There is an old saying, “You need money to make money”. This saying can be translated to “The more money you have, the more money you make”. Which is not something you often think about but you notice to be true when you read it. You see, the way everything works is skewed like that, and we inherently know that.
Take this example, say you know for a fact, an undeniable fact, that if you buy apartment “A” right now, it will double in value tomorrow. Would you buy it? Well off course you will. Now the question is how much does the apartment cost? Let’s say it costs 20,000,000 AED to buy. A rich person wouldn’t even blink and would go to buy it instantly, after-all tomorrow they will have 20,000,000 AED in profit.
But can an average person make the same decision given the chance?
No, because they simply don’t have the funds to do so.
And that’s the point. This is exactly why the rich get richer, while we keep running a marathon on a treadmill wondering why aren’t we moving forward. So, someone had to come up with a solution.
The idea of crowdfunding is simple. Instead of relying on a few wealthy people to each make a large investment, we instead rely on many small dollar investments from many people (the crowd) to satisfy the investment.
What this does is open up opportunities – that were previously only available to a select few – to the market in general and have them participate in the winnings (or losses, investing still holds risk) from the asset.
So instead of having 1 person buying the apartment at 20,000,000 AED, we can now have 2,000 people buy 2,000 parts of that stock at 10,000 AED each. This would also mean that when the real estate price increases, each of these smaller investments gains by a proportional amount.
The idea is not revolutionary by any means. Think about how a single company is split into multiple stocks, so that many people can be shareholders. We are just taking that idea further and applying it further down the line and onto different asset classes.
The main goal of this process is to give people access. Rich people shouldn’t be the only people with doors opening up for them. This is for the underdogs who deserve a fighting chance.