The Top 7 Startup Investing Platforms
The Best Crowdfunding Startup Equity Websites
We've created a ranking of the best crowdfunding startup equity websites. Angel investing used to be the sole province of the fabulously rich and extremely well-connected. But, online crowdfunding technology paired with relaxed investing rules under the JOBS Act means that the chance to fund the next disruptive start-up is more accessible than ever. If you're interested in getting into the game, one of these top sites may be the right pick for you.
FundersClub is one of the larger crowdfunding angel investment platforms. One of their prime features is a rigorous vetting process for the start-ups they represent; only 2% make the cut.
With an average investment between $3000 and $5000, investors are able to diversify to increase rewards and minimize risk. According to the platform, an investor who had put money into every company on the platform last year would see a 104.8% return. But, with a carry of up to 30%, fees may take a significant bite out of profits. At the current time, they are still only working with accredited investors.
This platform originated from the United Kingdom. Seedrs provides an opportunity for localized businesses to raise money through equity crowdfunding. They offer quirky investments in startups like AdLudio (the first crowdfunding convertible online note) and Maily which is a really interesting email app for kids. The Seedrs team - Jeff Lynn (CEO) and Carlos Silva (President) plan on launching in the United States very soon.
OurCrowd is unusual in that it works specifically with Israeli start-ups. Founded by a pair of venture capitalists from Israel, this crowd-funding platform is more exclusive than others. They distinguish themselves, in part, by being the first investment platform to require the start-ups it represents to invest a portion of proceeds in charitable causes.
Investors must put in a minimum of $10,000 per start-up. Since the company expresses disdain toward smaller investors in their FAQ (asking "What startup wants someone investing as little as $100 as an individual in a seed round...") which indicates that they are unlikely to be friendly to unaccredited investors as the JOBS Act opens new opportunities. Fees on OurCrowd hit investors in a number of places: a 20 to 25% carry, plus a management fee of 2% and administrative fees of 4%.
OneVest takes a more hands-on approach than other crowdfunding angel platforms. A prospective investor fills out an application and gives details about what sort of investments she is looking for. An investor specialist then contacts the investor by phone to discuss investments that might be a good fit. Despite the high level of hands-on involvement, investors are not charged a management fee or commission. The minimum investment is $5000 per start-up. They advise investors that it may be 2 to 5 years before investments reach liquidity.
Gust is a little different from the other crowd investing sites on this list. Rather than acting as a network of their own, Gust provides an SaaS platform used by over 80 angel networks that include SeedInvest, OurCrowd, Bolstr and others. They do not provide payment or escrow services, instead leaving it to the third-party groups they work with.
What Gust does offer investors is a powerful portal for investigating individual offerings. Investors can discuss deals, track investments they are interested in, share potential investments with others and review their possible picks. As a collaboration tool, it makes it possible for a group of investors to pool funds and choose a vehicle together for their investment dollars. They also provide a large proprietary data and video library to help investors stay up on the latest trends and better predict future performance. They plan to open up their services to individual investors soon. Interested parties can sign up to be informed via email.
Under the JOBS Act, WeFunder plans to allow non-accredited investors to invest as little as $100 at a time on start-ups. The interface is reminiscent of those that will be familiar to crowd funders who've used Kickstarter or IndieGoGo. They currently have over 40,000 investor accounts and have funded per 75 start-ups. The company seems to have a preference for B2C start-ups that will quickly become familiar to individuals outside the angel investing world.
1. Angel List
Most people interested in start-ups are familiar with Angel List as the premier source of news and job leads in that arena. But, they also offer investment opportunities for those interested in start-ups and angel investing. Their investment platform works differently than others in that investors must join a syndicate to invest. These syndicates are run by proven angel investors, which has both benefits and drawbacks. The angels running the syndicates have strong resumes, with investments in highly successful companies like KAYAK, Instacart and Pinterest. Individual investors benefit from the wisdom and experience of the lead investors; but, it comes at a cost in the form of a carry. The carry on Angel List can run from zero to 30%. This guidance from the bigger investors can lead to larger returns, but the unpredictability of the start-up market means that even experienced angels will make bad picks sometimes.
The right platform for you will depend on a lot of things. The types of companies you like to invest in, the level of hand holding you prefer, your tolerance for risk and the amounts you are able to invest will all play a part. As crowd investing rules are firmed up and put into effect, we will probably also see other new platforms enter the ring. By choosing the one that fits your needs best and doing your due diligence, you can enjoy both the returns possible for angel investors and the satisfaction of knowing that you helped a groundbreaking company or technology grow its wings.
To learn about how to invest in startups, read about different startup investing platform where you can see both the risk and rewards of angel investing and later rounds such as Series A, B, and C.
Ross Blankenship is the leading expert on startup investing, venture capital and equity crowdfunding websites. He's written extensively about VC investing and startups in the top-selling book, Kings Over Aces.
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