FundersClub blog

WHERE PRIVATE INVESTORS GAIN ACCESS TO THE MOST PROMISING STARTUPS™

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6 Critical Questions that Investors Should Ask Funding Platforms

BY BORIS SILVER, CO-FOUNDER AND PRESIDENT OF FUNDERSCLUB

                         For the past week the startup industry has been caught up in the excitement surrounding new marketplaces for startup investment, no doubt fueled by the introduction of the JOBS Act rules regarding the lift of the ban on general solicitation. Investors should tread cautiously when investing in new financial products on new platforms. Whether it’s intentional or sheer incompetence, bad behavior among certain equity crowdfunding and investing platforms has the potential to do damage to startups and create difficult situations for their investors.

Startup investing is risky and doubly so for those who invest with the wrong partners. Taking a longer-term view, I see several areas of concern for investors on these platforms:

1. Quality and Due Diligence: what due diligence is being done on investment opportunities?

2. Terms: are investment terms fair and transparent?

3. Fees: are the fees charged enough to cover the costs for the entire lifecycle of the investment?

4. Financial Incentives: how does the platform make money and what are its incentives?

5. Long term platform viability: how much capital and who is behind this platform?

6. Legal counsel: who is advising the platform?

  1. Quality and Due diligence: what due diligence is being done on investment opportunities?

The most damaging thing I’ve seen in the equity crowdfunding ecosystem is platforms dressing up listings for companies who are not ready to fundraise. In many cases basic due diligence would have uncovered a lack of product, plan, team and or other essential building blocks necessary for any fledgling company. As platforms clamor to boost the number of listings they offer customers this short term mentality is a disservice to both founders and investors.

At FundersClub we take due diligence seriously and believe it is our job to filter out startups who are not ready to raise money. Investors leverage platforms to gain efficiency, which is why our site offers pre-screened investment opportunities that not only save them time, but we believe also raises the bar of quality. Through steps like management discussions, market research, customer reference checks, reviewing key performance indicators/metrics, and reviewing plans we determine when to fund a company.

2. Terms: are terms fair and transparent?

Funding platforms need to be transparent about the terms that their funds are able to negotiate with the companies that they invest in, what terms other investors in the round are receiving, and previous funding details.  I’ve seen multiple cases of companies raising money on other platforms at significantly worse terms than those that FundersClub and other venture capital firms invested at, and this fact isn’t being disclosed anywhere on their site. This behavior is potentially misleading to investors and is not good for anyone in the ecosystem. This is particularly bad when some platforms out there are making claims like: “Investors on [ABC platform] are investing on the same terms as the professional investors.”

FundersClub addresses this with two approaches. First, we typically ask for and receive the same terms as other institutional investors in a round (this isn’t always possible, but we try.) Second, for each company we make every effort to gather and display the previous financing history including amounts, dates, and material terms of previous investors. If we don’t receive the same material terms as other investors in the round, then investors on our platform know about this. This builds transparency and visibility into the funding history of each company on our platform.

3. Fees: are the fees charged enough to cover the costs for the entire lifecycle of the investment?

Platforms that are charging no fees or really low fees are playing a dangerous game of not sufficiently capitalizing their funds and potentially putting their investors in dangerous situations down the road. For platforms that choose to operate through pooled LLCs (benefits of which includes smaller check sizes, access to hard to get deal flow), the fund operational costs of items like banking, accounting, legal, state filings, and other administrative costs for each LLC fund add up over time. It can take 4-7 years, or longer, from initial investment for a startup to see a liquidity event (M&A or IPO), as it takes years to build companies (of course not all companies will see liquidity events.) For a single LLC, this can mean anywhere from approximately $15k - $100k of costs over the lifetime of a fund (the wide range depends on a number of fund specific factors.)

Investors need to ask: what happens to these investments when the LLC runs out of cash to cover expenses? Let’s consider a platform that charges no fees and raises an LLC fund with 50 investors in it (the legal max is 100 for a 3(c)1 exempt fund.)

