4 Online Platforms for Raising Startup Capital
Startup founders, take note: If you want to raise funds from angel investors or venture capitalists to grow your business, it recently became much easier to do so.
On Sept. 23, part of the JOBS Act went into effect, lifting the ban on general solicitation. This means that instead of being forced to seek introductions to potential investors privately, companies may publicly express their interest in equity fundraising.
Because the U.S. Securities and Exchange Commission maintains strict rules regarding whom you may solicit for investment funds, online fundraising platforms may be the simplest (and safest) option. Here are four leading investor-company matchmaking platforms to consider.
AngelList — This minimalist website allows startups and investors to search for the opportunities that are most relevant to them. Startups may post details about their founding team, a brief summary of their business, and details about their fundraising plans (available only to accredited investors). Startups may also post job openings and use the platform to recruit potential employees. Investors, once approved, may search for startups based on location, industry, name, funding level, and other criteria. Startups pay nothing to get listed; investors pay 5 percent of their investment's value to AngelList. AngelList alums, which include GetAround, Artsy, and Life360, have raised more than $2.9 billion to date.
Fundable — This site is similar to the crowdfunding platform Kickstarter, but in addition to allowing fans to donate specific amounts in exchange for rewards, the site enables investors to provide funds in exchange for shares of stock. Fundable charges startups $99 a month, plus a 3.5 percent processing fee for credit-card transactions. Although the option to solicit investors is new, some companies have already achieved substantial success: Ube, an app that allows users to control your home’s lighting via smartphone, has raised $925,000 through the platform to date.
Gust — This platform, previously known as AngelSoft, exclusively focuses on matching entrepreneurs with accredited investors. To that end, Gust offers a variety of tools for developing effective VC pitches. You can use the site to create both public and private business profiles, to put together a video pitch, to search for investors, and to track investors’ activity on the site. Gust is free to entrepreneurs, and investors pay a fee that is not publicly disclosed. The site’s 1,000-plus investment groups have funded more than 1,800 startups in the past year. Pressly, a mobile startup, recently used Gust to solicit introductions and invitations to events; the founders credit the site with helping them raise $1.5 million.
Startups.co — With more than 300,000 companies and 20,000 investors in its stable, Startups.co is one of the largest platforms through which entrepreneurs and investors can “meet and mingle.” The platform is largely entrepreneur-focused, offering tools and expert consultants to help business owners create pitches and find investors. That level of service comes at a cost, however: The platform charges entrepreneurs $59 per month for access to its network of investors, plus flat-rate fees (starting around $300) for consulting services; there are no disclosed fees for investors to participate. The platform provides opportunities for businesses seeking both large and small investments: One music label received $1.5 million in funding through the site.