Crowdfunding platform VentureCrowd and Sydney Angels, a group of 70 high net worth investors, have partnered to run the ruler over technology startups that would benefit from the ability to crowdsource early-stage financing from sophisticated investors.
The partnership will tap into a bunch of startups that weren’t previously in touch with VentureCrowd, while lowering the risk for the growing number of investors who are using the platform to manage a portfolio of startups.
Since 2008, Sydney Angels has made more than 35 investments, of between $200,000 and $500,000, in companies such as Ingogo, Venuemob, Posse and DriveMyCar Rentals. It also has a dedicated sidecar fund, worth $10 million.
Backed by investment outfit Artesian Venture Partners, VentureCrowd already works with around 25 partners including early-stage business incubators, accelerators and universities which provide pre-screening and selection of startups that feature on the platform.
VentureCrowd previously worked with Sydney Angels to co-invest in fashion technology startup Fame & Partners. The partnership will formalise an approach to further collaborate in 2015.
“Equity-based crowdfunding is a great way to access a different group of investors and to top up an investment round led by more experienced professional investors, like Sydney Angels members,” David Jackson, a member of Sydney Angel’s management committee said.
The recent inquiry into Australia’s financial system, led by David Murray, recommended a “well-developed” crowdfunding environment would aid broader innovation and competition and give startups more funding options.
“We support this investment method as complementary to existing ones, not an alternative. It would be great to see equity crowdfunding platforms like VentureCrowd opened up to retail investors,” Jackson said.
The VenturCrowd platform works by taking investments from $1,000 and encourages investors to build a diversified portfolio of startups to mitigate the risks involved in early-stage business investments.
“The Sydney Angels are passionate about identifying ‘the next big thing’ in a variety of sectors, and we are excited to leverage their due diligence skills and expertise as well as their highly methodical investment process for investors on the VentureCrowd platform,” Artesian Venture Partners COO Tim Heasley said.
Sydney Angels has spent years building extensive dealflow of high potential startups from which they filter the most investable startups. Sydney Angels members employ a collaborative due diligence process to determine which startups receive investment.
“We believe more heads are better than one in early stage investing, so by pooling our expertise and networks, and sharing the work, we can come to a consensus view on the merits of a deal and investment terms,” Jackson said. “That way we can keep the failure rate of the startups we invest in to a more acceptable level than it would be without good due diligence.”
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