Why Equity Crowdfunding?
• Equity crowdfunding is attracting hot deals
• Top institutions invest in venture deals
• Lower minimums than VC deals
Why Invest? →
Launch Angels Benefits
• Best venture deals selected for you
• Expert selection and deal diversity
• Low fees, one-time sign-up
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How It Works
• Set your investment budget: $50k-$250k
• Your money is pooled with 10-20 investors
• We do a deal a month; about 10 deals total
How It Works →
- 20 January, 2014Between closing our first fund, spreading the word about equity crowdfunding and all the great press we've received, winter has been a busy time for everyone. Here's a short summary of what we have been up to.
News and Events
One of 10 Startups to Watch
…So said the Boston Business Journal, and we won't argue. Kyle Alspach, Technology Editor, picked candidates based on “their innovative idea or product, ability to quickly raise funding or their experienced founder (and possibly all of the above.)” Read more...
LA Judges Social Entrepreneurship Startup Competition
LA was honored to participate in Make Impact NYC 2014 - Do Good In Your Hood!, a conference focused on bringing together entrepreneurs and leaders seeking to harness the power of social enterprise.. LA Analyst Mandie Holmes judged the 'Battle of the Boros' Pitch Competition that served as the capstone event of the conference. More than $20K was awarded to entrepreneurs who are making an impact through great business plans anchored with a social mission. The event took place Jan. 16 in New York City. Read more...
Lunch & Learn with LA
We kick off our Lunch & Learn series with a Jan. 22 event in New York City. These events give prospective investors insights into equity crowdfunding, venture investing, and our funds. If you’d care to join us or suggest a lunch in your area, email email@example.com.
New Strategies for Funding Woman-Led Businesses. Join us for an event on March 4
Equity crowdfunding is changing the gender equation in venture investing, opening up new avenues for female entrepreneurs and angels. LA will be hosting a high-energy, stimulating event the evening of March 4 in Boston to explore and discuss those changes. Gents definitely invited! Stay tuned for details. Tweet us if you want an invite.
Industry NewsWith the start of the new year, we’ll join the crowd in glancing backwards and forwards to assess the status of our industry.
Checking the RearviewConsolidation, the angel bandwagon, and equity crowdfunding big bangs. An industry analyst reality checks 2013 predictions for crowdfunding. Read more...
It’s Coming... Maybe“If we get our act together…2014 can be the year equity crowdfunding arrives in big way.” Read more...
Buckle in for a Wild RideAlt finance takes hold, new funding models appear, and enterprise players step up. “10 bold predictions for crowdfunding.” Read more...
The Billion-Banner YearThis analyst projects 2014 will see up to $1 billion in equity crowdfunding. Further, he says that if the full JOBS Act is passed, “ECF will become the predominate method entrepreneurs use to raise capital.” Read more...
All Boats Will/Should RiseThe article title trumpets “predictions.” But it’s equally a prescription list for making equity crowdfunding an opportunity for everyone from service companies to communities. Read more...
- 16 January, 2014As we start to invest our first fund, I find myself considering what really makes a great entrepreneur. What experiences and life events lead someone to create a business and invest in their own ideas? Here are some common threads I have observed after interacting with entrepreneurs for over 40 years:
- In the genes. What do the Sainsburys (groceries), Rothschilds (banking), Oppenheimers (DeBeers), Johnsons (Fidelity), and Fords (autos) have in common? Those are just a few examples of the fact that entrepreneurs sometimes come from a family of entrepreneurs. On a less lofty level, it’s clear why many entrepreneurs trace their roots to parents who opened up that first drug store or cafe. Seeing the fruits of your parents’ labor directly lead to your own college education is a powerful experience.
