Set a Minimum Crowdfund Investment Level - dummies

Set a Minimum Crowdfund Investment Level

By Sherwood Neiss, Jason W. Best, Zak Cassady-Dorion

When you establish the parameters for crowdfund investment in your business or project, you may determine that you don’t want to bother with tiny investments. You don’t want people buying into your venture for $1 or $5, for example, because you could run yourself ragged trying to meet the needs and answer the questions of hundreds or thousands of equity investors.

Some SEC-compliant online platforms may set minimum amounts you can raise; others will enable you to have the option of setting a minimum investment level for each crowd investor, and you probably should exercise that option. But in setting a minimum investment, you don’t want to shut the door on people eager to participate but unable to supply major dollars. So, how do you strike a balance?

Start with the assumption that an average investment in your crowdfund investing venture may somewhat resemble an average donation to a crowdfunded project. The average such donation has, of late, been $80. You probably don’t want your minimum to be higher than that amount.

Depending on the amount of money you’re trying to raise and the estimated size of your crowd, you may even decide that a $25 or $40 or $50 minimum investment is appropriate.