The fund starts off with no cash to cover fund expenses

Delaware LLC Formation cost: $90

SEC and state securities filing costs for 50 investors: $2k-5k

Accounting costs for year one: $3k-$5k

This fund will presumably run out of money in year one and need an additional cash infusion. And this calculation doesn’t even include any legal or banking costs. Who is going to pick up the tab for the fund in year two and beyond? What happens when the startup platform that manages the funds goes bankrupt and there is no cash left to pay the fund costs? These are scenarios that can and will happen; platforms that ignore such considerations do so at the expense of their customers.

At FundersClub, our fee structure includes an administrative fee. The administrative fee is 10% of invested funds, 100% of which goes to cover third party out-of-pocket expenses/administrative costs of the fund. Neither FundersClub or any of its affiliates or employees receive any compensation from the administrative fees. Any administrative fees that are not used for expenses are returned to investors. We do this because we are working on building something sustainable with FundersClub, and we want to do our best to protect investors on our platform; making sure that our LLC funds have cash in the bank to cover expenses is important to us. In the event that something happens to FundersClub, the FundersClub venture funds operate as LLCs that could be managed by a replacement manager. Currently, in cases where 10% of invested funds are not enough to cover the fees of the fund, FundersClub is prepared to advance money to support the funds cash needs. Further we have planned for setting aside additional capital to support a continuity plan.

4. Financial incentives: how does the platform make money and what are its incentives?

This one is critical to understand because incentives and behavior are so tightly linked. The incentives of a funding platform need to be known and transparently communicated to investors. Generally, platforms take two approaches: financial incentives based on upside and financial incentives based on volume.

Let’s consider the incentives and resulting behavior of each approach. Operating as a Venture Capital advisor is an approach that we pioneered by receiving a historical no-action letter from the Securities Exchange Commission and by being admitted as the first and only online platform in the National Venture Capital Association. Venture Capital advisors are incentivized by the upside of an investment through carried interest, which shares a portion of the investor’s profits with the Venture Capital advisor. If the investor doesn’t make money, the Venture Capital advisor receives no carried interest compensation. We chose to operate as a Venture Capital advisor because we felt the incentives of such a structure would best align with those of our founders and those of our investors. As a Venture Capital advisor, it would be a waste of time to put up a company that we don’t believe will turn a profit for our investors. This is not the case with a broker-dealer commission only model. Broker-dealers are financially incentivized to drive transactions, which churn out fees. Brokers are there to assist investors in executing transactions; as long as there is a buyer and a seller, the broker is agnostic to the value of the opportunity.

Further, many platforms charge startups to be listed on their site (either by charging the company cash or a percentage of the amount of funding raised). The incentive here can quickly lead platforms to create volume and earn fees by listing more companies. FundersClub does not charge startups to raise money; we believe the very best founders should not and will not pay for fundraising. These factors might mean that FundersClub is likely to list fewer investment opportunities at any one time than a site that just wants to create volume or earn fees by listing more companies. Investors should not judge the success of a platform simply by the number of investments in process on the site.

5. Long term platform viability: how much capital and who is behind this platform?

Investors should examine the financial backing and backers behind the various platforms out there. While some platforms have raised large rounds of funding from reputable investors, we are seeing some platforms pop up with flimsy balance sheets; many of these players will not stand the test of time. FundersClub raised ~$6.5M from some of the most reputable venture investors in the world (First Round Capital, Spark Capital, Intel Capital, Felicis Ventures, Y Combinator, and many others); like any startup there is obviously the chance that something happens to FundersClub, but we purposefully chose financial backers with deep pockets and a long term focus.

6. Legal counsel: who is advising the platform?

You get what you pay for and legal advice is no different. Platforms that operate under shoddy legal frameworks can spell disaster for investors, platforms, and companies that choose to work with them. We work with top-tier law firms (and we proudly and transparently show them on our website.) Here are our legal partners:

Wilson Sonsini Goodrich & Rosati

Sidley Austin LLP

Cooley LLP

Do you know what law firms are supporting the legal frameworks, contracts, agreements, and processes of the funding platforms you are working with? If not, you should find out; if you cannot find out, find a different place to invest your money.

