No. Like traditional VCs, we do not charge entrepreneurs for taking our capital. Typically 10%, or up to $25k (exact amount may vary by fund) of the capital pledged by FundersClub members is set aside in a fund. This administration capital does not go to FundersClub. It is used to cover the tax and legal fees associated with setting up a fund, and the ongoing operational costs of running the fund. This capital does not dilute your startup — for example, if FundersClub members pledge $250K, $225K is invested in your startup, and $25K is applied to the 10% administration fee. This is no different from fund expenses incurred by traditional VC funds.
FundersClub receives carried interest, or a percentage on the profits from an investment. We find that this method strongly aligns our interests with those of both our founders and investors, as we are not compensated unless there is a positive outcome for all parties.
As a general rule we try to avoid investing in companies that directly compete with one another. We do, however, invest in multiple companies within the same industry. To see which companies we have invested in, check out our portfolio.
Entrepreneurs interact with FundersClub, but are not required to interact with individual FundersClub investor members. Members decide whether to invest in your startup based on FundersClub processes and the information shared in your online profile. Therefore, you will not need to engage in phone calls, emails, and meetings with individual investors during the fundraising process.
We facilitate a moderated Q&A process by collecting questions from investors and sharing them with founders in an aggregated and efficient manner (there are typically 10-15 questions from members throughout the fundraising process).
Following the investment, FundersClub distributes monthly and quarterly updates, comprised of information we receive from your company, to your fund investors. You remain in control of the information distributed to your fund investors within these updates. While we strongly believe in the value of sharing regular and complete updates, you can choose to withhold any information that should only be distributed internally within the FundersClub team, and not shared with fund investors. In these updates, you are encouraged to share ways the fund investors can help (e.g. through introductions to potential business hires, partners, customers, etc.)