Yahoo Finance 25 Cents Can't Buy You Gum Anymore Thanks to Inflation, But It's Enough For Retail Investors to Invest In Startups
When was the last time you remember being able to purchase something for a quarter? The Dollar Menu at McDonald's is all but gone, and even a pack of gum will run you over a dollar in today’s high-inflation market. Your average cup of coffee costs a few dollars, and gas hasn't cost less than a dollar since oil prices collapsed in 2020.
What can a quarter get you in today’s market? It's enough to get you started investing in startups. The Jumpstart Our Business Startups (JOBS) Act went into effect in 2016, effectively allowing anyone to invest in startups. While the industry started slow, it has since blossomed, creating tens of thousands of jobs per year and raising hundreds of millions of dollars for American small businesses.
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This startup is accepting investors for as little as 25 cents – what’s the catch?
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Unlike traditional venture capital and Regulation D offerings, these raises don't have accreditation requirements or effective minimum investments because of limited slots. Rather, startups can accept small checks from thousands of different investors for any feasible minimum investment that makes sense. Because of the costs associated with capitalization table ownership slots, processing and transaction fees and paperwork filings, the minimum investments tend to land between $250 and $1,000 for these types of offerings.
But in some instances, companies are more interested in getting as many investors in the door as possible. These investors often turn into customers and long-term supporters, so the value of that outweighs the lower margins associated with a smaller investment.
One such example is HiveSkill on Netcapital, which requires a minimum investment of 25 cents. While many are left wondering what a 25-cent investment can get you in today’s market, investors now have at least one option — they can become venture capitalists.
This isn't the first company in the equity crowdfunding market to use this approach, but it's one of the lowest entries into equity crowdfunding. Legion M Entertainment Inc. on StartEngine currently has a $39.40 minimum investment as the company looks to become the "World's First Fan-Owned Entertainment Company." The company aims to get 1 million investors in the company and use them to become a value-added for every movie, show or other media it produces.
Investing in startups is not like the stock market. Public markets allow for easy liquidity with, ideally, more subtle gains over a long period. Investing in startups is often a high-risk, high-reward game. Angel investors and other startup investing groups often have investing horizons of five to 10 years.
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This article 25 Cents Can't Buy You Gum Anymore Thanks to Inflation, But It's Enough For Retail Investors to Invest In Startups originally appeared on Benzinga.com
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