In Conclusion

These are exciting times and we are still in the early innings of the space. A lot of innovation is happening in the way startups are funded, and I believe long term this means more innovation for the world. People who are new to angel investing should take their time, get educated, and understand the investing ecosystem before they dive in. Overall, investors should continue to think long term and critically examine the quality of the platforms that they are using to make investment decisions.

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FundersClub's Stance on General Solicitation

BY ALEX MITTAL, CO-FOUNDER AND CEO OF FUNDERSCLUB           

                       This week we’ve seen numerous articles in the tech press covering the SEC’s lift of an 80-year ban on what is known as general solicitation. The lift of the ban allows entrepreneurs, online fundraising and investment platforms, and other issuers to start marketing investment opportunities directly to the general public subject to specific SEC regulations. Below is an overview of how FundersClub views this new operating environment and its stance.

Overview

First, our decision-making framework: We’ve always made platform-wide decisions based on facts and circumstances that are known to benefit both investors and startups, not hype. This deliberate and facts-based approach is what leads to sustainable wins, which is our economic incentive as a VC.

Our stance on general solicitation is no different, which is why we’re opting to defer participation in general solicitation until it is a clear win for investors and startups. The reality is that as of today, top VCs, top incubators and accelerators, and the leading law firms advising investors and startups currently regard public fundraising as a question mark. Many are actively advising against it, and for example, are cautioning investors against companies who’ve participated in public fundraising to protect the investors.

While we believe in the merits of increased transparency enabled by general solicitation, at this moment both startups and investors who participate in general solicitation are being put at unknown risk. Although other online platforms appear to be shouting from the rooftops about the merits of general solicitation, it is a fact that those at the center of the startup ecosystem remain cautious and are not yet convinced.

The Issues

Overall, the key problem is it is still very much a grey zone. Startups that engage in general solicitation must verify all of their investors’ accreditation statuses, but the SEC didn’t specify exactly what’s required to do so. Failure to properly verify could force a startup into bankruptcy for blowing its securities exemption. The SEC has also proposed a new set of additional regulations which they can implement at any time. Aside from creating additional overhead, the penalty for slipping up on them is a one-year ban on fundraising, another virtual death-sentence for young startups. Because startups rely on the broader ecosystem to succeed (it takes a village to bring a startup to exit or IPO), it is irresponsible to pull startups in a direction that taints them with such risk. We aren’t anti-general solicitation; we’re simply calling for more clarification from regulators and agreement from the ecosystem to ensure startups and investors are protected before jumping in.

From the investor standpoint, we're also concerned that general solicitation is currently being used to raise money under investment terms that investors may not fully understand. For example, we have already observed many instances where opportunities made available this week via general solicitation are being offered at different terms compared to what institutional investors like FundersClub are buying in at or seeing privately, with no disclosure made to the public investors that they are receiving worse terms. General solicitation has merits but the process will need to be carefully managed to protect both startups and investors in order to lead to sustainable wins.

Our Actions

We are in dialogue in Washington DC, in Silicon Valley, in Silicon Alley, with VCs, incubators/accelerators, angel groups, founders, lawyers, and others to arrive together at an ecosystem consensus before suggesting that public fundraising and investing is advisable for investors or startups.

At times you may notice we are quieter than others--we like to talk softly while carrying a big stick. I hope you know we are always working tirelessly, often behind the scenes, to advocate for the community’s best interests.

I'm very humbled by what the FundersClub community of investors and founders has accomplished to date as we continue to responsibly chart new territory. I look forward to funding the future together with you and to understanding how our team can continue to best serve you.

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EVALUATING A STARTUP: HOW AYDIN SENKUT MAKES INVESTMENT DECISIONS

BY FELICIA CURCURU, VP OF USER EXPERIENCE AT FUNDERSCLUB

  I had the pleasure of interviewing Aydin Senkut, Founder of Felicis Ventures, at the UPROUND Conference on Sept. 12.  In the past five years, 47 Felicis backed start-ups have been acquired by firms such as Google, Facebook, Twitter, Groupon, Microsoft, AT&T, Disney, Ebay, Intuit and others.  This is quite an impressive track record.  

