat's off to your channel! Of all the finance channels I've been exploring on TH-cam, yours has by far the highest average quality, sound advice, and just plain fascinating stories! Keep up the great work! If there were such a thing, I would nominate WSM for "best finance channel on TH-cam!"
"Your gain, is my loss..." - Retail investors
Not always
I am SO drawn to strapping a toaster to my face, spending my real money on fake clothes, fake property, fake food and drinks all while being monetized by real advertisements. I cannot wait!
That’s why I don’t do kickstarter, because there is no potential to share in the profits. Why would anyone invest in something with no opportunity of return?
13:09 $5.7 million dollars raised from 122 people would be about 46k per person - how could that be accurate?
I had noticed the same. But maybe there were a couple of big investors.
Know that corporations will say almost anything you want to hear to get their hands on your money!
Thanks a lot of such an eye-opener video; i am really pained to see such great ideas being ruined by some scruplous market players. For example, that idea of using mobile gaming for social causes is such a great idea, but they have already ruined it before even its launch!
Crowdfunding sounds more like a donation for founders than actual investment. Government has to give some tax benefits as investors never see money similar to a donation.😂🎉😂
But those who buy into a crowdfunding campaign are usually getting a product in exchange
Went on that start engine website. What a bunch of junk on there. Got to be crazy to invest in any of those pathetic companies.
Thanks 4 ⭐️ Great Video!
Agree with 99% of what ypu stating!! Still if you as a public Investor find an idea you like and do good Research on those responsible / like email ask etc you can find Gold, but as any miner it takes time to find it 👋
A lot of these crowdfunding places are offerring 20% discounts due in half a year. That's four times the return of the market and justifies four times the risk.
14:30 Saying that the market is a particular size and you only have to capture 1% of it is a Cardinal Sin on Shark Tank. It's strictly forbidden, and contestants are always admonished for not watching the show and knowing better.
Lol, I recognize Wigl at 1:33 from an EEVblog video 😂
Ooooh someone really doesn't like Kevin O'Leary hahaha. Good job.
How did you find their financial report??
4:40 Biden is sniffing the kid and he is crazy uncomfortable LOL
Classic O’Leary
I don't understand why anyone would buy into anything Kevin O' Leary would be selling. He's not even a good businessman. He got one lucky deal and he's been riding that achievement like every deal he makes is good. Beanstocks was just a cashgrab. Kevin needs money so bad that he sells himself on Cameos for $1,000. I don't know any successful business man that needs to panhandle for pennies if he's suppose to be super rich and successful.
To be fair, planting trees is one investment that goes 20x to 100x regularly. You just have to wait atleast 10 years.
You're not including the value of the land and cost to harvest
@samsonsoturian6013 being in Kenya I suppose those would be close to nothing but yes those costs exist. The good part is that if you do some accounting gymnastics and spread those out over the period of growth, those would be a speck compared to the value of the wood.
There are companies that do that and are traded in the stock market. Will you sell your house and invest in those companies?
@@fsaldan1 no i already have stock on a paper mill company. You know you can buy saplings for less than a dollar and a full grown trees go for 50 euros a ton? And this isnt for lumber
I agree to a certain degree with this... but also at the same time if you go into these investments fail 95% minimum with only 1% becoming successful then you're fine. Just like with any sort of investment. Just make sure you're diversified enough with your portfolio to not rely on one of these sorts of investments.
Sounds like leaving my cash under the mattress is the best idea 😅
Biden and Trump will make sure the purchasing power of your under the mattress money drops quickly. The Fed is helping them on this task. And they count with the approval of the overwhelming majority of Americans that will vote for one or the other.
I used to work for equity crowdfunding. Some founders and projects legitimately can benefit, but the companies are lying and mostly care about money and money and not at all the results of the projects or the investors
Kevin o Leary is really putting his face on everything
Speaking of 🗑️startups just got the ad 🤣
Common Sense Sceptic has a great series on O'Leary. He and his ilk - Musk, Holmes, Milton, are amazing in their ability to tell enormous lies without hesitation.
Video narrator: Ordinary investors could only invest once the company goes public at this point the valuation is much higher so the life changing gains going forwrd is limited.
