The most overlooked detail in startup investing

By the time you've found a startup to invest in, you've probably already overlooked a small detail.

The devil is in the details - even a 1% difference can make a huge impact over time.

Okay so small details matter. What small detail are we going to look into today?

Fees.

Investor fees are (sometimes) an important differentiator when it comes to investing.

I'm going to show you the BEST investing platform for your needs.

But first - some links from around the web:

• 💼 Want to speak to 10+ founders a day? Wefunder is hiring an intern to do just that (LINK)

• 3⃣ Founders face two options: continually raise VC money and grow 100x, or bootstrap and inch forward. What if there was a third way? (LINK)

• 🥊 You can now own a piece of Floyd Mayweather's fitness brand (LINK)

• 🧁 This startup will send you a box of very NSFW pastries if you invest $1,000 (LINK)

• 🟦 Republic rolls out a membership starting at $199 that unlocks a investing bootcamp, early deal access, founder pitches, and more (LINK)

(FEE)L THE BURN

Fee Fi Fo Fum…

Each startup investing platform charges transaction fees for investments made on their platform. They're typically within the 2-5% range. The fees vary by payment method as well, with credit cards often being the most expensive.

Further complicating it are the minimum and maximum caps some platforms place on their transaction fees. I've compiled fees for the top 5 equity crowdfunding platforms below:

Now let's assign some investment tiers and see how these rates & caps play out. This chart will first look at example fees for ACH payments.

BEST FOR INVESTING….

• $100: Dealmaker leads, but all are extremely close

• $500: Republic/Wefunder/Dealmaker

• $1,000: Republic/Wefunder/Dealmaker

• $5,000: Republic/Wefunder/Dealmaker

• $25,000: Wefunder pulls away significantly here, due to its $100 cap on fees

Overall, Dealmaker, Republic and Wefunder are extremely competitive for ACH payments at all investment tiers. Their low rates, coupled with their maximum fee cap gives them an edge here over all other competitors. In many instances, StartEngine + Issuance fees are nearly double their competitors.

Now let's take a look for those paying with a credit card:

BEST FOR INVESTING….

• $100: StartEngine, and all five are extremely close

• $500: Republic

• $1,000: Republic

• $5,000: Republic

• $25,000: Republic pulls away significantly here, due to its $300 cap

Republic is the clear winner here, they're either highly competitive or the best at every investment tier. Compared to its favorable showing in ACH payments, Wefunder is actually fairly expensive for credit card payments due to their high rate and absence of a cap.

Payments made via credit card are subject to higher fees across the board - this is to offset the fee that the credit card companies themselves charge to the platforms.

Overall, I'd stick to ACH payments for your investments, unless you are using the credit card to reach some high-reward welcome offer.

I also want to note that unless you're investing $25k+ the differences can be small. And while small differences can compound over time, I'd spend more time finding the startup that fits your investment criteria than sweating over fee differences.

Wow, I really walked back the opening paragraph - but let me explain.

With startup investments, you're aiming for any individual company to provide a massive return, and the fee differences pale in comparison to finding the right startup.

If you get a 50x return on a $1,000 investment, the $10 fee difference means nothing.

But when starting your search, it might make sense to begin with the platform that has the lowest fees for your investment amount & payment method.

Sharpen your pencil on deal selection, valuations - and once you've found the right startup stick to ACH.

This painting sold for $8 million and everyday investors profited

When the painting by master Claude Monet (you may have heard of him) was bought for $6.8 million and sold for a cool $8 million just 631 days later, investors in shares of the offering received their share of the net proceeds. 

All thanks to Masterworks, the award-winning platform for investing in blue-chip art. To date, every one of Masterworks’ 16 sales out of its portfolio has returned a profit to investors. With 3 recent sales, investors realized net annualized returns of 17.6%, 21.5% and 35%.

How does it work? Simple, Masterworks files each offering with the SEC so that nearly anyone can invest in highly coveted artworks for just a fraction of the price of the entire piece. 

Shares of every offering are limited, but readers can skip the waitlist with this exclusive link.

Past performance is not indicative of future returns, investing involves risk. See disclosures: masterworks.com/cd