How Does an Investor Make Money With Equity Crowdfunding?

Alon Hillel-Tuch, a co-founder of the crowdfunding platform RocketHub, explains the four ways that an investor can make money off of an equity crowdfunding asset.

learn more about Catherine Clifford

By Catherine Clifford

Opinions expressed by Entrepreneur contributors are their own.

Investing in startups is crazy risky. The chance of sinking money into a startup that runs for a bit, putters out of gas and dies without ever getting your principal investment back to you -- let alone any return -- is very high.

There is, however, a chance of making a very attractive return on your investment. Chances are, if you do see a return, it won't be the sort of Facebook 2.0 overnight wealth that fuels Silicon Valley pipedreams. Even still, investors can indeed be rewarded handsomely for taking a savvy risk on the right startup.

How does that work, though? We answer that in our fourth episode of Crowdfund with Cat. In particular, what needs to happen for an investor to make money on an equity crowdfunding investment?

Alon Hillel-Tuch, a co-founder of the crowdfunding platform RocketHub, breaks the language of equity crowdfunding investing down for us into simple, easy to understand language. Promise.

RocketHub was acquired by entrepreneurship resource center EFactor a year ago. Since then, Hillel-Tuch has left and is now a partner at the venture building group, Stacked VB.

The rules and regulations surrounding equity crowdfunding changed -- in pretty significant proportions -- on May 16. For a comprehensive dive of how the rules are changed, check out our series of written stories on equity crowdfunding (linked to below).

Starting May 16, Entrepreneurs Can Raise Money in a Whole New Way. Here's What You Need to Know.

An Entrepreneur's Essential Guide to the New Wild West of Funding Opening on May 16

Your Guide to the High-Risk, High-Reward World of Investing in Startups When Fundamental Finance Law Changes Go Into Effect May 16

Which Entrepreneurs Will Benefit Most From the New Era of Crowdfunding?

Next Generation Crowdfunding Starts May 16. Expect Opportunity and Growing Pains.

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

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