- Early obstacles. Many entrepreneurs have had to overcome significant problems at a young age. A common theme in entrepreneurs’ stories is those who have limited means often have unlimited imagination. Dyslexics such as Charles Schwab and Richard Branson (Virgin) are known for their creativity. Others faced economic constraint. Howard Schultz (Starbucks) was raised in the Brooklyn projects. I grew up watching Oprah in her first big news role; she wore potato sack dresses as a child. Still others faced parental opposition, like Larry Ellison of Oracle who was told by his stepfather that he would never amount to anything. Unable to approach problems the same way as others, they invented new solutions.
- Education outside the box. Most entrepreneurs will never set foot on the Harvard campus (or they’ll exit early). They may forego formalized education altogether. And they don’t need it. Being part of a system isn’t what generates creativity and self-sufficiency; figuring out how to navigate a system without traditional credentials does. Everyone knows the dropout stories of Apple’s Steve Jobs and Microsoft’s Bill Gates. But the same applies to director James Cameron, entertainer Lady Gaga, Facebook’s Mark Zuckerberg, and casino magnet Kirk Kerkorian.
- Techie genius doesn’t equal CEO. Great entrepreneurs and great coders aren't necessarily the same thing. I also think this depends on approach. A coder looking to solve problems might make a terrific founder, while one who does it for the beauty of elegant code might not. Sure, if an idea requires excellent software or technical innovation, an imaginative technical co-founder is a must. But the insightful engineers behind BASIC and Fortran did not have years of experience in BASIC and Fortran.
-Shereen Shermak, CEO
- 10 January, 2014We’re pleased to announce the closure of the Where Angels Fund (WAF). This is our first fund, which was custom tailored for associates from Where, Inc., acquired by PayPal in 2011. Closing at nearly $1 million, the Fund will invest in early-stage companies with an emphasis on industries well known to the investors, including mobile and consumer Internet companies. Even as the WAF closes, Launch Angels is opening two other funds. The Early Traction Fund selects investments in early-stage companies with a revenue track record. The Women-Led Fund is targeting women-led or women-focused companies. Both Funds are open to accredited investors looking to invest $50,000-$250,000. Interested investors can contact us at firstname.lastname@example.org. For more on the closing of the first fund, read the Dec. 23 Boston Globe article and the Jan. 6 coverage in the Boston Business Journal.
- 10 December, 2013Here's a short summary of what we here at Launch Angels have been up to, plus news and events regarding equity crowdfunding and the startup space.
Future Forward AppearanceOn Nov. 19, CEO Shereen Shermak participated in the Future Forward Boston event. The invitation-only event included 50 founders, investors, and C-level executives, discussing Technology, Leadership and Competitive Advantage. The format was a series of 10-minute briefings on significant changes, with Shereen covering equity crowdfunding.
BRA Panel ParticipationThe Boston Redevelopment Authority (BRA) hosted an Access to Capital Workshop on Nov. 22. CEO Shereen Shermak was on the panel advising entrepreneurs, startups, and small businesses about early stage capital sources. Shereen spoke about the promise of equity crowdfunding as an alternative to traditional financing, between debt and equity financing speakers. The helpful workshop materials can be found online.
VentureFizz Shout-OutPayPal’s David Chang gave a shout-out to Launch Angels in a Nov. 4 VentureFizz article. Change noted, “ ‘I played with AngelList syndicates, but decided to use Launch Angels as a platform instead.’ ” Full disclosure: David is Shereen’s husband, but VERY independent-minded. Read the article here.
Women's Fund Next For Launch AngelsWe’re pleased to announce that we have opened our next fund to investors. Our focus will be on women-led equity crowdfunding deals. We’ll select promising opportunities that meet our regular criteria, plus one or more of the following:
- Women-led. Companies with a strong female presence on the management team or Board, and/or a track record of promoting women.
- Women-backed. Companies that are backed by women’s capital, where women have a stake of 40% or more in the venture.
- Women-friendly. Companies that offer women-friendly products or services, or have especially female/family-friendly policies.
