FundersClub: An online platform for making angel investments
thefundersclub.com
thefundersclub.com
These types of exchanges connecting companies with investors have been tried tens of times before, and they always fail because building a two-sided network is hard. People will only invest if good companies are there and good companies only show up if real money is there. Nothing I saw on the site suggested theyve solved this issue.
I'm cautiously optimistic about the Jobs Act but see so many of these platforms cropping up that seemingly don't have a solution to get quality dealflow and quality funders. The key to that IMO is not the fee structure which FundersClub spent a lot of time detailing or ease of the legal process. These are details but the key driver is getting quality startups and check writers on the platform who want to get "hitched". The legal and pricing details are next.
Lastly, the only folks really uniquely positioned to build the required two-sided network are the team at AngelList. I've not heard they're doing this but of anyone, they have the assets it seems to pull it off.
The YC spotlight is particularly perfect for this concept because of demo day. They might be the only startup that can get all their most important and prominent target customers (and thought leaders) in one room, very shortly after launching.
If they could convince YC companies to forego the available money and use their platform instead, that would be a coup for sure. But that seems unlikely.
Having the world's leading angel investors on the platform would be one of the keys to establishing a successful two-sided network.
Probably a fair amount of people (myself included) would like to be an angel investor. For people who are rich but not one-percenters cutting a check for $100,000 for a risky investment is a high barrier to entry. I'd be more inclined to make 10 x $1,000-$2,000 investments (bets?).
Could be interesting for niche markets if it bring in people with expertise, high income and are also decision makers in their day jobs: doctors, lawyers, small business owners, senior managers, corporate officers, etc.
- Someone who has made $200k+ for the past two years and will continue to do so.
- Someone with joint income with a spouse exceeding $300k for the past two years.
- Net worth or joint net worth exceeding $1 million.
While this does make sense, it basically means the type of folks who are already quite rich and would be making these sorts of investments just have the tools and ability to make investments at a lower scale, and through a website.
It's definitely an interesting idea, but I'll be more excited about it when the investors they allow get closed to the "average people" in the industry who aren't sitting on a million dollars.
Senior level engineers, accountant, etc could have net worth exceeding $1 million once you factor in home ownership, 401k, stock portfolio, 401k, IRA, etc.
Potentially you'd open up angel investment from the 1-2% to the 5-10%.
Just think for a moment about how conservative an investor has to be in order to (1) qualify as accredited (millionaire or very well paid) while (2) still being unwilling to part with more than $1K.
One of the problems that entrepreneurs have with sites like these is the noise - the folks who like to call themselves "angels" but only invest a random $5K once every year or two. They are more likely to waste your time with numerous questions and less likely to ultimately invest.