I asked Aydin what he looks for in startups he invests in.  He emphasized the importance of picking the best founders and he said he looks for "product visionaries": founders who have an acute vision of a product or service that fulfills a very important need.  He spoke about the best founders having an "obsession with building something that is really really awesome" and that their vision is "infectious," inspiring others to join their mission.  One interesting tip: He looks for companies that are "10x" in something - 10x cheaper, 10x faster, or 10x easier. He says this is a good indicator for the startup to be successful long-term.  He also said that sometimes investors get bogged down in due diligence, but if there is a great founder and an amazing product that customers are saying "wow, I love this, you can't take this away from me," those are the most important things to look for.

Aydin went so far to emphasize the importance of investing in the best founders, that he said he tries to invest in the best founders and startups irrespective of stage, location or valuation.  This point can be controversial with some seed investors who may turn down deals due to perceiving that valuations are too high.  He said most of the 47 exits were not cheap deals; they were expensive deals: "If you pick the best founders, no matter what you do, you are going to do great.  Whatever else you do almost doesn't matter." 

He also spoke about his willingness to work with companies outside of Silicon Valley, both in other cities in the US, (he made a recent investment in Nashville) as well as in other countries including Canada, Brazil, Finland. "Talent and innovation is global, " he says. Aydin believes in some of these places there is significant talent, but sparse seed capital, which provides interesting opportunities for seed investors willing to venture to other parts of the world.

Aydin ended the chat on a humbling note saying that despite his $3.2B in enterprise value of exits, the companies he has passed on are more than 2x that.  He said he continues to learn from his successes and failures. He's learned that while some founders might come off as extremely tough, difficult or even slightly "crazy," these could also be the qualities that help them break through walls, and what makes them unique.  Instead of getting turned off by them, he has realized that this could be the very demeanor that can make them successful.

To watch the full interview go to: http://www.youtube.com/watch?v=2hy7kK2SVQQ 

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Fundraising Tips For First-time Startup Founders

By Alex Mittal, Co-Founder FundersClub

Many first-time entrepreneurs obsess about fundraising, and worse, let it take priority over what actually matters–building product and talking to customers. Having raised more than $30M of angel and venture capital across three of my own startups, I’ve made my share of fundraising mistakes and want to spare first time founders some pain with some hard-earned lessons.

Before fundraising, consider not fundraising

Excluding certain specialized industries (e.g. pharma, energy, medical devices), it’s generally inexpensive to build a company these days. Even if you’ll eventually need to raise capital, it’s possible to prove your initial assumptions and verify “product-market fit” (i.e. that people want what you’ve got) before shopping for investors. As a sign of just how much has changed, when I was starting my first company less than a decade ago, I had to buy RAM, CPUs, motherboards, and other components, build my own servers, and collocate them due to the amount of computation we were trying to perform that surpassed hosted server capabilities. Today, nearly everything has been turned into SaaS or “on demand software” (including server hosting), greatly lowering the amount of money required to verify that your business is real.

Avoiding raising money may make sense, not only in the beginning of your startup’s rollout, but also for the rest of its history. The proposition of taking $1 from an investor and returning $10+ to them creates a lot of pressure that may not make sense for your business or market when compared to bootstrapping.

VC money in particular carries the expectation that you’re going to build a $1B+ business, and relatively quickly. Somewhat ironically, as reported by the Kauffman Foundation, of the fastest-growing private companies in the United States from 1997-2007 identified in the annual Inc 500 list, only 16% had taken VC money. By that data, one could speculate that you have a higher likelihood of building one of America’s fastest-growing companies if you avoid VCs than if you work with them. Of course, many of today’s most recognizable tech giants did partner with VCs, and I personally have involved VCs in all of my startups, so you’ll have to evaluate your specific circumstances.

