Investments are made with other people’s money, usually financial institutions such as banks and insurance companies. Investments can be borrowed, but typically have to be paid back.
Investments in stocks and shares are usually held in a stockbroker’s or bank’s investment services. Investors use companies to manage their investments.
Why should I use crowdfunding?
Costs and risks have always been the major reasons that individuals have been reluctant to invest. The rise of internet lending has also decreased trust in the investment sector. It is widely accepted that professional financial services reduce risk by offering higher levels of returns and increased levels of professional support.
Crowdfunding, on the other hand, uses finance to overcome cost and risk. The risks of crowdfunding are the same as investing in a publicly listed company.
Investors should ask themselves why they need to invest. Would they invest with the same or similar investments if they did not need the returns?
This data could be problematic for a club like Everton in its attempts to recruit top players on finance. A younger, less experienced, promising player might be worth a big financial commitment but such investments might be less successful than planned. The next level of young talent from wealthy families may be less of a priority for a club like Everton.
Type of financial activity
Finance and recruitment may be two very different types of investment but finance plays a role in the recruitment process as well. Many agents work on commission from the recruitment of players. The commission they earn is dependent on which club a potential signing signs with and how well that player performs with the club. One of the most successful footballers of the last decade may have struggled to find a long term contract in England, and ultimately earned his last significant signing bonus on a contract in Spain. While he may have received a significant fee for his services, the finance that finances that fee may not have flowed into the club’s finances as intended.
Recruitment in the Premier League may be more like a hedge fund where the outcomes are often more complicated and uncertain. The recruitment of players like Sanchez and Coutinho has been heavily scrutinised. The next major signings, with longer histories in Europe and playing in the top leagues, may attract less scrutiny. Some of the players listed in the table may be off limits to Everton simply because the club is not willing to pay the inflated fees demanded for the players.
Football finance is complicated and complex. There are many additional questions left to answer and much more work to do before the first season in the Premier League is completed. There are some questions on whether finances can drive success on the pitch. The Premier League may not be an environment where clubs are likely to achieve that success.
Summary
Being able to raise finance is one of the fundamental challenges of investment, and yet the benefits to businesses, the economy and society as a whole are huge. Crowdfunding offers innovative businesses the ability to raise finance at the most favorable rates, for the most favorable terms.
And as a company grows, with the benefit of such investment, you can hire more people, expand your office space, generate more jobs and pay more tax.
Here at the Telegraph we are proud to have introduced crowdfunding to the UK in 2012, and to have facilitated more than 400 investments of £5,000 or more.
Since 2012, we have invested in over 250 companies with projects ranging from solar power, medical devices and technologies, to sports equipment and holiday travel.
We also work hard to provide educational tools, resources and links to quality information about investment and business investment.
If you have a question about investing in the crowdfunding market, give us a shout via the contact form and we’ll take it to the experts.
Investing in the right thing
Investing and giving money to finance projects is not as straightforward as many people assume.
You need to know what to invest in, what you are investing for, and also the risks involved.
With such a large number of different people offering investment opportunities, you need to do your homework and research before investing in any business.
