With quick accreditation and legal document e-signing, FundersClub hopes to attract a diverse membership. This free service prioritizes trust between investor and startup, as well as creating a community.
The online marketplace has now become a platform to democratize startup investing, and in so doing has given individuals and smaller investors access to new companies that they have never had before. According to Alex Mittal, CEO and co-founder of FundersClub, previous barriers to these potential investors has blocked $560 billion in capital from the current investing system. FundersClub has built a web service that gives its members pre-screened access to investment opportunities and profiles, as well as other convenience features. "We're infusing efficiency and progress into the private investment community by offering the world's first platform approach to the venture capital model."
Removing as many barriers as possible
FundersClub is free, and investment minimums are much lower that typical angel investments - $1K to $5K as opposed to $25K to $100K. Due to these field-leveling aspects of FundersClub, entrepreneurs can win the interest and support of more diverse investors, the service can put together larger total investments, and members can build a diversified portfolio at a much more accessible financial level. FundersClub verifies the accreditation of its members through the sign-up process, and provides startup profiles, a Q&A forum where founders can respond to startup-specific queries. Then the investor chooses a fund, signs legal documents online, and pays through bank transfer.
To build a diverse and trusted investor community
Once a member becomes an investor, FundersClub keeps her updated. Details, events and email lists are other ways that the site keeps investors engaged and builds community. As we see the category of venture crowdfunding grow in the wake of the passing of the JOBS Act, diversification will be necessary. While other sites like Fundable connect companies to Internet users, FundersClub attempts to build trust in a new market with pre-screening, accreditation, and creating a community around online-based investing. If the site succeeds, it could be another boon for the new legislation, as well as validation for widespread deployment of crowdfunding for other potential uses, such as large scale infrastructure projects.