So why does this discrepancy exist? I have a working hypothesis that the very best VCs do positively contribute to building category-defining large businesses, especially technology-driven businesses. However, there are many business models that simply don’t need VC capital to grow quickly. Companies like Dell, ShutterStock, and Esri all purportedly never raised VC capital. Don’t take it as a given that you must raise capital to start a successful company.

If you must fundraise to prove initial assumptions, raise as little as possible at first

I estimate $5-50k is enough to prove initial assumptions and demonstrate that real demand exists or does not exist for most products or services. That’s a sufficiently small amount that you can conceivably scrape the sum together from family, friends, and friends of friends. These individuals will be more willing to invest on the merit of you and your character as a person, rather than your non-existent business. Other relatively low-hassle sources at this stage include university entrepreneurial grant programs and business plan competitions, which are becoming increasingly more prevalent. Some startup founders have even used Airbnb income (if you have a spare room to rent) to finance their early operations.

If none of the above is at your fingertips, you can still figure out how to hustle to put some money in the bank, ideally by doing something at least tangentially related to what you’re trying to build so you can gain helpful market insights, experience, and connections at the same time. It’s probably a waste of your time to speak with people who call themselves angel investors or VCs at this point, although you could get lucky if someone happens to like you. Some people advise that you speak with investors early and often to help develop relationships for down the road. That may hold true for later in your trajectory, but right now, it’s a waste of your time. Besides, they’ll probably try to give you advice about what to do. That’s the worst thing ever at your nascent stage– customer demand and data should be your guide, not investors’ advice.  It’s unlikely most investors will be able to offer good advice that trumps simply getting your hands dirty and closely understanding what the customer wants.

Alex Mittal is Co-Founder and CEO of FundersClub. For more information go to www.fundersclub.com.

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A few minutes with Alex Mittal, CEO and Co-founder of FundersClub

Reposted from Accredited Investor Markets (AIMkts)

Venture Capital

  By: Alicia Purdy, Contributing Editor, AIMkts

FundersClub is a new type of venture capital platform, built around a unique online marketplace that allows accredited investors to become equity holders in FundersClub-managed venture funds – which then fund pre-screened, private companies.

1. Recently, the SEC officially recognized FundersClub as a venture capital adviser and it is the first time in history the SEC has recognized the concept of online venture capital – what predictions can you make about what this will mean for the investment world?

The VC industry’s digital coming of age will take a while to fully play out, but it will have transformative impact on the innovation economy.  Similar to how the Internet has transformed other industries, we will in time see the Internet facilitating a greater level of transparency, efficiency, and scalability in the funding and supporting of innovative businesses.  This will benefit individual and institutional investors, entrepreneurs, and today’s top VCs – all while increasing societal value and wealth creation.

2. Why is FundersClub the first ever to do this? Why hasn’t anyone else done it?

It wasn’t for lack of trying.  As with most big ideas, we were not the first to attempt to bring startup investing online, and plenty of earlier, failed attempts precede us (and more will no doubt follow us).  FundersClub’s progress is attributable to a combination of factors.  Our team is comprised of a syndicate of serially successful entrepreneurs, angel investors, and VCs.  The insights gained from our combined experiences allowed us to build software that today helps us tap into a vast network for receiving dealflow, conducting due diligence, investing, and adding value to our investments. Certain market trends also facilitated our launch.  For example, there is a growing shift of value creation out of the public markets, which is sideling millions of investors and causing them to seek alternative ways to invest in innovative companies.  We also structured our business model to fully align our incentives with those of the investors and entrepreneurs we serve, which impacts every decision we make.  We don’t pocket any money from investors’ invested capital, for example, and instead are compensated solely via a percentage of investment profits.  We are therefore not incentivized by selling investments to investors or fundraising for entrepreneurs, but rather by attaining successful outcomes for both investors and entrepreneurs.

