As angels gain wing, so do investing platforms
An early-stage startup usually struggles to raise funds. Founders typically have to run after multiple angel investors, spend considerable time and effort explaining the idea, and negotiate with investors on the termsheet, the formal agreement stating the terms and conditions of the investment.
But now, as the startup and angel investing universe has expanded, a host of technology platforms have emerged to bridge the gap between startups and investors, and ease the whole process of investment.
They screen the startups and do a certain amount of due diligence so that investors know they are dealing with reasonably eligible candidates. They have tie-ups with legal entities that both sides can go through, saving a significant amount for resource-constrained startups, and some have standardized termsheets that reduce a lot of the headaches and cost. Once the founders and their product-market fit have been evaluated, the platforms help the startups and investors gauge the fair valuation.
The platforms make money by charging a fee or a commission on the transaction. And although the current funding slowdown might be affecting late stage investments platforms are gaining momentum since both the parties are looking to connect with the right set of people.