Alternative financing and the power of micro-decisions

«Let your choices reflect your hopes, not your fears». This quote from Nelson Mandela, a man who had to make important decisions throughout his life, highlights the motivations that drive us when we make decisions. Even if we believe that only the choices of individuals, administrations and major companies are transcendental. The truth is that micro-decisions also have the power to change the world.

We make hundreds of decisions in our daily lives, from when we set the alarm to when we decide to turn off the television. Every step we take involves a micro-decision. However, many of them we make without reflecting since they respond to everyday life. For example, what we eat for breakfast or what means of transportation we use to get to work.

Beyond these small and, a priori, inconsequential decisions, we can find a broad panorama of micro-decisions that can impact our lives and society as a whole.

Thus, in terms of investment and financing, investors can make micro-decisions and support certain business projects rather than others. This is possible today thanks to the irruption of FinTech and the rise of alternative financing platforms such as Inversa Invoice Market.

Today we will explore the capacity of small savers to intervene in the future of society and the economy thanks to alternative financing. We will also unpack the potential of micro-decisions to transform the world.

Alternative finance empowers investors

Investment products and services are pillars of the traditional financial system. All banks have such products, which offer investors a return in exchange for investing their money.

However, investors are only involved in the initial decision. That is, whether or not to invest their money. On the other hand, they need more information on the companies financed with their money and cannot decide on the type of projects they support.

Various alternative financing forms, such as crowdlending and crowdfactoring, have changed this situation. Through online alternative financing mechanisms, investors have in their hands the ability to decide which products they contract and which companies they finance.

Moreover, in marketplaces such as Inversa Invoice Market, investors can consult all the information about the company they will finance. Its credit score, rating, name, and economic activity.

In this way, before acquiring an invoice, every investor knows what the company will provide with liquidity and, therefore, what support is like.

The information helps us to choose

In the analog era, we had very limited access to information. However, this has changed with the spread of the Internet and the digitization of companies and households. As a result, we can obtain data on all issues and subjects with a couple of clicks.

Information makes us freer, and this also applies to the financial sector. Opacity is a thing of the past; investors can now make micro-decisions about what to do with their money based on a very high level of information. This has several benefits:

  • The scoring of companies is more accurate. Risk analysis is more realistic.
  • Information banishes intuition in decision-making
  • Investors can have a broad overview of the companies and businesses to which they will provide financial resources.

Cutting-edge technological developments and solutions from FinTech companies such as Inversa make it possible to process the entire flow of information and offer it to investors synthetically and visually. In such a way that a person wishing to invest in an alternative financing platform can choose based on accurate and reliable information.

Micro-decisions in the investment arena can have a big impact

The Crowd concept and the concatenation of micro-decisions

One of the main keys to alternative financing modalities, from crowd equity to crowdlending, lies precisely in the first of the words that make up these concepts: the crowd. Or, to put it in English: the crowd.

A crowd of investors can drive a business project through alternative financing platforms. In other words, the sum of multiple micro-decisions takes on a significant dimension, providing a company with the liquidity it needs to make investments or meet its operating costs.

A person who invests 100 euros in financing a company’s invoice will not, on its own, have a major impact on its operation. However, if 50 other people make the same decision, the company can finance its invoice and obtain the liquidity it is looking for. This can help it consolidate its position in a highly competitive market.

Thus, the concatenation of micro-decisions can impact the economy and society that, on the other hand, a single isolated choice could not have.

This is why it is so important for the success of alternative financing to capture the attention and interest of a growing multitude of investors interested not only in getting a return on their money but also in making an impact from their micro-decisions.

It is no longer return and risk that matter

Indeed, profitability remains a key factor every investor considers before choosing an investment product. The same applies, of course, to the risk associated with the transaction. But these are no longer the only determining factors.

With each passing day, more and more people want to be able to make micro-decisions about how their money is invested. Or, to put it another way, to ensure that their choices impact the real economy and the business and social fabric.

So the entities that market investment products. Whether they are in the traditional financial sector or we are talking about FinTech focused on alternative financing. They must answer three questions:

  • How much is the investor going to earn?
  • What is the risk they are taking?
  • What will their money be used for?

A new investment trinomial thus emerges profitability – risk – responsibility (social and environmental).

This implies a paradigm shift. Since many investors prefer to finance companies with a lower score or products that offer lower profitability in exchange for the micro-decision they make having a positive impact on the local economy, the sustainability of the planet or other issues of interest to them.

Micro-decisions to transform the productive fabric and society

Because of all that we have explained in this article, we can draw several conclusions:

  • More and more people are interested in making micro-decisions around the investment of their savings.
  • Crowdfactoring, crowdlending or crowdequity open the door for individual micro-decisions to have a greater impact, bringing together interests.
  • Alternative financing platforms facilitate the possibility of choosing investment products taking into account, in addition to profitability and risk, the characteristics of the companies that will benefit from the operation.
  • Sustainability is a central issue in public opinion, but ESG criteria (environmental, social and governance) show the growing importance of social responsibility in the corporate sphere.
  • It is not only the major players in the economic system that can undertake transformative actions. Micro-decisions have an immense potential to generate a positive impact, support companies in the real economy and build a productive fabric that generates quality and more sustainable employment.

Alternative financing is a fundamental tool for small investors to make micro-decisions based on their hopes and desires to build a better world. Without, however, giving up the opportunity to make the most of their savings.

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