Risky Business

Last week I mentioned the 90 percent failure rate of startups as one of the key risks for those thinking of investing in crowdfunded securities.

But another significant risk you should consider when investing in privately held businesses is the illiquid nature of your shares. Unlike publicly traded stocks, which can be sold for cash at a moment’s notice, your ownership stake in a privately held business can be hard to value and even harder to find a buyer for.

While secondary markets for crowdfunded securities will likely emerge in coming years, crowdfund investors should invest for the long term.

– Thomas Schroder, Krowdfund.com