Welcome to Money for the Rest of Us. This is a personal finance show on Money.

How it works, how to invest it, and how to live without worrying about it.

I'm your host, David Stein, today's episode 350.

It's titled, Should You Invest in Startups on Equity Crowd Funding Platforms?

I recently got an email from a new member of Money for the Rest of Us Plus.

He wrote, Recently I was made aware of another investment option that intrigued me.

This is getting a piece of investments into Startup Businesses via investment platforms like Angel List,

Seed Invest, We Funder, and Republic.

I know this is a very risky investment arm, but I believe it is as risky relative to cryptocurrency.

What do you think about allocating 5 to 10% of your portfolio into multiple startups?

Let's say 10, via Angel List, for example, as an alternative to cryptocurrency.

Historically investing in startups was limited to institutional investors and very high net worth individuals.

They mostly didn't via venture capital funds, but in May 2016, the Title III of the Jobs Act outlined a way

that private companies could raise up to $5 million from all US investors.

And with that change in law, that has led to a number of new platforms that individuals can invest in startup businesses,

just like big institutional investors.

Some of these platforms require investors to be accredited, which means they have annual income of over $200,000,

or have a net worth not including the primary residence of a million dollars or more.

Now, however, some of these platforms don't require individuals to be accredited,

and we'll look at some of the criteria for that in a few minutes.

Venture Capital has been a successful strategy.

Since the late 1970s, 43% of initial public offerings in the US were backed by venture capital funds.

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