MicroVentures was formed as a result of the desire to bring venture investing to everyday investors by leveraging secondary liquidity and technology. Their goal is to empower both Investors and Entrepreneurs with the tools they need to thrive.
MicroVentures is a fantastic place to get in on early-stage equity investments. The companies are exciting, the valuations make sense and MicroVentures does a good job of screening out the bad apples. MicroVentures is ideal for someone who wants to put $1000 or $10,000 into early-stage companies and doesn’t want to deal directly with angel investors on Sand Hill Road.
Microventures is a registered broker-dealer with the limitations set out in Rule 506(c) of Regulation D under the Securities Act and as such offers investment opportunities under Rule 506(c). MicroVenturessigning is regulated by FINRA and the SEC.
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Founded |
2009 |
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Investment Type |
Venture, Startups |
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Sectors |
Internet technology, Software, Green Technology, Gaming, Social, and Media & Entertainment |
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Minimum Investment |
● Usually $100 ● $3,000 (Regulation D offerings) ● $10,000 (secondary, late-stage companies) |
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Audience |
Open to all Investors |
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Investor Fees |
● 0% Non-Accredited Investors ● 5% for Private Investment fund fees for regulation D/S ● 0.5%, 10%, 1% for Secondary Offerings |
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Due Diligence Process |
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Securities Offered |
Private Equity Investment |
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Investor Resources |
Company documents, blogs, One to one interaction with employees |
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Pros |
● Available to Accredited Investors, Non-Accredited Investors as well as Institutional Investor ● Companies that applied for funding have to overgo competitive due diligence ● Access to the company’s news and insights ● Investing starts with a bare minimum amount of $100 |
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Cons |
● Limited educational resources available ● High-risk Investment with low-liquidity ● Less number of opportunities |
Types of Investments MicroVentures offers
As a registered Investment broker MicroVentures offers mainly two types of investments –
- Primary Investments – In this company offers freshly issued securities to raise capital. It includes accredited investing as well as Equity crowdfunding.
- Secondary Investment – In this existing investors of a company sell their part of the investment to another investor which is therefore called a secondary investment. Just like the stock market company does not receive anything from the process.
You can also schedule a phone call after signing up to their website to discuss your objectives and risk appetite and they will guide you as per your needs.
What do you get when investing with MicroVentures?
You can earn in two ways via investing in MicroVentures –
- Selling securities in the Secondary Market – If you want to sell your share of investment in secondary markets you can do it with the help of MicroVentures. In the whole process, MicroVentures will accompany you.
- Public Listing – If the company in which you are invested grows and goes public you will get the difference of profits made on investments.
How does MicroVentures make money?
The major source of the revenue of the company is fees charged by them.
Up Front Costs
You have to bear the following amounts as Upfront costs –
- $1,000 – Legal Review
- $1,500 – Form-C ( a statement filled by startups when they want to raise money)
- $3,000 to $5,000 – Outside Financial Review ( It is required when you want to raise more than $1,07,000)
- $100 to $1000 – Associated Fees ( It is required when your company situated or sell securities more than or equal to 50% in a state that requires notice filling). Associated fees for most of the states ranges between $100 to $500
Closing Costs
Your company has to bear the following costs as Closing costs-
- 5% from investors for every capital raise done successfully
- 5% from Issuing Company
- 10% Carried Interest
- $1,000 or 0.35% as Escrow Fees whichever is higher
Optional Costs
You may have to pay optional costs as-
- Outside Marketing – Cost will vary
- Video Marketing – Cost will vary
Potential Returns and Cashflow
Potential returns on your investment are based on the performance of your selected company. Generally, startups may become giant or end up closing their operations.
You should keep in mind that there are only two ways to monetize your investments whether the company goes for an IPO. or you can sell your part of investments in secondary markets through MicroVentures.
Furthermore, MicroVentures also offers a secondary market for future buying and selling of securities after listing. They also facilitate an efficient, secure, and secondary transaction on their platform.
Withdrawing capital from startups is indeed difficult but you cannot ignore the past track record of MicroVentures in producing successful startups like Airbnb, Slack, Spotify, and various other startups.
The Breadth of offerings on MicroVentures
MicroVentures offers Accredited Investors, Non-Accredited Investors as well as Institutional investors to invest in startup ideas which are listed after the detailed screening of ideas by MicroVentures on their platform.
Companies offered – Sector, Company, and Number
MicroVentures offers a wide variety of companies in sectors including Internet technology, Software, Green Technology, Gaming, Social, and Media & Entertainment.
You can also select the sector you are interested in while signing up to Mircorventures where they provide the custom option to choose industries you are interested in.
Regulatory Framework
MicroVentures is a registered broker-dealer with the limitations set out in Rule 506(c) of Regulation D under the Securities Act and as such offers investment opportunities according to Rule 506(c).
As registered as a broker it is mandatory for MicroVentures to ensure that an investment is suitable for their registered customers, or they can face fines and civil action.
MicroVentures is regulated by FINRA and the SEC. MicroVentures holds FINRA series 24, 63 & 79 registrations. MicroVentures is not an investment advisor and does not provide investment advice or recommendations regarding the suitability of any security for a specific investor.
Most platforms focus on listing as many startups as they can but MicroVentures solely focus on quality. The due diligence process involves analyzing the key elements like –
- Business Model
- Business Roadmap
- Type of products offered
- Management
- Historical performance
- Future business plans
- Moat of the company
More often MircoVentures focuses on technology-based startups related to Internet technology, Software, Green Technology, Gaming, Social, and Media & Entertainment industries.
But they do not hesitate if the company outside of these industries with great potential on listing their platform.
Conclusion
MicroVentures is an excellent idea and a great way to invest in early-stage companies. MicroVentures is an equity crowdfunding platform that offers access to undervalued, high-growth private companies.
As MicroVentures mainly focus on listing excellent startup ideas which can flourish in long term. But startups are always termed as a high-risk investment with lower liquidity.
Therefore for a beginner who just starting in investing field should not go for MicroVentures as it may completely vanish your capital. A beginner should go for other investment options like the stock market with better liquidity.
An investor who is looking to diversify his portfolio can go with MicroVentures as experience help him understand the market.
But still, if you want to invest through MicroVentures you should go with an industry that you understand most as it may help to get the right startup with better insights.