Sherwood Neiss

If you haven’t been scared you away from crowdfund investing yet, that means you probably have some tolerance for financial risk. How much tolerance? That’s a question only you can answer (ideally with guidance from a financial advisor). Creating an investment portfolio that meets your needs demands first assessing your level of risk tolerance.

One of the most valuable networking tools you can use is an infographic. Kelly Hoey of WIM says she wouldn’t have been so successful without diverse relationships. The figure shows her infographic indicating the relationship to organizations and people critical for the success of her organization. Credit: Women Innovate Mobile network map 2012 You can use Post-it notes on the wall, a mind-mapping program, or a free infographic program, but get it down.

In your business plan and in your crowdfund investment campaign pitch, you told the crowd what you needed to do, when you needed to do it, and how you were going to do it. Those are your milestones. Summarize them into bullet points and put them on a piece of paper. In his book Mastering the Rockefeller Habits (Gazelles, Inc.

Crowdfund investing is a new funding opportunity for small businesses and startups that holds tremendous potential, but it's not a free-for-all. Entrepreneurs, business owners, and investors alike should know the legislative boundaries set by the JOBS Act (which opened the door to this funding resource in 2012), the risks involved in this type of funding, and the potential rewards it offers both to companies and their supporters.

If you want to exit your crowdfund investment after the first year, you can. No chain tethers you to the entrepreneur or business owner after this point. Here are your options: Selling on the secondary market: A secondary market is akin to one of the public exchanges, like NASDAQ, that exists for buying and selling public company stocks.

The chances of your crowdfund-invested company getting an IPO are extremely small — minuscule, in fact. An IPO occurs when a company goes public — it lists its shares with a stock exchange for the general public to be able to purchase. IPOs can be the exit of all exits. They’re what some investors dream of when they invest in startup companies.

A merger or acquisition is another common way for a crowdfund investor to have an exit. It occurs when a company combines forces with another company (merger) or when a company gets bought out by a larger company (acquisition). These deals can be structured in many ways. Usually, when a company is bought out, investors are given cash or stock — or a combination of both — as compensation.

You should never put more than 10 percent of your financial portfolio into crowdfund investments. (You may even consider something closer to the 5 percent range.) This limit is wise even if more than 10 percent of your portfolio is allocated to high-risk stocks. And if you and your financial advisor have determined that your allocation to high-risk stocks should be even lower (5 percent, for example), you don’t want your crowdfund investments to push you over that limit.

You need to apply some common-sense tactics to avoid being swept up in your crowdfund investing enthusiasm. You need to protect yourself from making bad decisions, and you have the means to do so if you just slow down, employ your gray matter, and take some additional steps. Make sure you actually understand the business or project.