The 5 Reasons Why People Invest

By: Erick Bzovi

A month ago something rare and refreshing happened in Detroit.

David Kirkpatrick, author of “The Facebook Effect”, imported a vibrant assortment of tech titans into the Motor City for Techonomy. Jack Dorsey, Steve Case, and Tim Draper spoke to a packed audience of entrepreneurs, innovators, and business leaders all seeking to learn more about how technology is impacting the way business is being done today.

In between sessions, I interacted with certified badasses like Mark Hatch, CEO of TechShop, and Danae Ringelmann, founder of Indiegogo. Both shared their thoughts on the changes surrounding Venture Capital, The JOBS Act, and the advent of crowd-funding.

A fascinating take-away from my conversation with Ringelmann was learning about motives for why someone participates in a crowd-funding project. It’s much deeper than what you see at face value, and provides greater insight into why people put money or resources into any endeavor. Whether individuals are investing in startups, or investing in a crowd-funding project that sparks their interest, the core reasons why people invest remain relatively constant.

Ringelmann classified these as the 5 P’s:

  • For Passion; to create something with true desire.

  • For Participation; to be a part of something bigger than oneself.

  • For Perks; to receive something of value.

  • For Pride; to gain recognition.

  • For Profit; to make money.

Sadly, unless Sigmund Freud is your co-founder, psychoanalyzing investors just isn’t feasible (and is generally ill-advised regardless). Fear not, for there is a silver lining. With sites like AngelList, Kickstarter, and Indiegogo on the rise, transparency is just around the corner. Raising money is never easy but today, thanks to crowd-funding, knowing your audience has never been easier

~Erick Bzovi @ebzovi on twitter