21 min
FastCTO Creates Diligence Score For Crowdfunding Investors - #1161 Superpowers for Good: Empowering Changemakers for Social Impact via Regulated Investment Crowdfunding from the SuperCrowd.
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- Entrepreneurship
Igor Belagorudsky, president of FastCTO, joined me to explain his company’s new tool for rating crowdfunding issues to make them more appealing to large investors. Increasingly, investors of all stripes are looking at deals on investment crowdfunding websites like Wefunder, Republic and Crowdfund Mainstreet. The score is intended to help both novice and expert institutional investors better understand the investment opportunity.
Issuers, that is the companies selling shares on a crowdfunding site, can hire FastCTO to provide the review and rating.
Preliminary Interview with Igor Belagorudsky, the President
Of FastCTO.
Expert tips for crowdfunding or fundraising:
Tip 1: Make your listing attractive to not just the individual that might be willing to invest $100 (or $88 as that's the average donation) but to the one that might be writing a $20,000 check (there aren't that many of those yet but we're looking to change that). The bigger the check sizes, the less investors you need to convince and the less time you need to spend to nurture your raise.
Tip 2: Assume, even though it's not always the case, that people writing bigger checks have more experience investing overall and use different metrics to decide whether to invest or not. As a trivial example, an investor contributing $100 might be thinking, "this is something I'd like to have/own/put my name behind" and never once opening the SEC filing you had to submit as part of your listing. On the other hand, an investor contributing $10,000 will definitely open the SEC filing, have their advisor(s) look at it, confirm your predictions, validate your business plan, etc. Now imagine the rigor with which someone considering a $100,000 investment might be looking at your listing with. Make sure you provide the resources that have the best chance of satisfying someone like that.
Tip 3: The goal of what we're doing is that more sophisticated investors will be attracted to the crowdfunding space and be willing to make big investments in companies that pass their sniff test. For "traditional" private security investments (angel rounds, VC, PE, etc), investors use a due diligence process to validate their decision to invest or not. Depending on your industry and the type of company you have, the due diligence might have several sections - finance, legal and IP, technical, organizational, etc. For crowdfunding companies, your SEC filing is meant to satisfy the finance section of a due diligence and your various warranties you make when listing are meant to satisfy the legal, but there's nothing besides your listing that satisfies the rest - especially the technical part of a due diligence which, for companies with any technology, is an essential part of the process.
The FastCTO Score aims to fix that - we want crowdfunding companies to have access to a technical due diligence they can share with sophisticated (and all) investors so they can check the tech checkbox and confidently invest. Not every company going the crowdfunding round might need that - you might not have any technology or software or systems that set your company apart, but for those that do, it's now an option.
Never miss another interview! Join Devin here: http://bit.ly/joindevin.
Get full access to Superpowers for Good at www.superpowers4good.com/subscribe
Igor Belagorudsky, president of FastCTO, joined me to explain his company’s new tool for rating crowdfunding issues to make them more appealing to large investors. Increasingly, investors of all stripes are looking at deals on investment crowdfunding websites like Wefunder, Republic and Crowdfund Mainstreet. The score is intended to help both novice and expert institutional investors better understand the investment opportunity.
Issuers, that is the companies selling shares on a crowdfunding site, can hire FastCTO to provide the review and rating.
Preliminary Interview with Igor Belagorudsky, the President
Of FastCTO.
Expert tips for crowdfunding or fundraising:
Tip 1: Make your listing attractive to not just the individual that might be willing to invest $100 (or $88 as that's the average donation) but to the one that might be writing a $20,000 check (there aren't that many of those yet but we're looking to change that). The bigger the check sizes, the less investors you need to convince and the less time you need to spend to nurture your raise.
Tip 2: Assume, even though it's not always the case, that people writing bigger checks have more experience investing overall and use different metrics to decide whether to invest or not. As a trivial example, an investor contributing $100 might be thinking, "this is something I'd like to have/own/put my name behind" and never once opening the SEC filing you had to submit as part of your listing. On the other hand, an investor contributing $10,000 will definitely open the SEC filing, have their advisor(s) look at it, confirm your predictions, validate your business plan, etc. Now imagine the rigor with which someone considering a $100,000 investment might be looking at your listing with. Make sure you provide the resources that have the best chance of satisfying someone like that.
Tip 3: The goal of what we're doing is that more sophisticated investors will be attracted to the crowdfunding space and be willing to make big investments in companies that pass their sniff test. For "traditional" private security investments (angel rounds, VC, PE, etc), investors use a due diligence process to validate their decision to invest or not. Depending on your industry and the type of company you have, the due diligence might have several sections - finance, legal and IP, technical, organizational, etc. For crowdfunding companies, your SEC filing is meant to satisfy the finance section of a due diligence and your various warranties you make when listing are meant to satisfy the legal, but there's nothing besides your listing that satisfies the rest - especially the technical part of a due diligence which, for companies with any technology, is an essential part of the process.
The FastCTO Score aims to fix that - we want crowdfunding companies to have access to a technical due diligence they can share with sophisticated (and all) investors so they can check the tech checkbox and confidently invest. Not every company going the crowdfunding round might need that - you might not have any technology or software or systems that set your company apart, but for those that do, it's now an option.
Never miss another interview! Join Devin here: http://bit.ly/joindevin.
Get full access to Superpowers for Good at www.superpowers4good.com/subscribe
21 min