July 11, 2018

The pre-seed/angel market is broken: We're launching an experiment.

My 2 friends and I are early stage founders ourselves, and we believe that founder talent is uniformly distributed – having a network is not indicative of founder success. The current market for pre-seed investing has super high information asymmetries and is an inefficient market.

Accessing pre-seed capital through a network favors the status quo, which is a huge disadvantage for people of color, females and people that don’t have an ivy league school on their CV.

We know from our own experience that raising a pre-seed is a huge pain and every founder you’ll talk to will tell you the same – while raising an angel round for our current startup, we just couldn’t take it anymore and had to do something about it, so we're piloting project pegasus as an experiment. If it's successful and we can make some matches between founders and angels, we'll build this out as a platform. If not, that's fine too and it was worth a try!

If we can make matches, we'll take a small commission from the angel investors – but for founders the service is free!

Check out Project Pegasus here: http://projectpegasus.io

Thoughts? Ideas on how we could improve? Let us know in the comments below!


  1. 5

    Hey Can - this sounds like a cool idea to root out inefficiencies in the fundraising process.

    For my project (www.tribefive.me for reference), I'm not sure whether we'll try to raise capital yet. We just launched. However, I'm pretending I am going to raise a pre-seed round to give you some initial feedback.

    Feedback / questions:

    • who are these "vetted" angels and what kind of vetting do you do?

    • what is the experience after I submit? Do I just sit around and wait, or am I expected to do something else to increase the likelihood that you'll match me with Angels?

    • on the founders section, I was expecting you to ask me to share my bio / LinkedIn but surprised you don't

    • does this service just match me with Angels, or does it help out with the actual term sheets, etc?

    • do Angels expect a pitch deck? Didn't see anywhere to upload one.

    Hope this helps!

    Cheers,

    Jonathan

    1. 3

      Thanks Jonathan. Let me try and address your questions below:

      • Vetting in this case means that we will only intro you to an investor if we think it's a match. From angels, we also collect some data points. Keep in mind that we only do double opt-in intros, so the startup AND the angel are asked if they're interested. Only if both say yes will we do the intro

      • You just wait. We try to give you an initial answer after 7 days, and then later if we come across another angel that might be a fit

      • Good point. We might add this.

      • Right now we only make an intro, and you take it from there

      • They might after the initial intro. It's up to the angel. However, they should have enough enough based on your application.

      1. 1

        Thanks for the reply! I have a suggestion how you might be able to build more trust with companies so they apply to ProjectPegasus.

        You should add some educational resources for people to consider if they are a good fit! These can be links and guides that other people have published, that you link to.

        I'm just thinking about my own scenario: I just put a product into the market; I'd like to consider fundraising; but I haven't really researched it.

        Maybe setting guidelines is another way to help steer people in or out of applying?

        For instance, maybe it's that companies should have a functional product in the market, or that they already have some revenue / traction / etc. That way, you can weed out all the wantrepreneurs out there who haven't started walking the walk from clogging up your pipeline.

        Good luck!

        1. 1

          Very good points and will consider to add in the near future! Thanks!

  2. 4

    A very good idea and a pain point that needs to be addressed

    1 - have anyone succeeded in using your service? a portfolio would be nice

    2 - How many investors do you have? showing how many investors are onboard and number of thier previous investments would be exciting

    1. 2

      Thanks, Amr!

      • We just launched today. So, no.

      • We have a handful. It would make sense to add that maybe later on once we have some case studies we can show :-) Great feedback, thanks!

  3. 3

    This is sadly very true. Basically, the world only gets contributions from people who have the money, but this is a relatively small population segment. And it is only getting worse, as more money goes to fewer and less innovative ventures. This is precisely why the world is stagnating.

  4. 3

    Hey Can - cool idea! I see that one question relates to a project that two or more founders have worked on together. Are solo founders not invited to apply?

    1. 2

      Thanks Ian!

      Solo founders are welcome to apply , too :-) But if you're more than 1, it's important for us to understand your history. Maybe we should make that question more clear, thanks for your feedback.

  5. 3

    This is an interesting idea to correct the information asymmetries. Does Pegasus do anything beyond the matching process, such as vetting the startups?

    1. 3

      Thanks Ben. In order to match, we have to vet all startups. Right now, we don't provide any feedback on the application.

      To be clear: Our goal is to match startups and angels. That doesn't mean we forward the top X applications to angels. It means, we look at startups and at angels (that work with us), and write an intro email if we think that they might get along.

      Currently, we don't do anything beyond introducing. You guys take it from there.

    2. 2

      to me candid feed back to startups would go a long way.

      • team 3/5

      • idea 4/5

      • traction 2/5

      -market understanding 3/5

      etc.

      with actionable next steps(if any).

      from a couple different investors(or others).

      1. 2

        That could be really helpful. Is there any plan yet on how you will attract investors?

        1. 2

          Just to be clear, Bob isn't part of Pegasus :-)

          Bob:

          Right now we're not providing feedback. For starters, I don't think we're in a position to provide feedback to such a large number of fundamentally different startups.

          Ben:

          We work with angels from our existing network. Also, we've been contacted by some angels after we've launched Pegasus today. Beyond that, we shall see :-)

          1. 3

            Great! Hopefully you have tons of success with this. It is needed in the market.

            1. 2

              Thanks a lot!

  6. 2

    Intresting take on the angel market. Having gone through two startups and funding rounds I can safely say that more avenues to connect with angels the better it is. Hopefully the pool of angels in your list increases so that you can make more introductions.

    I understand you call it an experiment but to be fair to the founders you should have a goal to transparently summarize and showcase some numbers like intros done, funded, total funds, domains invested. As in some other matchmaking services That’s missing in some of the other attempts like yours I have seen in the past.

    Also you can partner with mentors and former entrepreneurs to provide say a platform for founders having questions on the deck, idea inputs. Just my 2 cents.

    1. 2

      Thanks, Manish. We will definitely add numbers as soon as we have them. We literally launched this 24 hours ago :-)

      1. 1

        Sounds good. Also wanted to connect with you if you are open to partner with some one like me on say a mentorship track within your platform? Let me know

        1. 1

          Haven't thought of mentoring yet (really focussing on fund raising). But sounds like an interesting idea. Can you drop a quick message (hi@projectpegasus.io) and we'll take it from there?

  7. 2

    To me startups have been done.

    find investors that want to invest in base hits not unicorns.

    or on side projects., or experiments, or a set of customer interviews.

    find me a side coding job that pays a rate plus stock.

    too me there is a lot of side hustle talent it's just not being focused and built upon.

    1. 2

      I even have a unicorn idea. I just can't take the risk to work on it because I have two kids, mortgage, car payments etc.

      So, I need to work on things that have a lot better shot of working out.

    2. 1

      another angle would be like YC's list of projects.

      https://www.ycombinator.com/rfs/

      but recruit a team to work on them.