How does this differ from other equity funding platforms? And they don't take fees/carry, only equity (and a lot of it, at that)? How do they make money?
Also, it feels like there just has to be some curation of startups or industry/vertical focus to keep the platform high-quality and protect both sides.
@nayafia We're not interested in making money yet -- right now our focus is on creating the industry standard for online equity funding. If a startup is successful in raising capital on FlashFunders we received the right to invest in that startup.
Trying to pick winners at the seed stage is nearly impossible. Airbnb was selling boxes of cereal on the streets of SF to pay their bills, Skype couldn't find early investment, the list goes on. Every company on FlashFunders must meet SEC Compliance, but we believe in letting the "Market" pick the winners. Social validation from 3rd parties is critical but deciding who is good and who is bad at the Minimum Viable Product (MVP) stage is like trying to find needle in a hay stack...
@vincentmbradley I don't understand how you have any liquidity for operations though? And it's not about picking winners, it's about doing some basic due diligence to weed out obviously bad opportunities for investors (and vice versa). Even Kickstarter reviews and approves projects on their platform.
Taking this from another angle, if a startup is really compelling, they could raise from anywhere. Why would they raise from you or your investors - a totally open platform where anyone can sign up? By being overly agnostic, you will only attract not-very-good startups and not-very-good investors - which, if your business hinges upon taking equity, is also bad for you.
@nayafia -- Kickstarter reviews and approves projects based on adequate content -- they do not pick winners. FlashFunders takes a very similar approach. All startups must be SEC compliant and provide information on their business -- but like Kickstarter we're a marketplace that doesn't try to pick winners -- in our opinion that's a very close-minded, Silicon Valley way of thinking.
I realize you work for an early stage fund that prides itself on picking winners but disintermediation is going change the way business is done within the private markets. There's a lot of very sophisticated accredited investors, who are experts within their specific industries and currently don't have access to startup investing. As platforms like FlashFunders provide them with greater access -- they're going to be able to add "real" value to the startups they invest in -- without giving up a 2% management fee and 20% carry.
To your other point a quality startup should not spend 6 months and $23K+ raising their seed round -- rather they should use technology to close their round as efficiently as possible. FlashFunders has created the most efficient way to execute an offering and we do this in an SEC complaint manner. Let me ask you this -- why would you spend money and time closing your round the traditional way when the alternative was no cost and efficient? Again, I realize a lot of people within the venture world like the way business is currently done -- the bottom line -- it's about time things changed for the better. It's been the "good ole boys" club for the past 80 years -- I respect your opinion but 100% disagree with it!
We're not being overly agnostic or trying to pick winners -- FlashFunders is simply providing the most efficient way to execute an offering in a SEC compliant manner and we can make the statement that we are operating within the scope of our Broker-Dealer license.
Thus far we've had no problem attracting smart, scrappy, quality entrepreneurs that want to save $23K and 6 months raising capital. We also haven't had much trouble attracting "quality" investors who want to help build "quality" startups.
FlashFunders is a marketplace that is focused on no fee, efficient, compliant capital raising: https://flashfunders.com
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Super interesting. I think FlashFunders could really help entrepreneurs to be clear and concise about what they're offering and not fall into the trap of what they think investors want to hear. Always the best place to begin a partnership. Kudos! I think I might try it!
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