25 billion. That’s how much angel investors contribute annually to over 70,000 companies as investment every year. That’s billion with a B. And angel investors are not the only source of external investment for businesses and startups. There are venture capitalists, who specialize in investing in promising businesses. There’s also the relatively new phenomenon of crowdfunding, which appeals to the larger masses for investment. When you’re looking to invest in a business, there are a number of things to look at. Sales figures, profits, even customer service ratings.
But how do you know where to invest? Read on to find out.
Top 5 Platforms for Investing in Startups
Entrepreneurship forms the backbone of both the American economy and the American dream. In today’s fast-paced business world, the startup culture has really caught on. And why shouldn’t it? With soaring interest rates, mortgages and student loans have reached a critical point. Most people are beginning to understand a cushy career job may not be the answer to their financial problems. Others have visions and ideas that they want to turn into a commercial reality. With so many startups cropping up for so many different reasons, it can be difficult to know where to invest. This is where these 5 platforms can help you make a better decision:
- FundersClub for Accredited Investors
- Seedrs for Local Businesses
- OurCrowd for Israeli Startups
- OneVest for Personalized Attention
- Gust – The SaaS Portal
Let’s examine them in more detail below.
FundersClub for Accredited Investors
FundersClub is one of the biggest crowdfunding platforms out there. However, at this time, they only work with accredited investors. The platform has a reputation for a stringent vetting process. Only 3% of the applicant startups make the cut every year. This means FundersClub only represents the most promising startups that manage to pass its rigorous screening. Investors on FundersClub usually have an average investment between $3,000 to $5,000 which means they have relatively low risk. Investors can also diversify their investments to minimize their risks further.
However, it bears notice that FundersClub charges a service fee of 30%, which could take a significant chunk out of your profits.
Seedrs for Local Businesses
Seedrs is among the top platforms for investing in local businesses. Based in the United Kingdom, the platform connects local businesses to investors and crowd funders. Some of the best local startups like Maily (email service for children) and AdLudio (online convertible note) came from Seedrs. While the platform currently operates only in the U.K., it’s top-level management has expressed interest in tapping into the U.S market as well.
OurCrowd for Israeli Startups
This crowdfunding platform is unusual in the sense that it restricts itself only to Israeli startups. However, it also the first platform to require startups to donate a portion of their investment proceeds to charity. However, OurCrowd is extremely exclusive when it comes to investors. It requires a minimum investment of $10,000 from investors for each startup. OurCrowd charges a service fee of between 20-25% as well as a 4% administrative fee and a 2% management fee.
OneVest for Personalized Attention
OneVest is very different from the other investment platforms on this list. It takes a more direct, and personalized approach to potential investors. When you are looking to invest, you will need to fill out a form detailing preferred types of investment. A OneVest investment specialist then follows up with the potential investor with a list of suitable investment opportunities. And the best part is, OneVest does not charge you extra management fees even though they have a more hands-on approach. The minimum investment in a startup is at least $5,000.
Gust – The SaaS Portal
Gust is more of a Software as a Service (SaaS) than an actual investment platform. It provides its own platform to over 80 angel investor networks that include:
Unlike other platforms, Gust does not handle escrow or payment processes. Instead, these processes are left to the third-party groups working on the SaaS platform. Gust allows investors to network with each other. It offers a space where investors can investigate offerings, discuss and track investments and share performance reviews. It also allows a group of investors to pool their investment and choose a suitable opportunity to invest in.
Why should you invest in startups? For one thing, the blue-chips are all saturated. Spectrum internet offers are going great, but it is not practicable to invest a small amount in the company and expect a return. Startups, on the other hand, offer investors an equity share in return for this investment. Provided you hedge your bets and play it safe, you can see a far more significant return on your investment. Let us know if you feel any other angel investing platforms should be on this list.