MicroVentures Review: Invest in Startups With Only $100

MicroVentures offers “venture capital investing for everyone,” letting you invest in private companies vetted by their investment team. The platform periodically offers interesting renewable energy and other green startup opportunities. Keep reading to learn if you should invest.

SustainFi November 11, 2021

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Rating: Good (4.0 / 5)

Summary

  • Investment Type: convertible notes or preferred shares
  • Minimum Investment: $100
  • Liquidity: none
  • Open to non-accredited investors
  • Investor fees: none for Regulation Crowdfunding offerings

Pros

  • Low minimum investment
  • Curated investments
  • No investor fees
  • Open to non-accredited investors

Cons

  • High risk
  • No public track record
  • Long-term investments you can’t sell for a long time
  • Limited opportunities available

What is MicroVentures?

Founded in 2009 and based in Austin, Texas, MicroVentures is an equity crowdfunding platform. It offers equity crowdfunding for non-accredited investors, private investments for accredited investors, and a secondary trading platform, which is available to accredited investors.

MicroVentures was founded by Bill Clark, who previously worked as a credit manager for Dell and PayPal. Over the past decade, MicroVentures raised over $300 million for over 700 investment opportunities.

Although the site lists few options at any given time (only eight in November 2021), they sometimes offer interesting renewable energy projects, such as:

  • Oscilla Power, a wave energy converter manufacturer
  • Renu Robotics, a developer of autonomous tractors for solar farm maintenance
  • Primo Wind, a maker of residential and commercial micro-grid solar/wind systems

Equity crowdfunding investments

Equity crowdfunding lets regular people invest in startups. Before the SEC’s Regulation Crowdfunding, lucrative startup opportunities were only open to the exclusive club of well-connected venture capitalists and other professional investors.

How does MicroVentures select the equity crowdfunding investments on its platform?

Unlike most equity crowdfunding platforms, which try to list as many startups as possible, MicroVentures says that it carefully vets the companies on the platform. The due diligence process includes assessing the following:

  • Product or service offering
  • Business model
  • Intellectual property
  • Product roadmap
  • Leadership team
  • Addressable market
  • Competitive landscape
  • Regulatory environment
  • User traction
  • Historical and projected financials

Although MicroVentures is industry agnostic, they prefer businesses with an emphasis on technology or those with consumer-facing products.

However, possibly due to more strict diligence, the platform offers few options at any given time. In November 2021, only eight options were available.

Besides, MicroVentures has never published its track record, so we don’t know how good its diligence process has been. Most likely, because crowdfunding is so new and startup investments take a while to mature, it is too early to tell.

What are the MicroVentures investment terms?

Types of investment. Most investments take the form of preferred stock or convertible notes, though more options can be available.

  • Preferred stock. Like common stock, preferred stock gives you a stake in the company. You also get certain privileges, like the right to priority repayment if the business is sold or goes bankrupt
  • Convertible notes. Convertible notes are a form of debt that converts to equity if the company hits a certain milestone, such as raising more capital

Who can invest? Equity crowdfunding options are open to all U.S. investors over 18. 

Minimum investment. The minimum investment is $100.

Fees. The platform doesn’t charge investors fees for equity crowdfunding offerings. This is a welcome change from many other platforms, some of which charge 1-2% of your investment. Instead, MicroVentures charges the businesses listed on the platform.

Liquidity. It is unlikely that you will be able to sell your investment. According to MicroVentures, the average exit for a startup is seven years but can often be longer. Besides, you must hold a Regulation Crowdfunding offering for at least 12 months.

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How much can I invest?

Crowdfunding investments are risky, and the government regulates how much you can invest in any 12-month period. The limits only apply if you are not an accredited investor. 

To be classified as an accredited investor, you generally need to make $200,000 ($300,000 for couples) a year for two years or have a net worth of over $1 million, excluding your primary residence. 

If you are not an accredited investor, under Regulation Crowdfunding, you can invest at most $2,200 if your income or net worth is less than $107,000. 

If your income and net worth are greater than $107,000, you can invest 10% of your net worth and annual income, whichever is greater, up to $107,000. 

Accredited Investing

MicroVentures offers early and late stage options to accredited investors. The offerings generally fall under what is known as Regulation D. The platform’s claim to fame is past offerings of super-successful startups like Slack, Uber, Lyft, Airbnb, and SoFi. You need to sign up for an account before you can access any of the opportunities.

Unlike equity crowdfunding opportunities, accredited investing options will cost you. Typical fees include:

  • Placement Fee (one-time): 5% of your investment paid upon closing
  • Management Fee: 0.50% of your investment each year until the exit event; two years are charged upfront. After that, management fees accrue but are not charged until there is a distribution
  • Carried Interest (one-time): 10% of profit after you get the money you invested back. This one-time fee is not applied until there is a liquidity event (e.g., the business is sold). If there is a liquidity event, you get your money back plus 90% of any remaining profits. MicroVentures gets the remaining 10%
  • Offering Costs (one-time): 1.5% of your contribution paid upon closing. This fee covers the costs related to establishing, regulating, and reporting for the offering

Secondary Trading

MicroVentures runs a platform that connects buyers and sellers of late stage stock in private startups. To buy stock, you need to be an accredited investor.

Is MicroVentures safe?

MicroVentures is a FINRA-registered broker-dealer, and it’s got a fairly long record for a startup.

However, investing in startups is extremely risky. In fact, most startups fail, and your chances of finding the next Uber or Palantir are slim. And if the investment does work, you will likely have to wait for years. Besides, alternative investments like equity crowdfunding are not FDIC-insured and may lose value. So only invest what you can afford to lose.

MicroVentures currently has a B- rating from the Better Business Bureau, though there aren’t many reviews.

💰 Takeaway

Investing in startups can be fun and even lucrative. MicroVentures periodically offers cool green opportunities and charges no fees to investors for its equity crowdfunding offerings. However, we recommend only investing what you can afford to lose.


🔔 Looking for other ways to invest with impact? Check our guide to investing in communities and small businesses.

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