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Crowdfunding – The investor perspective…

March 1, 2015

As Business leaders, it is likely that you will think of crowdfunding in terms of raising investment for business, but have you ever thought of it as a way of investing your own money?

We speak to Mark Tylor, a Dubai based investor to find out from him why this method of investing is so interesting to him.

Why did you choose crowdfunding as your method of investment?

I’ve seen the huge success that Peer-to-Peer lending has had in the UK and US and I’ve also seen the high returns that that can be made as an investor! When Beehive launched last year I thought it was a great opportunity for the UAE and I was keen to get involved straight away.

What did Beehive offer that the other crowdfunding platforms didn’t?

Beehive is lending based rather than equity based and this was more appealing to me as I prefer to lend money for specific initiatives in various businesses rather than take an equity stake in one company. The lending based model is a faster moving model so there are actually only 14 days in which to fund a business. I like the fact that investors compete to fund businesses so when it gets to the end of 14 days and bidding is about to close, it gets quite competitive and you have to ensure your bid is still in the running!

I’ve been in the UAE for 9 years and another positive for me is that I can actually invest in businesses that are local to the UAE and I am part of fueling their growth rather than placing my money into anonymous opportunities overseas.

What did you invest in?

I’ve invested in 3 businesses so far and getting an average rate of about 14.5% on my investments which I’m very happy with!  I have bid on other businesses but I’ve been out bid at the last minute so it certainly keeps it exciting! The businesses I chose were a real mix. Panache is a plastics manufacturer; Genyx is a Management Consultancy and Snoopy Pets is a pet re-location service.

Why did you decide to invest into this business?  By this we mean, what were the factors that stood out to you the most?  What made the business you invest in seem more interesting to you in comparison to others?

The businesses all so different that I probably wouldn’t ever have ever thought to invest in them individually but seeing their profiles on the Beehive marketplace clearly highlighted each of their individual strengths such as a strong management team, high growth potential and innovation pipeline, so it really helped me decide where to place my money. It’s a real spectrum of businesses but since I can invest smaller amounts into each it’s easier for me to build a diversified portfolio, which clearly helps manage any investment risk.

What were the financial rewards that you achieved from investing in this business?

I’m making an average of 14.5% on the businesses I have helped to fund so far and I am definitely keen to keep re-investing my money into new opportunities on the platform.

What would be your top tips for those wanting to invest using a crowdfunding platform?

I can really only answer with a view to peer to peer lending as that is the only crowdfunding platform I have used to date.

The beauty of Peer-to-Peer lending is that you can lend small amounts so it’s perfect for investors who are new to this type of platform as it gives them an opportunity to try investing in an opportunity with a low level of risk. Then when you have more confidence you can start to invest larger chunks into a wider range of businesses.

I would advise building up a portfolio of businesses that you invest in and keep re-investing in new opportunities as they become available, as that will really optimize the level of returns you make on your money.

Source: Business Insight 

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