Me: Looking at warren buffett strategy and net worth. Yup you are damn wrong sir.
If that guy is pitching it, run. Just run!
7:35 You saying Sequoia actually did some degree of due diligence on FTX ?
Okay, that's it; you are Definitely OFF of Kevin O'Leary's Christmas card list!
The entire VC field is rife is fraud. Buyers really need to look into ideas and the people first.
They're just legal loan sharks
Kevin, Mr.Ponziful.
Finally it returned after 100 years
I have a question, how does beanstox lose so much money, excess of 2 million a year, like what are the costs behind this?
Kevin OLeary has the reputation of getting paid millions by the most shadiest corporations in the world as an "advisor" of some sort. He also sells cameos to regular folks for $1,500 a pop.
He doesn't care about his reputation, he only cares about the money.
But buying bitcoin is ok?
No.
I’d love to see this being pitched on shark tank. They’d laugh it out of the room.
I live in north carolina and am working to be an angel investor. I have been shocked at the pay to play aspect of the environment. I have been bombarded by dozens of funds looking for me to invest a minimum of $20,000. Yet when I manage to get a peak at the teams looking for investment they don't even have budgets.
Pretty much all we need to know is that three years in just one has gone public, that one by SPAC, and it is going down in flames…success rate zero.
5:24 bro please find some better stock images, what is this
Anguish in video 😣😨
Crowdfunding unproven businesses in this way makes absolutely no sense; you need to be able to invest in companies that have a solid product but need capital to grow their operations, but such companies are going to easily get VC financing, so equity crowdfunding is going to be left for the dregs of the businesses.
You didn't mention, however, the one type of crowdfunding that I've invested in - real estate. In this case you just have to trust that the sponsor of what you're investing in is able to make good picks about what real estate to buy, which you can sometimes confirm by looking at the sponsor's history. Real estate is a very capital-intensive investment type, but the money that you spend is reasonably safe because it's invested in buildings or land rather than being spent on salaries. You can get a pretty good chunk of the purchase price out of any real estate investment even if you buy right before a downturn. This is simply another way to raise money for real estate investing, rather than a sketchy company trying to get some capital which it's likely going to waste.
Of course, you're not going to have 10x returns either, so I guess that's something equity crowdfunding has in its favor.
I never thought that having regulations was unfair.
How are you going know all the statements without it being necessary.
Hell even in regulated stock market you have scams and in unregulated one you know the results.
Venture capital, wealthy investors and firms can handle tha loss but an average joe with no accounting knowledge would probably lost
Your commitment to hating on Kevin O’Leary is so impressive. Do it again
Lemons only apply to new cars
People are just more willing to gamble for their investments than they used to be.
Why would a rich man tell you how to get rich? A rich man wants stay rich and keep his wealth, not share it. otherwise, what is a rich man if everyone is rich?
That is not a logical argument. A successful money manager gets rich by helping other people (investors) to get rich. Warren Buffett is an example. There are many others.
Im getting more convinced as time goes on that o'leary is nothing more than a con man
The joke at 13:20 is good. 😁😁🤣🤣 They're going to plant a tree in Kenya? Kenya is a tropical country. Trees grow by themselves in the tropics. If you leave an empty lot for five years in the tropics, you return to a dense forest. Whoever falls for that, is really too ignorant to their own detriment.
How is a company that has not sold a single product, values at 28 mln dollars? And who thinks that a company that makes less than 100k a year is worth millions?
Interest rates really need to go up to weed out these useless companies.
@4:41 Layoff the kid Joe!
The man you showed 3:20 had much more to do with the great depression than any fraudsters.
Roosevelt was elected after the Great Depression.
Reddit is going public thru a spac
Its a waste of money investing in these start ups when 96% of them fail and just suck up free investor money and are never become profitable or valuable.
"Accredited investors" are rich chumps that no one cares about. And the fewer disclosures of crowdfunding is a necessary step to get people to read the disclosurers
Capitalists being true to themselves.
are you an accredited investor if you have $1million excluding primary residence, but you don't own a home?
