Investor protection: not just avoiding fraud

There’s a lot of talk in the crowdfunding community about investor protection. Folks in the regulatory community and in the press are focusing on the potential for fraud. And at CrowdCheck we absolutely agree that preventing fraud is vital. After all, we were founded with the mission of avoiding fraud.

But you know what? Investor protection isn’t just about avoiding fraud. In fact, fraud-avoidance might not even be most important element of investor protection. Investors have the most protection when they are armed with information. Not just information that allows the investor to recognize and avoid fraud, but substantive information to compare investment opportunities: information about the risks and potential that crowdfunding presents; information about the nature of a crowdfunding investment; and information about the specific company in which the investor might be interested in investing.

That’s where CrowdCheck comes in. In addition to establishing that a business seeking crowdfunding is what it claims to be and is doing what it claims to be doing, CrowdCheck walks the entrepreneur through all the statutory and regulatory disclosure requirements, letting the entrepreneur present all the most important facts about her business, and delivering due diligence to investors. Armed with this information, the investor is able to make what the SEC calls “an informed investment decision”. From the investor’s point of view, there are no surprises. The investor understands and accepts all the risks of crowdfunding and the realities of investing in small businesses and goes into the deal with reasonable expectations. And because there are no surprises for the investor, there are no nasty surprises for the entrepreneur or the portal she lists on either. While aggrieved, a fully informed investor isn’t going to come to her later and try to claim that she withheld crucial information.

Information. Organized, understandable, relevant information that’s been checked out by professionals. It’s the best investor protection of all!

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