Startup Investing Platforms act as a bridge connecting startups with investors. They help CEOs raise money by exposing them to tens of thousands of capitalists. Platforms such as Allianse, for example, use AI to match them with the right investors.
What Are Startup Investing Platforms?
Startup investing platforms are like social networks. Take LinkedIn as an example. It is the leading network connecting businesses and professionals. In like manner, these platforms connect investors with startups and vice versa.
The primary advantages of using these platforms depend on the membership type.
- Startups can use these platforms to connect and receive funds from investors. As members, they may also receive funding offers from investors.
- Investors, meanwhile, get access to highly-vetted investment opportunities. It takes away one of their biggest concerns – losing out on the next unicorn.
What Are the Different Types of Startup Investor Platforms?
There are more than 20 sources of funds. Hence, it follows that there are different types of platforms. For simplicity, we narrowed it down to the three most common types.
Platforms for Angel Investors
Angel investor platforms connect startups with angel investors. In essence, entrepreneurs can get funds from an individual to start their business.
Who Are the Angel Investors?
Angel investors are private investors whom others call angel funders, business angels, or seed investors. They are usually non-accredited investors with high net worth seeking to profit from ownership equity.
The reference to “angel” is not without merit due to their philosophy in providing funds.
Venture capitalists and other lenders invest in the viability of the business. Their primary interest is in the profit they could earn. In contrast, angel funders invest in entrepreneurs starting their businesses. Their concern is to help them get off the ground, hence the reference to “angel.”
Angel investing is risky. But for small startups, their terms are usually more favorable than other lenders. Moreover, they could be anyone. In the case of many founders, there are business angels within their circle of family and friends.
Who Should Seek Angel Investors?
In most cases, it is small entrepreneurs and startups that seek angel funding. The money they borrow could be one-time, allowing them to start the business. Or, it could be to augment their finances during the early stage of their business.
After coming to terms, seed investors release funds to entrepreneurs. In exchange, they receive ownership equity in the company. As an option, they may also accept convertible debt in exchange for the funds.
Where Do You Find Angel Investors?
As mentioned, there might be one or more angel funders in your circle. You can also ask family and friends for referrals. Other than that, the most convenient way is to look into angel investor platforms.
Platforms for Crowd Investors
Investment crowdfunding is one of the most popular means of raising money. Its concept is simple. Startups can raise capital by accepting small amounts of money from many individuals. A crowdfunding platform, meanwhile, connects entrepreneurs with crowd investors.
Who Are the Crowd Investors?
Crowd investors are individuals with high net worth who provide funds to startups. To be one, they need to have accreditation from SEC (under Reg D).
Angel investors can also invest in crowdfunding. But first, they need to register with SEC as accredited investors.
Crowdfunding, in essence, is a means for individuals to become investors. By joining a leading equity crowdfunding platform, they can invest money into startups. As for entrepreneurs, it is one of the best ways to launch a fundraising campaign, raising capital.
Who Should Seek Crowd Investors?
Both angel and crowdfunding are viable sources of capital for many small startups. But there are instances when it becomes a better option than seeking angels. One possible reason is that the money needed is considerable. In this case, entrepreneurs may raise more funds from a large number of individuals.
In exchange for capital, startups provide equity shares to the crowd investors. It is why people also refer to this funding type as “equity crowdfunding.”
Where Do You Find Crowd Investors?
Any of the best crowdfunding platforms today is the best way to seek crowd-sourced funds. One thing you should do, though, is to compare and check each crowdfunding site. After determining which platform is best for you, go ahead and give it a go.
Platforms for Startup Investors
A startup investor platform is not the same as the other two platforms. Its main difference is in the investor type and the process of matching connections.
With others, putting money into startup companies is through the platform. In other words, they act as a broker-dealer and are either registered as such or not.
Note: Being a registered broker-dealer is not mandatory.
Startup investment platforms, meanwhile, consists of venture capitalists and other investors. Using advanced technology, they match investors with highly-vetted investment opportunities.
Who Are the Startup Investors?
It is in this platform where startups can find the most diversified investor types.
Some of the investors are:
- Venture Capitalists. Unlike angel and crowd investors, these investors do not invest as individuals. Instead, the partners form a firm, putting money in a fund. A committee then makes all decisions on all startup investment opportunities.
- Startup Accelerators. Also called seed accelerators, these are programs that provide support to early-stage companies. In particular, they provide education, mentorship, resources, and capital to promote growth.
- Startup Incubators. These organizations foster early-stage companies through various phases of development. Among their services are providing office space, education, mentorship, and capital. In essence, they help startups from the beginning up until the companies are stable.
For investors, having such platforms lets them focus on startup investments. If needed, they can get investment advice from experts in the industry. Technology, indeed, eases the process of adding to their investment portfolio.
Depending on the platform, some also put more emphasis on entrepreneurs and startups. Besides vetting them for investors, they also extend tips and advice for them to succeed.
