Crowdfunding as explained in earlier posts, is the use of the Internet and web platforms to connect groups of investors with project owners raising capital for a variety of projects and offering different forms of compensation in return. To run a crowdfunding business, the people behind the platforms have to be transparent, trustworthy and credible, and need to combine and understand all of the following elements/systems to make it work:
- Legal and regulatory framework
- Checks and balances on deal flow/operators
- Customer acquisition and education
- Social media
- And all the standard finance, accounting, marketing, PR, etc.
And for real estate crowdfunding platforms, you should also add these to the above list:
- Real estate development
- Real estate investment
- Real estate due diligence
- Contracting and Structure
So, as you can see, the technology component is just one part of the business. That being said, good technology is paramount to the smooth flow of all users of the platform and clear management, recording and tracking of all transactions that are taking place on the platform.
It is very important to have the tech that can handle all of this and also (arguably more importantly) abide by and match the permitted regulations and rules regarding the particular type of crowdfunding platform business model in question.
Each jurisdiction ultimately has different rules on fund raising and investment of those funds. How you find new investors for your platform, how you speak to them, “solicit” them, on board those same investors, market and communicate to them on an ongoing basis and provide opportunities to them, are all based off of what is and what is not legally allowed in that country.
So we believe the main reason why tech is important, other than give you a great user experience, is that you certainly want to make sure that you are operating within the legal boundaries and the platforms you are registered with have all of this locked down and sorted.
Real estate crowdfunding is for serious investors who need to take the time to understand the markets and deals they are investing into. The platforms that will stand out are not just creating marketplaces where any deal can just get listed. We get hundreds of requests each month for deals we would never list. There are many more bad deals out there than good deals. There are many loopholes, tricks and ways that a real estate developer can dishonour their agreement with investors. You want to ensure the people behind the platforms are legitimate and have the experience in real estate investing.
So as a wrap up, join good crowdfunding platforms with great tech but also look behind the tech and the deals, and make sure you think the people behind the platforms are great too.
InvestaCrowd is an Asia-based real estate crowdfunding platform, bringing our members institutional grade real estate investment opportunities, from markets with transparent and established legal systems and real estate developers who have proven and successful track records.
We welcome all comments and would love to hear what you think. To find out more about what we are doing now, please login and create an investor account atwww.investacrowd.com, a leading real estate crowdfunding platform in Asia. Thank you.