With the recent enactment of the “JOBS bill” that eliminates some restrictions on public fundraising for companies, many online startup marketplaces are positioning themselves to become the go-to marketplace for startups to fundraise and investors to invest. Companies such as AngelList, Gust, and Fundable now offer startups to create “profiles” and take “reservations” in fundraising rounds. In addition, angels can create “syndicates” to help lead fundraising rounds from “backers”.
Beyond all the new “lingo” that has immediately entered the startup vernacular, the impact that these sites will have in the future of startup investing cannot be underestimated…especially for Midwest-based startups. Soon, Midwest startups with a great idea, solid team, and a lot of hustle can be fundraising from a much larger pool. Like Kickstarter for startups and accredited investors.
Just think, as a startup you are no longer geographically handcuffed for fundraising. The “Midwest is too conservative” investment stigmas no longer apply (a stigma Confluence is whole-hearted trying to destroy).
At Confluence, we are excited to be an early participant in this movement and are well positioned to capitalize. Where does Confluence see itself in this marketplace going forward? Well, on one hand, these sites will undoubtedly provide us with much more deal flow to review and grant us the ability to co-invest in startups and investors we love. We also may participate as a “syndicate” on deals in order to increase our investments into Midwest startups. However, prior to any Confluence investment we still need to really know the entrepreneurs, their vision, and plan for execution. This isn’t done via email but rather over a series of phone calls, meetings, and rounds of beers. Hopefully we can now discover more Midwest startups, work with them, and make reasonable investments. On the other hand, entrepreneurship is a hard game and only a handful of people are cut out for the job. Confluence plans to mentor early-stage startups and entrepreneurs and position them so they can then capitalize on fundraising from a much larger pool.
I believe AngelList is the frontrunner in this game and will come to dominate this market. This site is powerful and the full extent of their prominence will take hold over the next 3-5 years. I’m reminded of the Bill Gates quote, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” Regardless the size of impact, the investing landscape will be changed and Midwest entrepreneurs will benefit. If it benefits Midwest startups and entrepreneurs, then that is something Confluence will always support.
In the meantime if you are a Midwest startup, make sure you have a solid AngelList profile created (even if you are not currently fundraising) that includes images, videos, and demo links. You can check out the @BoomBoomPrints page or our @ConfluenceCapital pages for reference.