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Abstract

Retail investors’ demand for better returns, transparency, and access has sparked innovation in alternative investments like Crowdfunding. This emerging product suits various sectors, allowing deals across asset classes (e.g., property) while letting retail investors choose investments matching their goals and style, such as early-stage investing, IPO funding, or venture debt. It also empowers them to remove unsuitable companies from their portfolios quickly, for example, through discounted secondary market sales if available. Today, retail investors enjoy a more democratic financial landscape, engaging directly with company executives without the formalities of AGMs or class actions typical in public markets.

This dissertation aims to do the following. First, it would explore whether the ability and empowerment that crowdfunding provides to retail investors is a permanent game changer on the investment landscape. Anecdotally, it is interesting that today, a pool of retail investors can invest under somewhat similar terms as institutional investors into deals that previously would have been the exclusive preserve of large financial organisations such as banks, or their ultra-wealthy clientele, or even Sovereign Wealth Funds. That paradigm seems to be increasingly evolving towards a more level playing field for large and small market participants.

Secondly, this research intends to assess whether crowdfunding is indeed the best long-term solution for retail investors, rather than the traditional long-only funds that were curated and managed on a discretionary basis, which also gave institutional fund managers incredible amounts of influence, including the ability to set and collect all kinds of recurring fees regardless of fund performance.Finally, this dissertation will explore how retail investors can utilise crowdfunding to achieve their return objectives, both capital appreciation and income generation. This can be as a satellite product to a core traditional asset portfolio, or as a core portfolio in itself.It should be noted that Reward or Charity-based crowdfunding will be completely excluded from this research. The focus is strictly on investment crowdfunding.

Author: ISAAC AYODELE