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Ability to invest in early stage startups?


sleepydragon
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Hi,

Just curious is there a way for retail investor to invest in early stage companies directly?

Examples are venture capital for computer technology companies, etc..

 

I guess one way is to going though the private wealth departments at various banks? Do they offer specific companies or people have to invest in funds? And what's the fee is like? Do I have to let them charge a percentage of my entire asset (or a minimal asset number) to be able to invest?

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Hi,

Just curious is there a way for retail investor to invest in early stage companies directly?

Examples are venture capital for computer technology companies, etc..

 

I guess one way is to going though the private wealth departments at various banks? Do they offer specific companies or people have to invest in funds? And what's the fee is like? Do I have to let them charge a percentage of my entire asset (or a minimal asset number) to be able to invest?

 

The retail investor does not really have a fair way to get into stuff like this. If you do, it will be through murky private placements where you're being giving indirect ownership and paying incredibly high mark ups and sales fees. Or at least this is the case 95% of the time.

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Hi,

Just curious is there a way for retail investor to invest in early stage companies directly?

Examples are venture capital for computer technology companies, etc..

 

I guess one way is to going though the private wealth departments at various banks? Do they offer specific companies or people have to invest in funds? And what's the fee is like? Do I have to let them charge a percentage of my entire asset (or a minimal asset number) to be able to invest?

 

Check out AngelList. Also, most major tech cities have angel syndicates. BUT, angel investing is so popular now, you are virtually assuring yourself adverse selection unless you have contacts or knowledge.

 

If you are looking for a passive fund, there are VC's that focus on early stage companies (e.g. Y-combinator, 500 startups) but I suspect retail investors would have a hard time getting access to any quality funds.

 

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another one: https://www.seedinvest.com/ 

 

I haven't tried any of them. I am also biased against these platforms since I think the best rounds are over-subscribed anyways.

 

Short answer to your question: Yes you can get involved, but it will take work since at the end of the day it's all about deal sourcing / getting access to deal flow. Are you accredited?

 

A lot of the best start-ups are highly sought after by VCs and its the job of the vc fund professionals to spend a lot of time networking and deal sourcing. As a result, you'll won't have the same investment selection. Example: http://www.businessinsider.com/how-lightspeeds-jeremy-liew-invests-in-startups-like-snapchat-2013-12 Try something similar for a start-up you like?

 

I don't think banks get any of the action till late stage [series c or later].

 

Your best bet is angel syndicates, getting in before a institutional seed round. You can probably attend a few pitches without having to make an investment to get a gist for what early stage investing is like. My city, Seattle, has a pretty cool club called Seattle Angel Conference which teaches new angel investors how everything works http://www.seattleangelconference.com/p/conference.html . Maybe your city has something similar?

 

You could also get involved with an incubator or accelerator as a potential investor or mentor. It's a great way of getting access to potential deals. Universities all have startup incubators now. If you're vouched, you can probably get into the top pitch nights too @ ycomb, techstars etc

 

Once you build a rep, people will come to you with deals, ask if you're interested in joining a round etc.

 

Last option is go be an LP at some VC fund. There are alot of cool micro-vcs with sub $20mm aum. Basically one man vc shops with tight knit lp groups. Larger funds always raising money too.

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PM me if you want to invest in my startup. It is about drones delivering packages efficiently thanks to deep learning strategies controlled by smart contracts on a custom blockchain. First come, first serve.

 

Are the drones powered by renewable energy?  ;)

 

I'd recommend going to some of the startup events in your area and talking to startups and angel investors. Maybe an angel group would allow you to sit in on a few pitches that they get so you can get a feel for the market. Early stage investments are as much about connections and expertise as they are about money so figure out what you can bring to the table to help the startups you invest in succeed in addition to dollars.

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PM me if you want to invest in my startup. It is about drones delivering packages efficiently thanks to deep learning strategies controlled by smart contracts on a custom blockchain. First come, first serve.

 

My drones will contact your drones.  8)

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