by: Grow VC Group
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Not until too long ago, the private investment market had been shrouded in a cloak of secrecy, brought about by the guarded nature of the industry. Precisely because of the lack of access to accurate data, decision making relied more on intuition or ‘gut instinct’. Now, however, as the market starts to transition online, a more systematic approach to private company investment is taking place as it is more easy to collect and analyse large quantities of data relating to investments and investor behaviour.

Today’s post, taken from our Democratising Finance, Alternative Finance Demystified Report, will focus on the importance of data and marketplaces, and their emerging role in guiding the decision making process when it comes to investments in the private market.

Traditionally, private company investment has remained a closely guarded market, accessible only to a small number of high net worth individuals with access to proprietary personal networks. As alternative finance opens up the marketplace to a wider number of investors, democratising finance, so too will it enable investors to make decisions in a more systematic way.

The emergence of online marketplaces and platforms has made it easier to collect and analyse large quantities of data relating to investments and investor behaviour. In turn, this means that institutions and individuals can analyse that data, performing research and due diligence in a more scientific manner, paving the way for a systematic approach to private company investment.

The number of alternative investment platforms has significantly increased over the last few years. This poses challenges to investors of how to navigate such a large number of platforms to find the right investment opportunity. Coupled with the increasing geographical spread of these platforms, and the varying stages of the funding cycle that they operate at, the alternative finance sector is becoming an increasingly complex market for investors.

Similar to what has occurred in other markets, such as ad-tech, since the rise of the internet, traditional finance looks poised to move to online marketplaces that reduce these complexities. On the equity side of alternative finance specifically, marketplaces help promote discovery of opportunities, bringing investment opportunities across geographies, sectors and company types to one centralised location.

Debt focused crowdfunding marketplaces are more focused on efficiency due to higher volumes and higher traditional borrowing costs, and are someway in advance of their equity focused counterparts.

Read the whole article on DealIndex Blog.

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Grow VC Group The Grow VC Group is the world leading, global pioneer of securities crowd funding, peer to peer marketplaces, new investment models and global business development. Established in 2009, the Group has developed new investment models on six continents and continues to innovate the global market.

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This entry was posted on Monday, October 19th, 2015 at 1:00 pm and is filed under Business Updates. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.