Tuesday
May 24
2016

AIG to Sell Crowdfunding Insurance, Looking to Make Money Off Investors’ Worries

American International Group is giving crowdfunding a try. Not to raise money for startups, but to profit off investors’ concerns about being ripped off as they invest in small businesses through this new type of funding.

The New York company is set to launch what it is calling “Crowdfunding Fidelity,” an insurance product developed to protect investors on equity crowdfunding platforms against fraud.

In announcing the new coverage Tuesday morning, AIG noted that there have been few instances of fraud in the sector so far. But it said its new product would help to build investor trust to ensure underlying issuer trustworthiness.

“As a sector still in its infancy, equity crowdfunding platforms are only as strong as the confidence they instill in their investors,” said Lex Baugh, AIG’s president of liability and financial lines, in a news release.

Source: Wall Street Journal (link opens in a new window)

Categories
Investing
Tags
business development, crowdfunding, insurance