3. What implications do you predict that a never-done-before online VC platform could have for accredited investors?

VC has a long and storied history.  Although the industry has faced its share of issues, at its best, VC has yielded iconic and innovative companies we now take for granted that have enriched the investors who supported them (e.g. Google, Apple, Amazon, eBay).  By bringing transparency and efficiency to VC, we aspire to maximize success for our investors and entrepreneurs.  We also seek to make the startup asset category accessible to accredited investors who currently do not have access to investment opportunities normally reserved for institutional VCs and their limited partners (who typically include pension, hedge, and endowment funds, and large family offices rather than individual accredited investors). We also seek to make investments available in such a way that allows for portfolio diversification with much lower levels of capital than conventionally possible. Finally, it’s important to point out that startup investing is still a high-risk, high-reward asset category, and it’s unlikely that that will change.

4. What about for other types of capital-raising platforms?

It’s difficult to speculate about other platforms.  We’re more a VC platform, incentivized by successful outcomes for investors and entrepreneurs, than a fundraising platform incentivized around raising money.

5. What FundersClub does is sometimes mistaken for crowdfunding, but you have been clear it is VC-only – for accredited investor.  Can you elaborate?

We have little to do with either equity crowdfunding or the JOBS Act.  During our founding, the public dialogue around online startup and private company investing was dominated by equity crowdfunding and the JOBS Act, but we created our own path based on the experiences and best practices of our team.  Specifically, we invented our model for online investing in private companies—online VC—to bring the power of the Internet to VC.  In so doing, we’ve avoided some of the problems that equity crowdfunding brings in its present form.

6. Such as?

For starters, the SEC has yet to finish writing rules to protect investors who plan to engage in equity crowdfunding. But beyond this fundamental point, there are also substantial gaps in the legislation itself, such as how to prevent fraud, how to minimize investors’ exposure to low-promise opportunities, how to avoid the potential adverse selection problem where only startups who can’t attract value-added capital pursue crowdfunding, and how to avoid overwhelming startups with the overhead of hundreds or even thousands of shareholders while still protecting investors appropriately.  In contrast to this ambiguity, FundersClub is taking what works from a tried and true investment model—venture capital—and improving it with the power of the Internet as well as the recommendations of thought leaders in the VC industry who have weathered both success and failure over multiple decades.

7. FundersClub is the first and only online platform to be granted membership in the NVCA so far, which is a great way to attract wary investors – how has that changed things for FundersClub?

The NVCA, the National Venture Capital Association, is the trade organization of the venture capital industry. Its members include all major VC funds.  FundersClub’s membership in the NVCA was not intended to attract investors, but rather to give our investors and our entrepreneurs a seat and a voice at the table of the VC industry. We are now an active member of the NVCA and we are both impacting and learning from best practices of the VC industry.

8. You have solid, personal experience in raising capital for startups, so what set of circumstances/experiences led you to start FundersClub and what led you to believe this type of platform would be successful?

It’s true that our personal experiences raising capital, creating startups, successfully exiting, and investing in startups caused us to approach FundersClub with a first-hand viewpoint that has helped us along the way.  However, more than our personal experience, it is our focus on soliciting and being responsive to feedback that I credit for our success to date.  Before launching, we spoke with and incorporated the feedback of hundreds of individuals across the startup ecosystem, including entrepreneurs, VCs, angel investors, lawyers, accredited investors, and others.  We continue to collect feedback every day that informs our ongoing decisions.  We ultimately did not build FundersClub for ourselves, but for the entrepreneurial community and our goal is to build something that people love.

9. You and co-founder Boris Silver were featured in Forbes’ “30 under 30: Technology” and it was noted that you used FundersClub’s platform to fund FundersClub – comments.

We raised a $6.5M seed round for FundersClub.  Of this, $0.5M was invested by FundersClub, and $6M was invested by other top VC and angel investors. FundersClub was FundersClub’s first investment. Since then, we have seen most of our subsequent investments follow this pattern, with the startups augmenting capital raised from top VCs and angels offline with capital from FundersClub.  This is not surprising since it is quite common for top startups to raise capital from a syndicate of investors rather than a single investor, and often preferred by both the founders and the investors since it gives the company a more diverse investor team.

