As an investor, I’m always researching alternative ways to grow my money. The stock market is an incredible way to create wealth. But I don’t love putting all my eggs in one basket. There are so many investment vehicles outside of the stock market. AS a result, you should be looking into some ways to diversify. Whether it’s cryptocurrencies, real estate, or NFTs, there are more ways than ever now to make your money work for you. Hence our SeedInvest review.
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SeedInvest Review Introduction
So have you ever imagined you could be an angel investor? Before you answer, we’re probably in the same boat. I always thought investing in startups was for billionaires in Silicon Valley. Then I found out about sites like SeedInvest.
They allow you to invest in up-and-coming companies as if you were a high-flying venture capitalist. SeedInvest was launched back in 2013. And they’re a privately owned company based out of New York City.
SeedInvest allows regular investors like us to invest as little as $200.00 into a startup company. They’ve also had over 500,000 investors that have funded over 235 different start-ups. The largest round of funding raised a staggering $20 million, and received further investments from global companies like NTT Docomo and Konica Minolta.
SeedInvest offers the ability to invest in pre-IPO companies without needing to be an accredited investor. Historically these investors have had access to some of the biggest companies in the world at a fraction of the price. SeedInvest is setting out to change that as the company looks to level the playing field for the normal investor.
The company even lowered its initial investment minimum to $200.00 from $500.00 to make the process even more friendly for retail investors. So yes, in this SeedInvest review, we found that they’re real. Let’s take a look at why SeedInvest should be a part of your diversified investment portfolio.
What They Offer
SeedInvest lets you invest in individual start up companies that are posted on the site. It also offers a diversified investment strategy that allows you to evenly distribute your money across multiple start ups. When choosing this option, SeedInvest creates something of a startup ETF. As a result, investors can build a portfolio of up to 25 different companies.
What’s the benefit of SeedInvest’s Autoinvest program? Well according to the SeedInvest site itself, only 10% of startups have accounted for 85% of total angel investor returns. This means that a lot of startups actually fail. So just as with stocks, putting all your eggs in one basket can be a risky strategy. Just as we say a diversified stock portfolio is the key to long-term wealth, so too is spreading your money across multiple different companies.
But if you do choose to invest in just one or two companies, SeedInvest can still be a great addition to your portfolio. Any startup company listed on SeedInvest’s site has been vetted and selected by the SeedInvest team. How strict are they in their business selection?
In its history, SeedInvest has accepted fewer than 2% of all companies who apply. There’s a strict due diligence process from the SeedInvest team. And only the most promising startup companies make the cut. While this seems unfair to start-ups in need of capital, it also ensures that SeedInvest can protect its investors. If the business is listed on the site, it is most likely a very promising one. This is what we like about this SeedInvest review.
Using the SeedInvest Site
The SeedInvest site is extremely polished and intuitive and really takes no learning curve at all. The site makes it simple to manage your SeedInvest Autoinvest portfolio. Giving you the ability to freely move your money from company to company. The user interface is clean and was not at all clunky or repetitive like some of its competitors.
SeedInvest allows you to fund your account via a direct bank transfer or a wire transfer only. This is important for many investors as commonly used payment methods like credit cards, PayPal, or cryptocurrencies are not accepted. Make sure you’re aware of any additional charges your bank may have with wire transfers or online bank transfers. Once you’ve funded your account, it’s just a matter of browsing the available companies and choosing one to invest in.
What are the fees in this SeedInvest review? There are fees when using SeedInvest, which is understandable. The company does need to make money somehow. SeedInvest will take a 2% fee of up to a maximum of $300.00 for every investment you make.
In the big picture, it’s not a terrible fee to have to pay in order to get early access to investing in these companies. Keep in mind you are limited to the companies that approach SeedInvest. This isn’t like the stock market where you can choose any startup you want. This is just another incentive to choose wisely when making your investments.
What Are the Risks?
Well, to be blunt, you could lose everything, even if the company is successful. Investing in startup companies is so different from investing in stocks. There is a definite chance that your initial investment may not yield any returns during the initial startup phase. In fact, SeedInvest actually wants its investors to fully expect to hold their investments in a startup for up to five years.
There is no real governing body like the SEC for investing in startups. Any investment you make in a company is not FDIC or SIPC insured. Instead, you are just presented with a convertible note that is provided by the actual company. The worst part is that even if the company you choose is successful, there is a chance your investment will be diluted by future rounds of fundraising. This is far from a sure thing, but the potential rewards are extremely enticing.
Does SeedInvest Have Competitors?
Yes! This relates back to my point about only having access to companies that reach out to SeedInvest. There are multiple other sites like SeedInvest, and all of them will most likely have different companies to offer. Other sites like Kickstarter, GoFundMe, Indiegogo, StartEngine, and MightyCause are all slightly different versions of the same thing. While Kickstarter and GoFundMe aren’t necessarily investing in businesses, SeedInvest specializes in startup companies.
So does SeedInvest offer the best selection of startups to choose from? It all depends on which businesses you find intriguing to invest in. There is a chance you don’t like any of the posted companies and will have to wait until new startups hit the list. Remember, SeedInvest has only accepted less than 2% of all of the companies who applied. At the very least, that lends some credibility and confidence in the SeedInvest team.
Pros
- SeedInvest has a professional site that is easy to navigate and learn how to use.
- Low minimums for investment with $200.00 for Autoinvest or $500.00 to $10,000.00 in individual companies.
- SeedInvest Autoinvest helps manage a diversified portfolio of startups.
- Decent customer service availability with live chat and email options around the clock.
- Reasonable fees for investing that are returned if the company’s fundraising goal isn’t met.
Cons
- Limited payment options to fund your investment account on SeedInvest.
- The investment term is expected to be a long one of potentially more than five years.
- You are limited to the SeedInvest selection team, which will be different from other sites.
- There is no mobile app to manage your portfolio or investments.
SeedInvest Final Thoughts
So is SeedInvest worth the risk? There is nothing quite like diversifying your portfolio with a non-equity source of income. That’s not to say that SeedInvest is a guaranteed investment, nothing is. But you can only add so many different stocks before you find yourself at risk of losing it all during a major correction or pullback in the stock market.
In an age where brokerages are looking to create a divide between retail and institutional investors, SeedInvest is offering a transparent platform to allow investors to have access where they previously did not.
Venture Capitalism and angel investing has always been connected to the wealthy elite. But no longer! For as low as $200.00 investors can invest in up to 25 different companies in the Autoinvest option. For as low as $500.00, SeedInvest allows you to invest in individual startup companies. All of these companies are heavily vetted by SeedInvest before they make it to the site. In its history, SeedInvest has only selected about 2% of all of the companies that have applied to its site.
Investing in a site like SeedInvest is always up to your personal risk appetite. Some people are just happy staying in stocks or ETFs for low-touch investments. But if you are looking to diversify your portfolio with investing in startups, SeedInvest is an excellent website to do so on. Check out the site today to see if there are any companies you are interested in investing in!