$5M to plant a tree in Kenya? 🤣
I would rather buy meme coins 😂😂😂
It is actually stunning that the US went from allowing only accredited investors to invest in startups to allow 16 year olds living in basements to invest in alt coins. The government of Albania fell due to a Ponzi scheme. The US has thousands of Ponzi schemes going on simultaneously. The Great Recession happened because all the real estate investments went bust at the same time. The explosion of public debt in the US will cause a crash that will make all the Ponzi schemes become worthless at the same time. There will be political consequences as the wealth of millions of people evaporates.
crowd Funding is a good idea if it was regulated and the websites& the company which offer this kind of service is validating the information mentioned in the promotion.
otherwise it's a shit investment
Ooo first comment
You got in at the ground floor, now get 10 of your friends and family to comment and PrOfIt!!1!
@@Dave2713😂😂😂😂
after the FTX debacle, i'm shocked that kevin oleary still has ANY credibility at all 😮
Don’t invest in these “fake it till you make it” schemes
That is because crowdfunding has more then 50 investors, you missed a very important step, check the minimum investors requirement needed for threshold of lisence. I run the only start up investor's centre in Canada, no Canadian Stock Exchange Commission registration requirements so long as I stay under 50 investors for my company's list of investor clients. Seems I am the only business start up investor's centre approved by the Canadian stock exchange Commission.
Eventually there may be a use for the 800+ crypto tokens, other than speculating that it's going to the moon bro, and there will be a greater fool to buy it.
This video is kinda all over the place and does little to correlate to the title of the video.
When I see Kevin, I know not to do it
I personally think project crowdfunding is best. One of china's largest electric bike company started when people crowdfunded their first product not equity. There should regulation if you raising for a project it would be only for that project.
Movies is also a good section as some good movies are crowdfunded and are released in nationwide
Joe like the kids
Just a PSA for anyone easily fooled, the video sponsor is making claims that are sus at best, as well as scientifically impossible at the worst. There are only 2 types of commonly used plastics that are "actually" recyclable, and they ARE NOT "much better" for the environment than producing new plastics, the recycling process for these plastics is pretty much a net even in terms of emissions, waste, etcetera. Also, the claim that recycled plastics can be 100% as durable as new plastics is just straight up scientifically fucking impossible, even 90% would be a god damned pipe dream, plastics offer SIGNIFICANTLY less structural stability after being recycled once, and after the second, maybe the 3rd time they're totally useless.
Also, WSM has acknowledged all these facts* when reviewing other businesses that weren't sponsoring him, so i wouldn't pay any attention to future sponsors of WSM, he's clearly fine with making claims that are outright fabrications, in relation to product sponsorships. Even if I'm 100% mistaken and WSM has never acknowledged this publicly before, the claims of this videos sponsor are easily, verifiably false, by checking the first page of google results, therefore it becomes obvious that he does not investigate the claims his sponsors make at all, let alone with any scrutiny.
*This statement is an opinion based on my vague recollection of some videos that may or may not be WSM's. My allegations are pure speculation, you can trust what I, some random on the internet, has to say about Anything, about as far as you can trust the claims of his sponsors.
Also, i'd like to point out that I'm a years-long subscriber and, well, i was a much bigger fan before seeing him shill so hard for a company thats making (easily) verifiably false statements in marketing materials. Im not a "hater" of the channel, just this particular ad-read pisses me the fuck off, not only because its so blatantly deceptive, but again, in my flawed, human memory, im like 90% WSM knows these claims to be uncredible.
I'm from Kenya, never heard of them 😅
4:39 Old Biden still doing the same thing today
Well no one invests in ethnic minorites in England so I most likely will need to crowdfund in some way. If I were a nerd white guy wearing a Patagoinia t-shirt chinos and some New Balance, VCs would throw their check book at me.
Do you ever post any positive videos?
4:35 anyone else notice that good old hair sniff?
Anyone who helps crowd fun is an idiot. Why would i invest in something i can't own a share of?
Ipo safer... as 99% dead from 2020
Kevin O’Leary is a great personality on shark tank because it portrays the shark nature of investment, but he’s also an idiot for making it known how much of a a devil he is. Who would want to invest in his shit?