A fun innovation in financial engineering I saw recently and thought was worth sharing: I am an extremely tiny angel investor, which means I periodically send small checks to startups in return for an equity investment. This has historically been very toilsome for all parties.
-
-
The bet I am making here is, effectively, "A startup founder could tell a sophisticated VC that they're getting slightly less allocation in an oversubscribed round to get me on their cap table, and the VC would reply 'OK, that makes sense, conceivably there is some value there.'"
-
That makes a lot of sense from the VC’s POV, but what if sufficient capital was available from crowd funding is the CEO less incentivized to give up a board seat? Do you think we could see an inflection point there?
End of conversation
New conversation -
-
-
Good crowdfunding platforms select for deals with sophisticated anchor investors who’d happily take the whole round. Many times I’ve had to argue for carving out a crowd-allocation to be offered for investment to customers.
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
-
-
Adverse selection not the only reason for crowd funding. Founders can get better valuation usually and also, are safe from not losing control by being ousted by a major investor. It also works for business that are sizable but don’t have VC-like outcomes.
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.