10. Does FundersClub attract a certain demographic or type of investor? What draws them to you, over another type of investor?

Yes, because of the high net worth and income requirements, FundersClub members tend to be highly accomplished and connected in their professional careers and industries.  They also tend to be highly engaged in the world around them since FundersClub enables individuals to have a direct impact on innovative, disruptive ideas.

11. What are some of the beneficial differences between investing through FundersClub versus investing into a company directly as an angel investor?

One major benefit is access.  Because FundersClub is a VC and institutional investor with a track record of funding top startups, we enable individuals to gain access to investment opportunities normally reserved for only top VC funds and prominent angel investors.  A second major benefit is diversification.  Typical minimum check sizes in the types of deals the FundersClub is able to access are normally $25,000 to $500,000 or more, whereas FundersClub makes available exposure to these types of opportunities for as little as $1,000, enabling diversification and portfolio development with much lower amounts of capital.  A final benefit is due diligence. While we expect investors to conduct their own due diligence on investment opportunities and come to their own conclusions on whether a given opportunity is one they should pursue, we conduct a rigorous vetting process prior to listing a company on FundersClub.  Fewer than 5% of referred companies end up being listed as a result of this process.

12. What are some offline networking opportunities FundersClub has for its active members, its startups, and its dealflow partners?

FundersClub hosts offline member events in selected cities to augment our online activities. These include events for our portfolio companies and their founders, events for our investor members, and mixers that include both.  Historically these have been networking events, though we will be rolling out educational and workshop events as well.

13. Your background also includes leadership in a non-profit that has provided running water to thousands of people worldwide, does or will FundersClub do anything philanthropic?

We view our current activities as having a large social impact.  Our vision with FundersClub is to transform lives and create prosperity through funding innovation. We empower individuals to have an impact on disruptive ideas, and we promote innovative change through sustainable means (startups).  As we touch more people through our network with our scalable and growing platform, we also inspire more dialogue around innovation that might not otherwise occur.  We are also beginning to fund deserving businesses in geographic regions that are not traditionally recognized as tech hubs and that have often been forgone by the traditional investment community due to information asymmetry.

14. You have an asteroid named after you – why?

Before I became an entrepreneur, I was very active in science research. I generalized the field of DNA nanotechnology by proposing and then creating the first self-assembling nanostructures composed of artificial DNA. The intended application was to use these as scaffolding to create self-assembling nanowires and ultimately self-assembling computers and other devices. My research was published, won numerous awards, and MIT Lincoln Laboratory decided to name an asteroid after me as part of winning an award for young scientists.

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FundersClub begins planning the "FundersClub International Incubator and Angel tour"

Since our launch, incubators, accelerators, angel funds and startups from around the country and around the world have reached out to us.  FundersClub launched exclusively with Y Combinator companies, and we are extremely interested in expanding beyond Y Combinator and outside of Silicon Valley in the near future.  We are excited about the opportunity and potential for innovation outside of Silicon Valley. Learning about opportunities from trusted incubators and accelerators is compelling to our organization. We strongly believe in the power of community and the quality of companies that we bring to our community reflects this belief.

We are also interested in sourcing startup investment opportunities from our Members.  We are building the functionality for Members to directly refer startups to us.  For now, if you have a startup to refer, please introduce them to Felicia on our team directly, at [email protected].

We are planning a tour where FundersClub will visit the world's leading incubators, accelerators, angel funds and startups.  We will also host FundersClub Member events exclusively for FundersClub members in different cities (FundersClub is going to become invite only in the near future).  We will have a kick-off event in San Francisco. Please stay tuned for events in your city.  The cities we are currently planning to visit are below, email us at [email protected] and let us know if you'd like to be involved with the FundersClub event in your city, or if you'd like us to expand our tour to your city.  We look forward to meeting many of our Members in the coming months.

