FundersClub is an online venture investing platform whose blog covers startup fundraising, co-founder fit, immigrant founders and AI data preparation.
HN commenters point to FundersClub as a crowdsourced way to invest in startups, alongside AngelList, and one employee describes its handling of inbound pitches.
> we are intrigued by the new possibilities enabled by the JOBS Act and look forward to potentially expanding our activities down the road.
-- https://fundersclub.com/site/faq/
Refer looks like the beginning of a kickback scheme a la Morgan Stanley stock tech analysts circa 1994.
Furthermore, it is true that you are only targeting "accredited investors" for now. Two things should be noted. Firstly, accredited investors aren't necessarily smart investors. Earning $200K a year or having a networth of $1 million is a fairly common thing and is unconnected to financial literacy and startup valuation (see actors/doctors/lawyers/baby boomers investing in startups).
Secondly, are you honestly telling me that you are just going to stick with soliciting accredited investors if the legal obligations you are presently under were to be lifted?
Please.
A side point. A lot of people think that making startups an investment option for all is a good thing. I'm fairly certain that's a stupid idea, for the simple fact that if VCs, whose full time job it is to solely invest in startups, suck at investing in startups, what chance do normal investors with other jobs have exactly? A lot of people thought that online trading was an amazingly good idea during the late 90s (it sure was for eTrade), but the individual returns of sole traders illustrate that this was not the case, and in fact most investors would've been better off holding a diversified low-fee index fund.
Not all "disruption"…
I am a bit confused as to YC's thinking with encouraging a startup like this.
What are the revenue opportunities - not necessarily short-term, but even long-term - like?
Do they charge a fee on each investment made? Or do their fees just come from exits? If so, then their cash flows will look even more ridiculous than a regular startup - if you assume they only admit 'early stage' startups for starters to their platform (because I guess that's where the most friction is from a fundraising point of view, and where the more deals are, etc.) then they could go 5 years with no cash flows from those deals?
Am I missing something here?
If they charge per deal, does the investor pay or do the startups pay (aside from a % of equity)?
Edit 1:
So I just did some digging through the FAQ [1] on their site and found this, that pretty much answers my questions and now I understand why YC invested. Makes sense.
Neither FundersClub Inc. nor any of its employees receive any compensation from the administrative fees or any other transaction-based fees for its single company funds. FundersClub will charge a performance based carried interest for most of its funds, which are expected to provide returns over time. Our immediate goal is to develop a compelling funding platform that will benefit both the most promising startups and investors. Over time, FundersClub has a number of additional ways in which it can make money. FundersClub may operate liquidity services for private companies,…
Full Disclosure: I work for FundersClub
We had this problem for a long time. We had a generic cold inbound form and got such an abundance of email with no good way of filtering it that we just gave up on it. However we realized that with a bit of focus we could turn this into a good way to get some great deals we would have otherwise missed.
We now again have an founder application form (https://fundersclub.com/founders/apply/). It asks some generic questions followed by more specific metrics based questions depending on what type of company you are (Consumer, B2B etc.). We can then filter based on these to surface what we believe to be good opportunities to the top. Would love any feedback on the metrics we ask for - we try to keep them as data focused as possible, as once you start asking more qualitative questions you go right back to being overwhelmed.
I don't agree. According to their site[1] they advertise a low minimum 2.5-5K, so you don't need to make 200K a year (or have 1M net worth) to invest 10% or even 5%. You just need to have 100K available for investment and, in your diversification, put 5% on this.
I know it's the law in the US, but I don't get it. Yes, it could be incredible risky as you said, but nobody is stopping you (at least here in UE) from buying a leverage certificate that is incredible risky as well (I've seen 7X, 15, even 21X Long and Short on the German or Italian stock market, for example). You just express that "you know what you're doing" and you're good to go.
Or you can go to your bank, get 10K in cash and go to the nearest casino...
[1] https://fundersclub.com/how-it-works/
"picked off fast" is perhaps a bit generous - there are lots of great companies that got to series A without seeing a single "top VC" term sheet. I see angel investing as a way to connect with new founders that have a lot of potential, and help them accelerate their path to a billion dollar valuation.
For an interesting middle ground, I'd recommend one of our investors, https://fundersclub.com - they let you get in early on YC deals as an individual, and stay connected / give advice to companies you end up being an LP in
With a few hundred thousand to invest I'd probably do a 3-way split between:
https://www.thesyndicate.com/ - back Jason's next 50 deals at 2K each
Put 25K each into the next 4 YCombinator deals at https://fundersclub.com/
Put 50K in the next 2 quarters at AngelList Access Funds https://angel.co/v/access-fund
If you do any of this give me a follow at @baccredited and let me know how it goes. I just followed you as well.