Have you always wanted to try being a venture capitalist but couldn’t afford its high risks? Do you also want to feel useful, knowing that part of your capital is acting as a catalyst for social good? Then micro investing might be just for you! Almost non-existent just a few years ago and admittedly still in its introductory stage, this form of investing has been growing rapidly in recent years and may be worth a look.
As with any new and rapidly developing investment model, micro investing is relatively vague and not easy to define. However, it is often associated with the concept of crowdfunding.
Made widely known to the public through the 2012 legislative debate over the JOBS Act (JOBS is an acronym for Jumpstart Our Business Startups), crowdfunding is the practice of funding an idea or project by raising many small amounts of money from a large number of people.1 This is typically done via the Internet and can be used to support a wide variety of projects. Crowdfunding websites such as Kickstarter, Indiegogo, RocketHub and others provide potential investors with thousands of ideas they might connect with and in which they can make small investments.
Just browsing through the different projects can be a lot of fun. Crowdfunding websites typically focus on raising funds for creative projects and list them generally by category, which can range from Art and Dance to Publishing and Technology. But if helping just one individual or a small group of people isn’t enough, other crowdfunding websites, such as MicroPlace, may offer something different. This PayPal affiliate advertises itself as “a brokerage platform where US individuals can invest in companies creating positive social impact in the US and abroad and earn a financial return”.2 All projects on MicroPlace fall under the category of impact investing and are focused on developing communities, supporting women, providing affordable housing, etc. At the time of publication of this article, the minimum acceptable investment is $20. However, if one is really serious about his venture capital aspirations, MicroVentures, which connects angel investors willing to commit anywhere between $1,000 and $50,000 and startups, might be the right choice. And while returns might never match those of an actual venture capitalist, risks are also much lower. After all, the key word is “micro.”