4 Online Platforms for Raising Startup Capital

Startup founders, take note: If you want to raise funds from angel investors or venture capitalists to grow your business, it recently became much easier to do so.

On Sept. 23, part of the JOBS Act went into effect, lifting the ban on general solicitation. This means that instead of being forced to seek introductions to potential investors privately, companies may publicly express their interest in equity fundraising.

Because the U.S. Securities and Exchange Commission maintains strict rules regarding whom you may solicit for investment funds, online fundraising platforms may be the simplest (and safest) option. Here are four leading investor-company matchmaking platforms to consider.

AngelList — This minimalist website allows startups and investors to search for the opportunities that are most relevant to them. Startups may post details about their founding team, a brief summary of their business, and details about their fundraising plans (available only to accredited investors). Startups may also post job openings and use the platform to recruit potential employees. Investors, once approved, may search for startups based on location, industry, name, funding level, and other criteria. Startups pay nothing to get listed; investors pay 5 percent of their investment’s value to AngelList. AngelList alums, which include GetAround, Artsy, and Life360, have raised more than $2.9 billion to date.

FundableThis site is similar to the crowdfunding platform Kickstarter, but in addition to allowing fans to donate specific amounts in exchange for rewards, the site enables investors to provide funds in exchange for shares of stock. Fundable charges startups $99 a month, plus a 3.5 percent processing fee for credit-card transactions. Although the option to solicit investors is new, some companies have already achieved substantial success: Ube, an app that allows users to control your home’s lighting via smartphone, has raised $925,000 through the platform to date.

Gust This platform, previously known as AngelSoft, exclusively focuses on matching entrepreneurs with accredited investors. To that end, Gust offers a variety of tools for developing effective VC pitches. You can use the site to create both public and private business profiles, to put together a video pitch, to search for investors, and to track investors’ activity on the site. Gust is free to entrepreneurs, and investors pay a fee that is not publicly disclosed. The site’s 1,000-plus investment groups have funded more than 1,800 startups in the past year. Pressly, a mobile startup, recently used Gust to solicit introductions and invitations to events; the founders credit the site with helping them raise $1.5 million.

Startups.co — With more than 300,000 companies and 20,000 investors in its stable, Startups.co is one of the largest platforms through which entrepreneurs and investors can “meet and mingle.” The platform is largely entrepreneur-focused, offering tools and expert consultants to help business owners create pitches and find investors. That level of service comes at a cost, however: The platform charges entrepreneurs $59 per month for access to its network of investors, plus flat-rate fees (starting around $300) for consulting services; there are no disclosed fees for investors to participate. The platform provides opportunities for businesses seeking both large and small investments: One music label received $1.5 million in funding through the site.

About Kathryn Hawkins

Kathryn Hawkins is a principal at the content marketing agency Eucalypt Media. She's written about business, marketing, and entrepreneurship for publications including BNET, TheAtlantic.com, Inc.com, and owns and operates the positive news site Gimundo. Follow her on Twitter at @kathrynhawkins.
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2 comments
Rick Matthews
Rick Matthews

PINDX is a new capital sourcing platform that my firm has used that is a great alternative to crowdfunding and has an opted in audience of over 40,000 investment professionals.  Very cost effective tool if you want to get in front of real investors in the capital markets.

PeoplePowerFund
PeoplePowerFund

Anticipated by the Summer of 2014 the S.E.C. will provide new rules for raising capital for start-ups and existing business.

The most fundamentally exciting aspect of the Jump Start Our Jobs Act of 2012 is that not only has the prohibition on general solicitation been lifted but so has the need to market exclusively to Accredited Investors as defined under regular D by the S.E.C.

A revolution is upon us and its exciting to think that every day investors, regular people can invest in their favorite main-street opportunities and receive equity in return for their capital.

PeoplePowerFund.com  was born to serve the community at large in this exciting new opportunity, we see it as an opportunity to re-ignite the American Dream

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