With several equity crowdfunding platforms in the marketplace, individuals need to be cognizant of the potential for fraud and poor-quality investment opportunities. Equity crowdfunding has created the ultimate democratizing vehicle for individuals who are interested in investing in private investment opportunities. However, there are key elements that individuals should consider before making the decision to invest through a crowdfunding platform:

1. Is the platform licensed? Securities regulators have a responsibility to protect investors and they do this by vetting platforms, the individuals behind them and the business model. They also ensure that platforms have the right compliance procedures in place. If a platform is not licensed or if the platform is a "division" of an existing licensed entity (meaning they have not gone through the regulatory scrutiny to obtain a license), it should raise a big red-flag for investors.
2. What materials are available for you to make decisions on an investment? Investors should have access to sufficient information to make a decision on an investment. This generally should include: i) an understanding of the business model, ii) financial statements or projections, iii) investment terms and structure, iv) liquidity strategy, and v) disclosure of fees, risks and conflicts of interest.
3. Does the management team of the platform have the right experience? Private investments are typically not structured as simple common stocks or bonds. There can be many complexities with the structure of an investment, the securities being offered and the valuations. Investors should be looking for a platform with a management team that has experience in analyzing, structuring and executed complex transactions.
4. What happens after you make an investment? Since there are no regular reporting requirements for most private investment opportunities, many issuers tend to provide updates on the business or material changes only when it presents the issuer in a positive light. Investors should be wary of platforms that do not provide regular reporting on their investment opportunities because most individual investors will have very little influence when it comes to reporting.
5. Who is investing alongside you? As an individual investor, you will generally have no power on the structuring and valuation of an investment opportunity and the management of that investment. Platforms that offer the opportunity to invest alongside sophisticated professional investors who structure, value and manage an investment will provide individual investors with a greater sense of comfort and peace-of-mind.

Crowdfunding has provided investors with greater access to the private investment market. With greater access and opportunity, comes greater risk. Before selecting a crowdfunding platform, investors should look into how they mitigate risk, as highlighted above.

NexusCrowd Chief Executive Officer and co-founder, Hitesh Rathod will be speaking at the World Money Show Toronto 2015, on Friday October 30th at 2:35 p.m. He will also be participating in a FinTech panel at 3:45 p.m., moderated by Adam Nanjee, head of the FinTech Cluster at MaRS.  NexusCrowd will also be exhibiting at the show which will be held in downtown Toronto, at the Metro Toronto Convention Center on Friday, October 30th and Saturday, October 31st.

In his presentation, Hitesh will be discussing how, “Commercial Real Estate Is No Longer Just for the Well-Connected.”  Crowdfunding technology has spawned a new era for accessing the private capital markets. In the past, individual investors were limited to their own networks, geographies and/or private investment funds. Today, just about anyone can invest in hundreds of private investment opportunities through crowdfunding platforms. Real estate crowdfunding, in particular, has seen significant growth and interest from investors but how do you avoid getting fleeced and what are the right structures?