Cities on "FundersClub International Incubator and Angel tour" - more coming soon:  San Francisco, New York City, Boston, Philadelphia, Chicago, Los Angeles, Washington DC, Vancouver, London, Paris, Madrid, Milan, Berlin, Sao Palo, Santiago, Shanghai, Mumbai, Tokyo The FundersClub Team

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Dinner at the FundersClub House with Alana Yoel and Richard Shane

Just another example of why our dinner tradition needs to continue.  Richard (former Sequoia-backed tech entrepreneur-turned co-founder of Rocket Fizz, a soda pop franchise chain) brought 4 eclectic flavors for a tasting alongside dinner.  Peaches and Cream was the bomb, though Toxic Slime was the crowd favorite.  Can’t wait until they open their shop on University Ave in Palo Alto. Alana (co-founder of Agent of Presence, a wearable technology/fashion company) dazzled us when explaining how the dress she designed lights up to the beat of your own heart. As seems to be happening these days at FundersClub dinners, a mutual connection was made...Rich offered to put Alana in touch with his friend who ran and sold a large fashion brand to help as Agent of Presence gears up for its first mainstream product release.

Rich is one of our early users.  Alana and Felicia met at a muni stop in San Francisco a while back and have been good friends ever since (true story!).

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Dinner at the FundersClub House with Marya Stark, Jeff Stern and Eric Chernoff

Another night with good friends at the house.  Felicia’s friend Jeff is helping to launch a political campaign for an aspiring President of a foreign country. Marya is co-founder of Emerge America, which has over 600 women who’ve graduated its program and are now in political office.  Eric is a good friend who is at Harvard Business School and in the bay area completing an internship at a start up for the summer. 

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Dinner at the FundersClub House with Jude Gomila, Paul Stamatiou, and Akshay Dodeja

We stretched the limit of our small dining room table and augmented it with boxes of beer leftover from our launch party with Jude (co-founder of Heyzap), Paul and Akshay (co-founders of Picplum).

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Dinner at the FundersClub House with David Murray, David Mann, and Brian Bolton

Alex, Brian (ex-Apple), and David M (Khosla Ventures) geeked out over touch screen nanotechnology. Alex’s last startup was a touch screen nanotechnology company. Brian was one of Apple’s lead engineers working with Steve Hotelling, Jony Ive, and others to bring the world's first projected capacitive touch screen enabled smartphone to market (the much beloved iPhone). David M works at Khosla Ventures and was a Stanford PhD in nanotech and as a result has reviewed a lot of commercial nanotech for Khosla.  In a hardware-centric dinner, David Murray (head of product at Raptr, user experience lead at Atari, and product manager at Google), represented for software and marveled at his experiences starring in an upcoming Bravo reality TV show about entrepreneurs in Silicon Valley.

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Dinner at the FundersClub House with Sukanta and Moushumi

2 early FundersClub Members and supporters.  Thanks for all of the helpful feedback!

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Dinner at the FundersClub House with Ayush Agarwal and Colin Evran

Ayush, a Google product manager, was one of the first FundersClub investors.  Ayush and Colin (below), a Stanford Business School Student and entrepreneur, have been extremely helpful in giving product feedback during FundersClub's early days.

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Dinner at the FundersClub house with Jing Chen, Charles Yong, and Rishi

Tonight we were honored to host Jing, Charles, and Rishi. Jing and Charles run what might possibly be the largest gaming company you've never heard of.  Rishi is an early FundersClub supporter and just left Google (today!) to launch his own start up.

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Dinner at the FundersClub House with Tuff Yen

Dinner at the FundersClub House with Tuff, Chairman of the Seraph Group.  Awesome feedback on newly launched site, awesome dinner.

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FundersClub Launch Party was epic.

About 200 people showed up and we went live during the launch party itself.  Glad we could share our launch with such an amazing group of entrepreneurs, investors, and friends!

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FundersClub is now live. We are changing the way the world fundraises and invests. Fund the future with us.

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Dinner at the FundersClub House with Doug Sherrets

Mini-Wharton reunion in Palo Alto.  Doug is an early Facebook consultant and Google employee. All four of us went to Wharton at UPenn together.

Side note: You can see one of our core philosophies in the background-- YOLO.