Education Center

I don't know anything about investing in startups. Where do I start?

Welcome! Investing in startups can be rewarding, but is also considered risky. It is important to be educated on startup investing before participating. We have created this education center as one resource to help you on your way.

Individuals who invest in startups are called angel investors (Angel Investing), whereas institutions that invest in startups are called Venture Capital firms. Conventionally, only large institutional investors such as endowment funds, large family offices, fund of funds, and pension funds have been able to gain exposure to the returns of startups funded by venture capital firms. FundersClub lowers the barrier to diversify one's portfolio to include the types of investments traditionally targeted by top VC firms, and uniquely is open to both individual and institutional investors.

An investor that invests in a startup is buying a portion of the startup, with the intent to share in the possible upside were that startup to later become successful. Financial returns are realized by the investor when a liquidity event occurs, such as a secondary sale of stock, an acquisition, or an IPO. These events can take a long time (e.g. 4-7 years), and may not occur at all if the company is not successful, often resulting in a write-off of the entire investment.

As implied above, the venture investment asset category is generally known to be high risk, high reward. As a result, Diversification is a strategy employed by most professional startup investors to help balance wins and losses. In addition, although many endowment, pension, and other funds have venture capital holdings, they typically limit exposure to venture to 5-15% of their entire portfolio.

I am an experienced angel investor. Why should I invest on FundersClub?

Experienced angel investors use FundersClub for a number of reasons:

  1. FundersClub offers curated access to startup investment opportunities that may otherwise be inaccessible to angel investors.
  2. FundersClub allows investors to invest with lower minimum check sizes. The minimum check sizes are 10-20 times smaller than typical angel investments - $2.5K-$5K typically, vs. $25K-$250K. This provides an easier way to build a diversified portfolio. Read more about Diversification.
  3. FundersClub offers convenient online payments and legal documents
  4. FundersClub offers an easy way to connect with the broader community of startups and angel investors
  5. Active members can by invitation-only participate in the curation of startup companies on FundersClub and see/learn about interesting startups
  6. FundersClub typically makes available follow-on opportunities to double down on winners whenever possible to investors which would normally be out of reach to angel investors.

I am an entrepreneur trying to raise money. Can I get listed on FundersClub?

As an entrepreneur, you can apply to raise capital on FundersClub here.