Crowdfunding and companies

THE CHARACTERISTICS OF INVESTMENT

Investing in an unlisted company has definite characteristics:

• A high potential for economic return, but also a high potential for risk if a diversified portfolio in companies and sectors is not created
• It is medium- to long-term: some companies need time to acquire enough stability in the market to allow them to be acquired and/or to be listed on the stock exchange.
• It is illiquid: the lack of a secondary market where to buy and sell the shares makes it complex to convert the investment made into cash, as it is necessary to privately find someone willing to buy the stake or wait for the occurrence of the so-called "liquidation events" (stock market listing or company "exit")

LIQUIDATING THE INVESTMENT

Shares are transferable through 3 ways:

- Sale: as of today, there is no secondary market for the sale of shares, which makes it difficult to do so independently as the search for a buyer and the involvement of a notary are the responsibility of the investor. The situation changes if (where available) the investment was made with service of Rubrication.

- Company Exit: the acquisition of the company by an interested party, who buys all (or most) of the company shares.

Shareholders can take advantage of the right to sell their shares on the same terms bargained for by the majority shareholders (so-called right of co-sale); this allows them to take advantage of bargaining power that the minority shareholder could not otherwise have and to obtain the highest possible sale price, maximizing their profit.

- IPO: The possibility of the company going public on a stock market (the so-called 'IPO'). In this case, the shares held become shares and can be freely traded on the stock market.

OPTIMIZING THE 'INVESTMENT

To reduce risk and maximize the potential for economic return, we can:

1. Invest in companies with the greatest potential

2. Create a diversified portfolio

Mamacrowd identifies, from all those that apply, the projects that are most likely to be eligible for funding. How? Thanks to a team of specialists who check all the elements of the project: product, capacity and composition of the team, market potential, validations obtained from the market, involvement of institutional investors or prestigious supporters, presence of patents, scalability of the business, etc., finding their reasonableness.

Diversification is the distribution of capital that we have decided to invest on several projects, belonging to different sectors, rather than only on one.

Diversification allows us to spread the risk, taking into account that a part of our portfolio of companies may not generate income.

Even a few successful cases are enough to generate a significant economic return in our investments as a whole, thanks to the exponential growth in the value of the shares of certain companies.