Benzinga readers often choose CrowdStreet or EquityMultiple as the best crowdfunding platforms.
Are you considering investing in crowdfunding but unsure of where to start? With so many platforms available, it can be overwhelming to choose the best one for your investment goals.
Crowdfunding allows multiple investors to pool their funds and participate in investment opportunities that would have been out of their reach just a few years ago. It also gives startups and entrepreneurs an option beyond the narrow confines of venture capital or large banks to reach their fundraising goals. However, not all crowdfunding platforms are created equal, and it's important to do your research before committing your funds.
To help you navigate the world of crowdfunding, Benzinga compiled a list of the best platforms for investors. Whether you're looking for high returns, low fees, or a specific type of project to support, there is a crowdfunding platform out there for you. Keep reading to discover the best crowdfunding platforms for investors and see how you can turn a profit in this high-growth sector.
Quick Look: Best Crowdfunding Platforms
- Best for Accredited Investors: CrowdStreet
- Best for a Diverse Range of Offerings: EquityMultiple
- Best for Small Account Real Estate Investing: Streitwise
- Best for Investment Diversification:StartEngine
- Best for Newer Accredited Investors: RealtyMogul
- Best for Investing in Small Businesses: Mainvest
- Best for Ease of Use: GoFundMe
Best Equity Crowdfunding Platforms
Companies or entrepreneurs raising funds through an equity crowdfunding campaign must do so via an approved crowdfunding website or licensed securities dealer. Most equity crowdfunding offerings are available on authorized websites. A list of some of the best equity crowdfunding platforms and which investors they are best for is below.
1. Best for Accredited Investors: CrowdStreet
- Best For:Accredited InvestorsVIEW PROS & CONS:securely through CrowdStreet's website
Crowdstreet is an equity crowdfunding platform that focuses on real estate offerings. It is best for accredited investors looking at offerings ranging from managed funds to stand-alone real estate investments (commercial center, apartment complex). Experienced investors can use Crowdstreet to tailor-make their own custom real estate portfolio.
Pros
- User-friendly platform
- Diverse offerings in diverse markets
- Solid history of delivering investor returns
- Great investor resources
- Many offerings eligible for inclusion in self-directed IRA
Cons
- Only open to accredited investors
- A $25,000 investment minimum is high for some investors
- Many offerings have long hold periods with limited liquidation options
2. Best for a Diverse Range of Offerings: EquityMultiple
EquityMultiple is an alternative investment platform that utilizes technology to simplify real estate investing for investors. It offers a range of investment options, including short-term and long-term growth, and allows investors to select specific real estate opportunities without the need to purchase properties directly.
Pros
- Fast returns (many offerings pay in less than 12 months)
- Access to commercial real estate investments
- Excellent client support
- Smooth running, pro-investor platform
Cons
- Only open to accredited investors
- The $5,000 investment minimum is higher than other platforms
- Fewer offerings than competing platforms
3. Best for Small Account Real Estate Investing: Streitwise
- Best For:Small Account Real Estate InvestingVIEW PROS & CONS:securely through Streitwise's website
Streitwise is a real estate crowdfunding platform that’s best for investors looking to build a smaller real estate portfolio. This private real estate investment trust (REIT) is open to a wide range of would-be real estate investors.
Pros
- Offerings for accredited and non-accredited investors
- Open to investors outside of the U.S.
- Scheduled to pay quarterly dividends
- Low and transparent fees
Cons
- 2% annual investment fee is higher than many competing platforms
- Redemption fees can be high if investors need to liquidate shares
- Fewer offerings than other platforms
4. Best for Investment Diversification: StartEngine
The StartEngine equity crowdfunding platform is best for investors who are looking to get involved with investing in pre-IPO startups. This platform is an excellent place to look for high-upside crowdfunded offerings in a variety of business sectors.
Pros
- Famous SharkTank investor Kevin “Mr. Wonderful” O’Leary is a prominent backer
- Incredible diversity of offerings in multiple sectors
- Upside potential of startup investments
Cons
- Startup investing is highly speculative and high risk
- Many offerings have long hold periods
- Limited or no secondary market on most offerings
5. Best for Newer Accredited Investors: RealtyMogul
- DetailsInvestmentsecurely through RealtyMogul Income REIT's website
RealtyMogul’s crowdfunding platform is best for non-accredited or smaller investors who want to participate in institutional quality real estate offerings that have traditionally only been available to accredited investors with deep pockets. It is also an excellent option for real estate investors looking for passive income.
Pros
- Available to accredited and non-accredited investors
- Impressive diversity of offerings
- Low buy-ins in relation to institutional quality assets
Cons
- Investor fees can be on the high side (approaching or exceeding 2%) in some cases
- Many of the most appealing offerings have high buy-ins ($50,0000+) and are only available to accredited investors
- Newer platform lacks the track record of some competing sites
6. Best for Investing in Small Businesses: Mainvest
The Mainvest investment platform is best for investors who want to generate passive income while also crowdfunding small to medium-sized local businesses all over the country. This platform makes money for investors by pooling their capital and lending to small businesses, then paying investor income based on the loan interest.
