One of the forms of crowdfunding is stock investment type crowdfunding.
Equity investment type crowdfunding is an investment service that allows a large number of investors to purchase the shares of a venture company (startup) before listing in small lots and expect a large profit on sale when listing or selling the company in the future, so-called exit. It refers to that. For that reason, if the investing company does not exit, it will be difficult to generate profits.
Therefore, as of November 2020, I searched for a service that actually has an exit record from among the stock investment type crowdfunding services operated in Japan.
table of contents
- Achievements of each stock investment type crowdfunding site
1-1. Achievements of FUNDINNO
1-2. Achievements of CAMPFIRE Angels
1-3. Achievements of unicorns
1-4. Achievements of
eCloud 1-5. Achievements of GEMSEE Equity - Only FUNDINNO succeeded in exiting
- Precautions when investing in stock investment type crowdfunding
3-1. Knowing that there is a risk of bankruptcy
3-2. Invest from a long-term perspective
3-3. Since it is difficult to formulate an exit strategy, take advantage of the benefits of special treatment - Summary
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1. Achievements of each site of stock investment type crowdfunding
Let’s take a look at the achievements of each stock investment type crowdfunding service currently in operation from the data extracted from the website of the
Japan Securities Dealers Association .
1-1. FUNDINNO achievements
FUNDINNO is Japan’s oldest and most proven stock investment crowdfunding site . It is used by many companies that want to raise funds, and as of December 2020, there are 128 contracts concluded.
In addition, the offering amount is over 4 billion yen including stock acquisition rights type funds, and we have a top-class track record in domestic stock investment type crowdfunding sites.
Exits have been realized by Kampo Seiyaku Kenkyusho Co., Ltd. (current company name: Herbal Eye Co., Ltd.) in July 2019, nommoc Co., Ltd. in April 2020, and two other companies, for a total of four companies.
In March 2021, Ryukyu Asteeda Sports Club Co., Ltd. was approved for listing on the Tokyo Stock Exchange “TOKYO PRO Market”. This was the first initial public offering case for a company that raised funds through stock investment crowdfunding.
1-2. Achievements of CAMPFIRE Angels
CAMPFIRE Angel is a stock investment type crowdfunding platform operated by DAN Venture Capital Co., Ltd. of the CAMPFIRE Group, Inc.
As an angel investor, we can support startups with abundant future potential, from product development utilizing cutting-edge technology to manufacturing that attracts many fans and businesses that work on solving social issues. In addition, DAN Venture Capital Co., Ltd., which operates CAMPFIRE Angels, is a crowdfunding company certified by the Minister of Economy, Trade and Industry, so it has the advantage of being able to perform confirmation work for angel tax application applications by itself. ..
As of December 2020, the current recruitment record for CAMPFIRE Angels is five times, and the total recruitment of successful projects is 80.4 million yen. There is no record of exit.
1-3. Unicorn achievements
Unicorn is a relatively new equity investment crowdfunding site that went live in 2019 . Listed company ZUU Co., Ltd. holds a majority stake. The number of projects offered is gradually increasing, and it is a stock investment type crowdfunding site with high expectations in the future.
Unicorn has been recruited 14 times from 2019 to 2020, and the total amount is over 400 million yen. There is no exit record yet.
1-4. E-cloud achievements
In 2020, this e-cloud was newly introduced as a stock investment type crowdfunding site . As of November 2020, the number of applications has been two.
1-5. Achievements of GEMSEE Equity
GEMSEE Equity is a stock investment crowdfunding site operated by SBI Capital Base, which is part of the SBI Group, a major financial group .
Although it has not been outstanding yet, as a member of the SBI Group, we can expect high business performance and capital strength as a company. Currently, the recruitment record at GEM SEE Equity is only once in March 2020, and the recruitment amount is 28 million yen. There is no record of exit.
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Only FUNDINNO succeeded in exiting
As we have seen, only FUNDINNO has succeeded in exiting as of November 2020. Both of the two exits at FUNDINNO are in the form of share transfers, and the dividend is about 1.5 times the investment amount. So far, FUNDINNO has solicited more than 120 projects, but currently only two companies have succeeded in exiting.
Of course, listing a stock does not produce results in a short period of one to two years. In some cases, you may have to wait five or ten years. In the case of a company sale or stock transfer, the span will be a little shorter, but it is still common to think on a yearly basis.
It should be noted that Japanese equity investment crowdfunding has not yet achieved great results due to its short history.
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3. Precautions when investing in stock investment type crowdfunding
Equity-invested crowdfunding doesn’t make a profit right away. Therefore, it is necessary to know what to keep in mind before investing.
3-1. Know that there is a risk of bankruptcy
The first thing you need to know is the existence of bankruptcy risk.
As far as the company information on each stock investment type crowdfunding site is seen, you may expect that it will not go bankrupt easily because you are operating a groundbreaking business and making a profit. .. However, in reality, all the companies listed are in the stage of growth, and it is not possible to raise funds satisfactorily only with loans from financial institutions.
If the business you are working on fails, you run the risk of going bankrupt. Keep in mind that the risk of bankruptcy is by no means small, as it has limited capital strength compared to listed companies.
3-2. Invest from a long-term perspective
Equity investment crowdfunding is basically profitable for investors only after exiting. For that reason, it is not easy to make a profit in a short period of time.
Even in stock markets such as JASDAQ and TSE Mothers, which are relatively easy to list, it takes at least 5 to 10 years from the establishment of a company to its listing. Even if you invest in a venture company that is only a few years old and the business is successful, it will take time to improve the internal system, hire human resources, and increase capital for listing. Therefore, it is not easy to list.
Also, although the span will be shorter than listing, it is unlikely that the story will be decided immediately even in M & A. Once you have invested in a venture company through stock investment crowdfunding, be prepared to hold stocks over a span of several years. As such, it is not suitable for investors seeking immediate profits. It is also not suitable for those who do not have much financial resources.
3-3. Since it is difficult to formulate an exit strategy, take advantage of the benefits of special treatment
In stock investment type crowdfunding, it is basically impossible for investors to formulate an exit strategy, and it is left to the investee company. Because it is not listed, the acquired shares cannot be bought or sold on the securities market.
If you want to cash the acquired shares, you have to obtain the approval of the transfer of the shares from the investee company and then find the individual or corporation to buy from. Even if you ask the investee company to buy back the shares, it is unlikely that they will be bought back. Therefore, it is a prerequisite for investing that there may be no profit during the holding period.
However, for example, in the case of Fantastic Co., Ltd., which was solicited by Unicorn, there is a shareholder benefit program in which an Amazon gift certificate is presented to the invested shareholders.
Just as if you hold shares in a regular listed company, you will receive dividends and shareholder benefits, but only some companies will receive shareholder benefits on stock investment crowdfunding sites. If you want to enjoy the benefits of holding even a small amount of stock, why not actively select stocks that have such a preferential treatment system?
Summary
Equity investment crowdfunding has only been around for five years since it first appeared in Japan. For that reason, there are not enough exit achievements.
Due to the long span to exit and high uncertainty, it is not always a good investment method for anyone looking for an early profit or a high probability of generating a large amount of profit.
Conversely, it is also an investment method that can be expected to grow significantly in the future. If you have plenty of money to invest and can invest from a long-term perspective, it is a good idea to invest in stock investment crowdfunding with the aim of making a big profit. In that case, please make sure to confirm the risk of bankruptcy and the business development potential.
