Crowdfunding for pre-seed stage companies?
Raising money is hard at every stage. Well, it’s even harder to do so quickly without a wealthy personal network.
Here’s my super rough idea:
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A bunch of us get together and set aside cash ($X minimum?) as a syndicated group of unaccredited “friend & family investors”.
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All members vote on allocating funds to pre-seed stage companies on;
A. unsecured loan at a X% interest rate over 1-2 years.
OR
B. an income share agreement that pays out X% interest rate at a future liquidation event, like an acquisition or a priced round.
Whaddya think?
Hey @Fundercove nice thought process!
Are you talking about Equity-based Crowdfunding and crowd-safe?
I'm currently leading AngelHub in Asia that might be of your segment. Apart from us, there's also Republic, CrowdCube, Seedrs, Seedinvest, Fundable, OurCrowd and many more.
What's your game plan to attract startups and investors? Do you aware you need a license to make this possible? All the best :)
Hey thanks!
I’m just brainstorming right now, so I don’t have a viable GTM plan yet.
I’m aware of the other firms out there doing equity based crowdfunding, and all of the stringent regulatory requirements attached to the business.
I was hoping to sidestep them by not being an investment platform in the traditional sense but more of a community that facilitates matching pre-seed companies with a friends and family round. Instead of using SAFEs and whatnot, ISAs or personal loans could be the primary vehicle.
That sounds like a very long process and lots of risk. Why not just crowdfund from customers?
You could do that. There are tons of ways to finance a business, for sure. I‘m not 100% sure how long it would take. I suppose it would take just about as long as raising any other round
How much paperwork is involved as an unaccredited investor?
I don't exactly understand what you are asking though. I think you're saying you have a startup and you are trying to figure out ways to get preseed investment?
Regarding the paperwork: I’m not 100% sure, honestly. My initial idea is to help pre-seeds get funding without having the headache of added unaccredited investor in cap tables. So, maybe we structure the cash as a loan or a shared income agreement to mitigate that risk.
Yes and no. I’m simply brainstorming an idea I had whilst driving 🤠