Pros
- Open to non-accredited investors
- Buy-ins as low as $100
- Open to individual retirement account (IRA) contributions
Cons
- High risk profile of the loans
- Many small businesses are subject to local economic pressures that can threaten investor returns if those pressures prevent the business from paying loans on time
- No mobile app
7. GoFundMe
The GoFundMe platform is best for people or investors who wish to support a small business or a cause financially. It is more a fundraising site than an investment platform. In many cases, the payoff for GoFundMe campaigns is not equity in a business but access to the product the business offers or some other inducement.
Pros
- Open to everyone
- Low minimum contributions
- Widely known
Cons
- Is a charitable platform, not an equity crowdfunding platform
- Not geared toward investor return
- Many campaigns are not business-oriented
What is Equity Crowdfunding?
Equity crowdfunding is the process of raising capital from a wide swath of investors by offering future equity shares in a startup or company in exchange for investor capital. If the startup hits certain targets as specified in the shareholder agreement, (a successful exit, initial public offering) the investor’s contribution becomes equity in the company.
Equity crowdfunding investments were made possible by a provision in the Jumpstart Our Businesses and Startups Act of 2016 that allowed startups to raise up to $5 million in through U.S. Securities and Exchange Commission (SEC)-regulated offerings. These offerings, known as Reg A, Reg A+ and Reg CF, are only available to investors through licensed securities brokers or an SEC-authorized crowdfunding website to act as a payment processor.
Companies and startups that wish to run crowdfunding campaigns must be vetted by the SEC before they can make an offering available to the public. Many of the best equity crowdfunding platforms also have secondary vetting requirements that startups must meet before they accept the offering on the platform.
Who Should Invest in Crowdfunding Platforms?
A wide profile of investors could consider investing in crowdfunding platforms. If you are looking for high-upside opportunities with minimal buy-ins, or you are looking to diversify your portfolio from low-to-mid-risk holdings, equity crowdfunding could be an option for you. It’s also another way to get early equity in dynamic startups that may be big names in a few years. Equity crowdfunding could be for almost everyone.
What Makes a Good Crowdfunding Platform?
When it comes to what makes a good equity crowdfunding platform, user-friendliness and transparency should be at the top of the list. Potential investors should be able to easily browse the platform, review investment offerings and access the information they need to make a decision about the offering. That includes being upfront about charges, such as a platform fee or payment processing fee that comes with an investment offering.
Another important aspect of a good crowdfunding platform is vetting. Does the platform do secondary vettings of potential offerings after they receive SEC approval? The best equity crowdfunding platforms only accept a small fraction of the offerings that are submitted for consideration. Ideally, a platform will be headed by experienced people who have proven themselves either running startups, investing in startups or both. The platform should have a responsive and robust client service operation.
From Startups to Real Estate: Expanding Your Portfolio with Crowdfunding
The good news about choosing the best equity crowdfunding platform for you is that there are so many platforms in so many sectors to choose from. One way of assessing which is the best platform for you is by starting off with a few important questions:
- What are your investment goals?
- Are you an accredited investor?
- How much money do you have to invest?
- What sectors do you want to invest in?
- What is your risk tolerance (wealth building, passive income)?
When you can answer all these questions, it won’t be difficult to pare down the list of equity crowdfunding platforms and figure out which one is best for you. Then you can begin browsing offerings and looking for one or more that fit your investor profile. The good news is, that no matter which platform you choose, you will enter an investment sector that is dynamic, exciting and full of opportunity.
Frequently Asked Questions
Can you make money investing in crowdfunding?
Yes, you can make money investing in crowdfunding; lots of money. Equity crowdfunding allows investors to take advantage of real estate or startup offerings with tremendous potential upside for wealth building, passive income or both.
Is crowdfunding worth it?
A well-run crowdfunding campaign can certainly be worth it in terms of effort from the campaigner and potential pay-off for the crowdfunders and investors. However, a lot goes into a successful crowdfunding campaign, including planning and clear-eyed risk assessment.
How do crowdfunding platforms make money?
Crowdfunding platforms can make money in a variety of different ways. In most cases, they charge a platform fee or payment processing fee to investors, the companies making offerings on the platform or both. These fees can vary with different platforms and different offerings.
About Eric McConnell
Eric McConnell is an alternative investment writer interested in rare collectibles, fine wines, art and sports memorabilia. He developed his love for sports during his childhood, where in addition to being an aspiring professional baseball player, he was an avid baseball card collector and reader of the Robb Report.
As is the case for many aspiring young sluggers, Eric’s baseball career came to an end the first time he encountered a pitcher capable of throwing 90 mph and a wicked curveball. However, his delight in the finer things of life never waned, and after a career in real estate, Eric branched out into writing, where he joined Benzinga as an alternative investment writer in 2021.
Although he covers breaking news in all areas of alternative investments, Eric’s favorite subjects harken back to his childhood days of reading the Robb Report and collecting baseball cards. He has a passion for writing about fine art sales, whiskey auctions and sports memorabilia.