The Un-Event of the SeasonUnPitch Boston, a brilliant brainchild conceived by Boston’s tech/innovation community, is going to be the pitch party of the season. And Launch Angels is invited. The free event, scheduled for Dec. 11 in Boston, is a pitch contest open to 60 startups. Launch Angels will be one of the deal evaluators, along with some of Boston’s other leading VCs and angels. The contest was conceived as a response to a pricey paid event offered by an out-of-town group.
Hellishly Hot Relationships?
The risks of startups taking money from unsophisticated investors may produce the equivalent of the McDonald’s hot coffee lawsuit. And investor asset tests won’t put a lid on that risk, warns this WSJ contributor. Read more...
“If Cuban invests, I’m in!”
This humorous poke at the SEC’s crowdfunding rules proposes an alt version of regulations—including management teams that feature “at least two members who are old enough to drive.” Read more...
A Bad Haircut
Startup crowdfunding investors need to look not only at the present opportunity, but the risk of future equity dilution. Read more...
Who Says It’s Grade A Prime?
The commentator urges every would-be crowd investor to examine how well platforms vet their deals. Read more...
Get in There and Play!
A crowdfunding panelist argues that angels can be invaluable participants in crowdfunding and should "step up and show what they’ve got." Read more...
- 10 December, 2013
I know three companies that could have benefited from equity crowdfunding. How many do you know?
When President Obama signed the JOBS Act, he said that it was a “potential game changer” for small businesses looking to grow. Reviewing my own history, I can tell you this isn’t just theory. I’ve worked for three startups that could have benefitted significantly from more funding avenues. While each approached managing growth and cash flows differently, all were heavily constricted by their ability to raise capital and had to curtail growth despite high demand for their products.
My first example: I worked for a small batch food producer who wanted to grow without a small business loan. Each batch of product funded a slightly bigger batch in the following month. We sold every bottle we made and had to turn down some customers because we couldn’t meet demand. It was certainly motivating to sell out each month, but incredibly frustrating not to be able to grow as fast as we wanted to.
I also moonlighted for a small business owner who ran a restaurant supply store, funded with the owner’s life savings. He managed the anxiety of investing his nest egg and having no alternative funding by putting the business on a bootstrap budget. Revenues grew more than 3x while I was there. But we were also plagued by empty shelves, delayed building wholesale operations, and lost out to better funded/stocked competitors because we couldn’t afford more inventory.
Later I consulted for a SaaS startup raising capital from investors. The founders had the “right network” — a close knit but large group of wealthy family and friends who were a mix of active and interested first-time investors. But it was still a difficult process. After over a year of pitching, they only had checks for half the amount people had agreed to commit. They had to start making some hard decisions about staff and marketing dollars.
Startups traditionally have had these avenues to raise capital: self-funding, family and friends, angels and venture capitalists, or banks. My first two companies lacked a network of deep-pocketed friends. My third company operated in the right space to be attractive to VCs, but the prospect of seeking venture capital was foreign and they didn’t know where to start. All three were terrified of bank loan collateral requirements. And so they had to make hard choices and refocus priorities based on cash flows limits instead of product demand.
While all my former employers are doing well, access to equity crowdfunding could have been Obama’s promised “game changer” for them. Equity crowdfunding isn’t right for every business (see this interesting post from Seed Invest on the estimated costs of a crowdfunding campaign). But I can’t help imagining how much faster each could have grown if they had another method for raising the capital they needed.
- Mandie Holmes
Launch Angels Analyst
Mandie joined Launch Angels in October 2013, bringing experience in consumer products, eCommerce, and web development from a number of startups in the Boston area. She earned an MBA from the Simmons School of Management and a Bachelors from the Massachusetts Institute of Technology.
- 03 December, 2013
Equity crowdfunding is in its early stages, but even at this point you can glimpse the potential. And that potential includes promise for both women angels and women-led companies.
