Crowdfunding Among Angels
Thursday, 29 March 2012.
A Guest Post by Rory Eakin, Co-founder and COO of CircleUp
Crowdfunding was ahot topic during AngelCapital Association 2012Summit in Austin a fewweeks ago. It featuredprominently in the formalagenda, and was afrequent buzzwordrunning through thehallways during the breaks.Strong voices spoke out on both sides, but two clear themes seemed toemerge:1) Crowdfunding is coming, and it has the potential to change the Angellandscape significantly2) Many uncertainties remain about how established Angel groups willengage with crowdfunding platforms, and whether this will help or hurtthe early stage funding ecosystem.The most frequent concerns were around trust and the role of intermediaries. How can investors establish the trust and knowledgerequired to make a thoughtful investment on a crowdfunding platform?
Crowdfunding investors, like any investors, don’t want to waste time
shifting through unattractive investment opportunities.
What role, and responsibilities, should there be for an intermediary tolook after investors?These are critical issues that must be answered if crowdfunding is tosucceed. At CircleUp, we are tackling these issues directly with threeparallel approaches:
Managed Dealflow
- CircleUp reviews all companies beforeallowing them to post information on our platform. While finalinvestment decisions are always the responsibility of the investor,investors on CircleUp know they are considering opportunitiesthat have met our initial standards. We believe maintainingquality dealflow is essential for sustained engagement within anycommunity of investors, advisors and companies.
Focus
–
We focus on expansion capital for consumer products andretail companies. We love the consumer space because of thegreat companies we find in this middle-stage of growth
–
sometraction in the market already, but too small for Private Equity orstrategic investors. These companies are also easier for investorsto diligence because the investor has more information
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you cantry the product, look at historical sales, and talk to customers.While these are still risky investments, the risk of outright fraud isminimized given the historical information on the company.
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