In September of 2013 the JOBS Act of 2012 went into effect, allowing private fund managers to execute marketing and sales campaigns. For the previous 73 years fund managers were legally prohibited by the Securities And Exchange Commission, no matter what the return on investment, from making any mention of the existence of their offerings. The public had to seek out investment in funds in order to make a direct investment. So, for decades the only investment advertising seen in the United States was for investment managers who served as intermediaries between funds and investors.
Investment is important for digital development. Many small online businesses have opportunities to become more substantial businesses if they are able to find financial support. So far what that has meant is the company had to have such a big idea that it was worth pursuing angel investors and venture capitalists. But what about the smaller online business that started out as a hobby or an interest of the person who developed it. For example a blog. There are more and more blogs that become high yield properties for their owners even though their overall revenue stream remains under or around a million dollars.
Blogs that produce ten to fifteen thousand dollars a month are not uncommon. But the owners of blogs this size generally don’t think in terms of investment as a way of growth. The investment is usually made in sweat equity by the owner. Occasionally, however, opportunities arise for these blog owners to up their game. For example, if a blog owner comes upon a software idea that uniquely suites his or her audience’s needs, there is the possibility of significantly growing the blog’s revenue stream. But if the owner isn’t a coder, the software development could be prohibitively expensive. Up until now, the options were to look for crowd funding or a partner with some money. But what if setting up a fund around the blog was possible? Well, it now is.
High Yield Online Investments
Does this type of fund make any sense? Hedge funds thus far have not been structured around niche blogs or other online platforms. But let’s face facts, alternative investment vehicles are increasingly attractive to accredited investors as the traditional investment world continues to produce low yields and stories of corruption.
There are new circumstances and new opportunities for both investment programs and digital properties of modest size. The two may find ways to mutually prosper. Many hedge funds use an equity arbitrage strategy and the arbitrage could be around the growth of an online property or platform. Right now, however, any new investment arrangement has to overcome a very skeptical investor marketplace. Wall Street has sullied the waters so badly that all investment vehicles are subject to intense scrutiny. Maybe that’s actually an advantage. If successful 506 Reg. D funds (hedge funds) are going to become a part of the expanding world of modest-sized, niche, digital platforms, then let it begin with prudent and workable financial vehicles. Sloppy, reckless and incompetent investment funds will only impede digital growth in modest-sized digital niches.
As the alternative investment space expands due to new circumstances offered by the JOBS Act of 2012, advertising of investment funds will require a community of financial managers to foster confidence and faith among investors. Thus far online growth has been a wild West sort of expansion. Digital pioneers have rushed in usually at their own expense, attempting to find the rewards of a do-it-from-home business. That doesn’t have to stop, but the next step of growth is where things are likely to change.
In order to attract investors a business has to look like, smell like and actually be like a working successful business. Most online success stories already involve good business practices. It’s one thing to start an online business from home, it’s quite another to make it grow into a consistent money winner that becomes a full-time enterprise. To do that takes business skills and integrity. As investment takes hold in the second level digital businesses, they will require conscientious, honest and competent managers that prove they can show a respectable return on investment in both the funds and the modest-sized digital businesses.