THE EQUITY CROWDFUNDING EXPLOSION
First, a definition. Equity crowdfunding is investing in early-stage companies through web platforms, typically receiving stock for your money. At this point, only accredited investors (high incomes or high net worth) can participate. However, regulations are still being defined that may loosen that restriction.
Even under current restrictions, equity crowdfunding is rapidly growing. There are about 350 platforms in the US, with close to the same number around the rest of the world. According to GoGetFunding, among all the types of crowdfunding (including donation and loans), the equity crowdfunding segment grew the most from 2011-12—by an impressive 114%. And some projections show that $3-4 billion will be raised through equity crowdfunding in 2013. Just as tellingly, even as equity crowdfunding blossoms, venture firm investments are down.
Equity crowdfunding is more than just a new way of raising money. It’s filling a hole in funding. You may have noticed ‘the gap’ in financing between friends and family investments and venture capitalists. Angels (wealthy individuals who invest their own money in startups) are in the same “neighborhood” of contribution as friends and family. But they are not generally accessible, with 70% of their deals done locally (Halo Report, Angel Resource Institute.).
WOMEN-LED COMPANIES AND WOMEN ANGELS ON THE RISE
Equity crowdfunding is democratizing funding in more ways than one, including opening doors for women. Some crowdfunding sites boast great statistics on women-led investing. At Indiegogo, 42% of successful campaigns were female-led. A majority of offerings on CircleUp are women-led deals. Women have also been serial backers more than men.
Equity crowdfunding might be impacting angel investing as well. According to the Center for Venture Research, between 2011 and 2012 alone, the number of women angels increased by 80%: from 12% of investors to 22%. Part of this is likely attributable to the ability to identify deals online through crowdfunding sites.
ON THE SIDE OF THE ANGELS
I often hear women automatically dismiss themselves as potential angels. The reasons most commonly given:
- I don’t have the wealth to angel invest.
- I don’t have the time to angel invest.
- I don’t have the network to find the ‘good’ deals.
Let’s look at the money issue first. Angel investments are risky, and should only be undertaken by those who can afford to lose the money invested. But it’s interesting to note that angel investment entry points can be as low as $5,000-10,000.
As for the time and network issues, those are significant problems. In fact, those problems inspired the launch of my company, Launch Angels. We’re leveraging the power of equity crowdfunding to create personalized venture funds and a very transparent experience. Recognizing that equity portals often don’t perform thorough due diligence on deals they list and that good research requires on average at least 40 hours, we decided to assist would-be angels. We take on the research and paperwork burden for our investors, plus spread Fund investment dollars over more deals by pooling individuals’ money.
We also afford investors themed choices. For example, in 2014 we will offer a fund that will invest in women-led and women-friendly businesses.
Equity crowdfunding, angels, and women. It’s a timely mix and one that promises to remain fruitful well into the future.
Versions of this article also appeared on Forbes and Women2.com.
- 15 October, 2013As Launch Angels’ CEO, I had to be sold on the business before I came on board. Here are some of the reasons I concluded this is a great business, and why you should, too:
- First and foremost, a compelling product concept. Leveraging the changes in regulations provided by the JOBS Act, more accredited investors will have better options and transparency for investing in venture capital. Yet most investors find that researching the hundreds of options on equity crowdfunding sites is incredibly time consuming. Launch Angels does the work for you.
- Support for promising entrepreneurs. I am a serial entrepreneur, and I know what it’s like to start a business from the ground up. Often deserving businesses have not had the broad access to capital that equity crowdfunding allows.
- Economic growth through small businesses. Small businesses, on net, create most new jobs. As we exit the recession, the best way to add robustness to the economy is to help small businesses with good ideas survive.
- Diversity for my portfolio. If you are looking for venture capital opportunities and want a diversified outcome, take a look at our model and get more information.
Are you ready to diversify your portfolio with equity crowdfunding?
Download this white paper, What’s the Big Deal about Equity Crowdfunding?