What sites do you guys use to follow news or to invest in start-ups? I am seeing many organizations still in either seed investing or Series A and would like to participate. Obviously, I am no venture capitalist nor have the funding of an angel investor so I usually go with Crowdcube and Seedrs but often times these companies aren’t listed there or do not want to raise capital using crowdfunding so what can one do if they want to invest in start-ups but only have a couple of thousands?
Angel investors invest a lot more than a couple of thousand. If you wanted to lock down a number, the smallest angel investment I’ve seen was £30k, and that was in the context of a Southeast Asian country, so you’d expect higher investments in the west. Happy to hear others’ thoughts, who participated in fundraising. Maybe smaller amounts exist, but dimensionally, you should think 10x of that couple of grand, if not 100x.
However, you need more than the money. A few quick things I can think of:
Relationships in the given niche / private equity / big tech / startups that take years to build. They are essential to hear about companies and opportunities (and these relationships are probably the best news source).
A solicitor who draws up the necessary paperwork.
Your time or experts to do due diligence on the people, tech, finances, legal.
Probably a lot more I can’t think of right now.
Does that mean you are locked out of investing in startups?
Absolutely not, that’s what awesome platforms like Crowdcube and Seedrs are for. The UK is a fantastic place where not only high net worth individuals, but about anyone who understands the risks can partake. And we haven’t touched on the SEIS and EIS tax reliefs.
The solution could be to ask more startups to crowdfund. It’s tempting to accept a cheque from a VC and have the money on your account in one go, within days, and have it promptly written up by Techcrunch, because VC investment is, wow, such exciting news (I’m being sarcastic here - I hate that TC basically became a PR syndication site for VC firms).
If you are a startup, there is a strong argument for cutting your users in, and have them participate in your growth. So, email the team, and get their thoughts on whether they could do it when they do fundraising next. Ideally on the same terms the VCs receive. I surely got emails about it on a daily basis even before we announced we’d raise again.
Quite an interesting move from Seedrs, on the one hand I like the fact that this will cause investors to diversify their portfolio’s (especially when investing in startups) but on the other, there’s crowdfunding companies that I’d be keen to avoid investing in so I’m not sure I’d want this just working in the background..
That sound like a bad idea, To me crowdfunding is about sorting the wheat from the chaff (or trying to). I’ve invested in maybe a half dozen campaigns I thought could do well, and dismissed about 10 times that number.
If 90% + of startups fail basically you are getting exposure to loads of failures
I think this would be to encourage new types of clients, like IFA’s who are advising clients to gain exposure to this asset class and take advantage of EIS (instead of an EIS fund which takes ~20% of profit). They’re also looking to get more institutional investors involved according to their latest investor report…
Seedrs and Crowdcube Investor Fees - From what I understand, Seedrs effectively charge investors a 7.5% performance fee whereas Crowdcube doesn’t charge investors any fees. Has anyone else looked into this? or had experience with crowdfunding fees?
As I understood, Crowdcube only charges the funding company, I think it is along the lines of 7% per pitch, then Stripe charges them for the payment processing on the top.
But investors do not suffer in any form: if you invested £10, you will get shares rounded to £10, whereas Seedrs only allow the increments of share’s value (if a price is £7.50 per share, you could only pay whatever is divisible by £7.50 with no decimal places)