Just how dangerous is it in the new world of crowdfunding?

It’s obviously not for widows and orphans, but the risks aren’t as straightforward as you might think, says David C Stevenson.

Over the last few years the alternative finance sector which incorporates everything from equity crowdfunding' through to peer-to-peer loans( P2P) has had a fantastic press. Literally thousands of articles have extolled the virtues of the sector as a disruptive challenger to the broken' conventional finance sector.

Many of these articles have very sensibly mentioned the obvious risks involved with this kind of investing. In particular, that these investments aren't protected by the government's Financial Services Compensation Scheme (FSCS). However, I think it's fair to say that the discussion on risk hasn't been quite as detailed as I think it needs to be.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.