Who Should Seek Startup Venture Capital Investors?
Venture capital startup investments are on the rise. One reason is the sharp increase in the number of startups. Being new, many of them lack access to bank loans, capital markets, and other debt instruments. As such, their recourse is to turn to venture capitalists.
Usually, these firms prefer to invest in early and seed rounds. They also are more interested in startups that have high growth opportunities.
Be prepared to give up equity shares when taking funds from a venture capital firm. Do be prepared to give up equity shares when taking funds from a venture capital firm.
Venture capital is for startups that need considerable money. But getting funds from them is not that easy. For one thing, they prefer only startups that have tremendous growth potential.
Where Do You Find Startup Investors?
Allianse is one platform where you can find and connect with investors. Here, and on similar platforms, startups may also receive funding offers.
How Do the Best Startup Investing Platforms Help You Raise Capital?
The best startup investor platforms solve these fundamental problems small businesses encounter:
- Difficulty in accessing capital, usually due to lack of network connections
- Taking too much time looking for investors, diverting attention from their core business
- Inability to find and receive guidance from financial advisors and investment professionals
At its core, startup investing platforms connect you with potential investors. But servicing such needs alone is not enough. For this reason, the leading platforms use innovative technologies to enhance the process. Furthermore, they also provide several other helpful features.
1. Curated Selection of Investors
In a way, access to tens of thousands of potential capitalists sounds too good to be true. It is, and that is because not all are the right match for your startup. Hence, the best fundraising platforms vet investors, much like they also vet you.
At the same time, proactive platforms help you reach more investors in other channels. LinkedIn is an example. It has over 200 thousand firms and everyday investors seeking to invest in startups.
2. Match with the Right Professional Investors
Qualified investors for you do not mean they have to be the largest or any other superlatives. There are far too many variables to consider that affect investor-startup relationships. For both parties, it is more important to be the right fit.
In this regard, the benefit afforded to startups also helps the investors. One problem investing in startups is spending too much time on due diligence. But that is assuming they already picked the needle from a haystack. In 2020 alone, there were more than 804,000+ new businesses in the startup stage.
On good platforms with advanced tools, a strategic advisor can make investment recommendations. As a result, investors do not waste time looking for investment opportunities. More importantly, they can make a wiser investment decision.
When you think about the entire investment process, any difficulty faced by investors means lower funding opportunities for you. All things considered, helping startups and investors alike provide even more benefits for both.
3. Advanced Technologies
Artificial Intelligence (AI) has truly revolutionized many industries, including financial. As such, there is no excuse for any seed investment platform not to use the latest and most reliable AI technology.
In essence, AI serves two primary purposes:
- Make it possible to accommodate hundreds of thousands of startups and investors
- Analyze data and other factors that are too complicated for humans to determine the best matches
Besides AI, the backend also incorporates Machine Learning (ML) to enhance accuracy. ML refers to historical data to make predictions. Over time, its accuracy increases, thereby making better matches. Allianse is one such company that uses this state-of-the-art technology to help startups.
There is no end to learning entrepreneurship. Having mentors and experts in the field dispensing tips and guidance is invaluable. It cannot come at a better time whenever a startup encounters a problem.
Throughout the journey, all entrepreneurs go through a series of obstacles. While they can manage most challenges, others seem impossible. Here, access to industry and thought leaders can help them pull through and get back on their feet.
5. Networking with CEOs and Founders
Connecting with peers is a fantastic way to extend your network. Besides sharing the same passion, you can also share new ideas. Typically, the startup investing platform will organize virtual meetings regularly. Some topics talked about include business model, investment strategy, marketing, and many others.
Networking with like-minded CEOs and founders is not only fun. More importantly, you can grow your business together – and at a faster rate. And, who knows? You never know when some of them may become your partners in new ventures.
Use The Best Platform to Invest in Startups to Raise Capital
Searching for legit investors the old way limits you to a locality. Googling, on the other hand, is not likely to provide great fits. Hence, the best option is to take advantage of a seed investment platform.
Benefits Provided by Startup Investing Platforms:
- It lets you find and connect with real investors ready to write checks. Allianse, for example, uses AI and ML technology to connect you to the right investors.
- Be ready to reply to investors who find your business attractive. There are plenty of them reviewing recommended startups at any time, and one of them could be you.
- Mentoring and peer-to-peer connections with other CEOs help you become a better entrepreneur. Share knowledge, plans, strategies – but above all, grow your business and be the next unicorn.
The pandemic transformed the world forever. Not only did it force many businesses to change the way they operate. It also disrupted the lives of people. Even so, it also brought positive developments.
One of the significant changes is the rise of entrepreneurs in the US and other countries. As a startup with a sound business plan, the one factor that stops you from going mainstream is capital. Fret not, though, as there are startup investing platforms to help you get the much-needed funds.