You may have seen recently in your email, companies you follow, or love, offering a unique experience for their fans.
Stock Ownership…. spooky.
Stocks are an interesting thing. Viewed by a lot as a rich man’s roulette, and by others as a way of investing in your future. Most people might not even know that they own stocks.
If you have a 401k, then you unwittingly are a stock owner.
How Do Stocks Work?
In the general crowd, there is confusion about what stocks are, and what their purpose is.
The purpose of stock, is a company looking for a way to acquire capital. They have a plan, or a company need moving forward, and the resources of the company and owners are not enough to meet that needs. So to be able to achieve their goals, they turn to outside sources for help in making it happ’n cap’n!
They could reach out to a couple investors, or friends and families in a private corporation manner. Or they can open the corporation publicly, and be traded openly on the market, where anyone can go out and buy stock in a company. If you open the matter in a private matter, you can control the investing interests through a select few.
Well.. at this point we can’t go any further without bringing up Legion M.
In April 5, 2012, the JOBS Act was signed, and from that came Regulation CF, which changed everything, and one of the most famous people to use that regulation as soon as it was available to the public was Legion M. Now Regulation CF changed things by allowing companies to crowdfund stock purchases, which previously could not be done.
And out the gate Legion M raised $1,000,000 dollars allowing fans of the entertainment industry have ownership of their very own studio.
They even just not to long ago launched their 6th round of stock purchase, which if you want to get in on that, you can do so Here, but you better hurry because you never know how long it will be before the fans sell it out!
But Why Should You Buy Stocks?
The initial reason for stock purchase was because you saw the company, you agreed with what they were doing, and you believed in what they were doing. Well at least as much in the fact that you thought they would make a profit.
Generally speaking, you’d hold your stock, the company would benefit, and then as they made profits, they would distribute those profits to shareholders under dividends.
This was until people started to corrupt the system.
You might remember a little thing called the stock market crash that lead to the great depression. Not including tariffs, the gold issues, the one of the major issues was stock spending.
In the 1920s, people began to view the stock market as a way to make easy money, as opposed to supporting businesses, and making long term investment decisions. People overextended, and were shocked to find out that they didn’t make instant money. So people attempted to liquidate stocks quickly to be able to makes ends meet, and it was a lot of people.
This caused stock prices to drop massively, the general public to pull back on spending, and then the corporations started laying off out of fear.
How Is Regulation CF and Wefunder Different?
By opening low value investment through crowd funding, it does a couple things.
People who usually make short level investments, aren’t generally doing so for the purpose of making a fast transaction to make money. They are usually fans, and do this for the specific purpose so that they can say that they have some small percentage of ownership in a company. This brings back in some way, the original intent of stocks and investing in a corporation. I will admit though that it does take away from the ability for people to make large or valuable amounts of profits, but when you only invest $100 to $500 dollars, you really aren’t going to see a major value back in dividends, if they ever release.
I’ve told about 20 people that I have 400 shares in a distillery. It’s only been 3 days. When you own something, even if it is so minute to not matter in comparison, you are invested in it, and their success. You spread word, and you want the company to succeed more. You can’t just expect everything to happen on it’s own, but if you do the due diligence, and work to get it out there for people to see, sometimes the backers/funders/shareholders will take it the rest of the way.
So… this is a little underhanded. It also doesn’t help the crowd investor per say, but it does help people interested in launching their company on Wefunder.
But what does that mean? Well when you gain large investors, you have to pony up enough investment as a prior sole owner, to keep a controlling interest in a company. So usually, they will try to keep by the original owners a majority old of around 51%, or at the very least more of a percent then any other investor. When you have tens of thousands of people dropping $100 each, you can have a much lower controlling interest required. Instead of owning 51%, you may get away with only 21%. Wefunder even can prevent an individual share purchaser from buying over a certain amount of stocks. Which is good, for the original owner. It is kind of good though for the fan crowd investor. You love the company because of their vision, this allows them to take less risk, but keep the company on track.
Now if all the investors band together, and vote against your interest as a pool, there is still not a lot you can do.
So Should You Wefunder Companies?
I personally say yes. In fact I have done two companies.
I couldn’t help but get in on the ground floor of this company. We here at Nerd News Social love movies, comic books, and tv shows. So how could I not want to be a shareholder of a movie studio, especially one who focuses on representing their fan based owners. We’ve done several articles on them in the past, so check those out Here if you want to know more!
Lost Spirits Distillery is breath taking, they are a unique, and stunning. We love them, we are obsessed with them, and when they announced their Wefunder, we jumped at the chance to back them. Especially having first hand knowledge at how they do what they do, and how amazing their product is. If you want to see our prior articles, and soon to come out future posts, find them Here!
Any Cool Active Wefunder Campaigns?
We haven’t done our full due diligence, but these are a couple companies we see are currently running campaigns, and might tickle our followers fancy.
Galactic Adventures Escape Room
They are opening their first location in Orlando, Florida, and have shareholders from Star Trek, like Walter Koenig. They currently have sets and actors for the escape room business that will help bring in the crowds. In the long run, they want to make multiple rooms, based on licensed films & shows.
Amplified Ale Works
First starting off as a Mediterranean restaurant, they then shifted to their community and environment, becoming a brew house that showcases local musicians in San Diego, California. One of the cool factors is that crowd investors will gain profits from the company, and interest, until their investment is paid back 1.5x, while still keeping their profit share based on their shares. That’s incredibly generous! They need this captial though specifically to open their third beer garden for thir business.
So Go Out, Make Good Choices, And Get Investing In Companies You Believe In, Here!