Crowdfund Investing For Dummies
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Success in life is based on who you know as much as on what you know. As a crowdfund investor in a small company, providing knowledge and introductions can be very helpful if done in the right way, and when the entrepreneur asks.

Part of the reason that you’ve invested in a small private company may be your desire to feel more connected to your investments. One way to do that is to help connect the business owner with information, resources, and people who can help the company succeed.

Tap into your professional experience

What professional experiences do you have in your background? Do they relate to the crowdfund investment you’ve made? How can you structure this information and deliver it in a way that’s helpful and not distracting to the entrepreneur?

What may seem like common sense and very basic information to you as an experienced person in your field may be new and valuable information to someone who needs to gain that skill set. Don’t underestimate what you may have to offer.

If you’re willing to help, let the companies that you invest in know (in the manner they would like to receive communication) that you have skills in certain areas. When the business owner needs help in those areas, she’ll very likely contact you.

How advice is received by others has a lot to do with how you deliver it. Carefully follow the entrepreneur’s requests for how she would like to interact with investors. Regardless of how amazing the information you have may be, you’re an investor, not a majority owner in the business. You need to respect the decisions of the entrepreneur, including decisions related to investor communication.

Connect people who can benefit each other

The most powerful connections are two-way streets: They engage both parties in delivering and receiving value. When you become a crowdfund investor, try to identify relationships for the entrepreneurs or small business owners that can have bi-directional benefits.

Don’t bombard the companies you’ve invested in with lots of communication about all the people you know. Instead, make this step a highly targeted exercise. No matter how great your connections, they need to match what the business needs at that time.

For example, say that you’re investing in a small bakery that just started a year ago. It’s located about 5 miles from the world headquarters of a multi-billion-dollar corporation. You know the head chef at this corporation, who just happens to be looking for a new bakery to supply his breakfast and lunchtime bread and pastry needs.

Introducing the chef to the owner of the small bakery at this moment in time would be a recipe for failure because the corporation needs many times more bread than a small, new bakery can provide. When the bakery is a bit older, larger, and more experienced, this type of introduction could be truly valuable, but right now, the connection won’t help either party.

When you do identify connections that can be helpful, make the introduction and step back. Don’t try to micromanage the conversation. Let the two parties take it from there because your job — playing matchmaker — is done.

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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