3c hapter - Index of

146 Locavesting
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Crowdfunding sites aim for a high level of transparency, and most
provide aggregate performance data for loans they have facilitated.
Research any site and its track record before you lend money.
Sites such as ProFounder in the United States and Funding Circle
and Seedrs in the United Kingdom are bringing the P2P to model
to business investing. That could open up new avenues of funding
for entrepreneurs and the ability to tap into their social networks.
However, U.S. securities regulations limit the opportunity here.
Cons:
• Most P2P loans are unsecured and subject to default, so there is
real risk. As mentioned, it is wise to spread your investments out
over multiple loans to mitigate risk.
• In addition, many crowdfunding platforms are startups themselves
without long track records. Before signing on with a P2P marketplace,
make sure it has contingency plans to service its loans in the
event that it ceases operations.
The Bottom Line: Crowdfunding has great potential to democratize
lending and investing, and open up new sources of capital for
entrepreneurs.
For More Information:
• Kevin Lawton’s book can be found at www.thecrowdfundingrevolution
.com.
• To view the crowdfunding exemption (fi le no. 4-605) or leave
a comment, go to www.sec.gov/rules/petitions.shtml
• Further commentary can be found at www.crowdfundinglaw.com
and www.sustainableeconomieslawcenter.org.
• Microfi nance sites: Kiva.com, MicroPlace.com.
• P2P consumer lending sites: Prosper.com, TheLendingClub.com,
Zopa.com, Loanio.com.
• P2P student loan funding: www.fynanz.com
• P2P currency exchange: www.currencyfair.com
• P2P business lending sites: FundingCircle.com, ProFounder.com,
Cofundit.com.
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P2P equity investment sites: Seedrs.com, GrowVC.com,*Crowdcube.
com, Seedmatch.de, WealthForge.com,* MicroVentures.com.
* For accredited investors only.