Investing in start-ups without knowing the team, is often mentioned as a problem for investors. Even though online investing has made the process of investing in start-ups easier, there is still a gap where investors cannot meet the team in person and understand the business on a more
personalized level. As a result, a lot of the angel investing is based on geographical closeness, which makes non-local investors miss out on great opportunities.
more efficiently on the market. It is a co-investment model, diminishing risk. The system is based
on three parties, the leader, backers and the start-ups. The leaders, often Angels or Venture
Capitalists with experience and knowledge in the industry and a bigger deal-flow invests a bigger
amount of money into an enterprise. If not performing well, these investors face penalties in
both their reputation and their finance. Together with the leader, backers can invest smaller
amounts of money into the same enterprise. As a result of following the leader, the backers have
access to more start-ups than they would on their own and they get to learn much about the
industry. Lastly, the start-ups benefit from this process too. On average they get more capital
than usual and since the leader is responsible for the relationships with the backers and the whole
investment process, start-ups only need to be in contact with one investor.
Lately online investing platforms in the US have seen a great increase in syndicate crowdfunding. In terms of the
numbers of ventures raising capital, syndicates have in some cases overtaken other
investment models and this trend is projected to grow.
About the author - Cecilia Lundborg
Cecilia Lundborg is graduate student in Business Economics from Lund University, Sweden and has also studied International Business, Economics and Finance at the University of California, Los Angeles. Cecilia has a keen interest in international business and the online investment market. She is a currently working as a Trainee at Crowd Valley, doing research in the online investment market, writing reports to clients and is a writer for the Crowd Valley blog. Cecilia is passionate about the digital investment market and its global development.