While remote investing has long been popular with Millennials, Covid-19 is leading other generations to embrace this method as well. In fact, with the epidemic changing how we live and work, perhaps permanently, online platforms could become the preferred option for a majority of investors.
Q1 2020 hedge fund letters, conferences and more
Four Remote Investing Trends
Below are four remote investing trends to keep an eye out for in a post-coronavirus world:
Vetted Investment Opportunities
Although online platforms catering to self-managed investors have existed for some time, accredited and other sophisticated investors are increasingly looking online for vetted opportunities. In response, a number of platforms now offer the ability to come in alongside an already vetted investment.
Long-time pioneers in this category include OurCrowd, an equity crowdfunding platform that enables people to invest in global startups and receive VC and institutional co-investor terms. Similarly, iAngels gives accredited investors the ability to co-invest with angel investors in startups. However, these companies emerged in a pre-coronavirus era, and our new world requires more adapted online experiences for all generations and types of investors.
The bottom line is investors want access to information, along with relevant and in-depth data, before deciding whether to buy or sell an asset. In the past, they may have been hesitant to invest online, but the coronavirus epidemic is expediting the move to online investing. In turn, the desire for more visibility, liquidity, and knowledge to make good investment decisions is spawning new platforms to meet their needs.
Real Estate Crowdfunding
When the passage of the JOBS Act legalized equity crowdfunding, real estate was an early beneficiary, but many of the platforms that emerged in this sector were geared towards non-accredited investors. A pioneer and still one of the largest of these companies is Fundrise, which allows anyone to invest in qualified real estate offerings regulated by the SEC for as little as $500. Competitors to Fundrise include Realty Mogul, which provides access to institutional quality investments, as well as CrowdStreet, which focuses on commercial real estate investment opportunities.
A majority of accredited and non-accredited real estate crowdfunding platforms provide information on their investment properties, but most do not have such increasingly sought-after online tools as videoconferences, webinars with company leaders, and in-depth research on where the market may be headed.
Alternative Online Investments
For more high-risk investors, in particular Gen Z and Millennials, trading in cryptocurrencies has become a popular alternative to stocks and other traditional investment options. However, a recent study from The Economist Intelligence Unit found that while 64 percent of respondents use digital payments for a majority of their purchases, cryptocurrencies were the least preferred method.
Agriculture is another growing sector for online investing, with new platforms including AcreTrader and Steward emerging in recent years. AcreTrader connects individual investors and others to farmland available for purchase. Steward, which focuses on enabling people to invest directly in sustainable farms, offers a variety of investment options including in a diversified portfolio of farm loans, individual farm loans, or Steward itself.
The Power Of Blockchain
Blockchain technology is becoming an important tool in the online investing world. According to an analyst at Technavio, “blockchain-based crowdfunding is gaining immense popularity as it decentralizes the funding model while eliminating the risks associated with data security.”
Everflow, a network of digitalized exchanges, reduces illiquid real estate assets into small digital units on blockchain. The company provides accredited investors, family offices, mutual funds, and other investor categories with direct access to markets that were previously only available to institutions.
Similarly, SolidBlock utilizes real estate asset tokenization – the convergence of real estate investing and blockchain technology – to transform real estate into a tradable financial product. This gives investors the opportunity to buy shares in a property without owning the entire building.
Remote Investing: Conclusion
The technology and government regulations that enable online investing to be efficient and secure have existed for some time. However, as people become increasingly cautious about where they put their money in the current environment, the desire for more sophisticated investment platforms will continue to grow. To satisfy the needs of these investors, online platforms need to provide more in-depth company research and market knowledge, in addition to exclusive access to the most promising opportunities in a variety of sectors.
If the recent pandemic has taught investors anything, it is that they do not have to meet with an advisor in person to make an informed financial decision. With access to the right information and professional tools, they have everything they need to invest with confidence in a post-coronavirus world.
About the Author
Oded Eliashiv is Managing Partner of B-Seed, a New York- and Tel Aviv-based investor in early-stage technology firms. He is also Principal and Founding Managing Partner of BuiltUp Ventures, which invests in innovative, early-stage Israeli proptech companies. A longtime entrepreneur, he has founded and led multiple startups including EPOS, a provider of advanced digital positioning technology to the PC peripheral, notebook and touch-screen markets.
