3 opportunities for collaboration between business angels and crowdfunding platforms

Crowdfunding and investments by business angels are often seen as mutually exclusive. At Connect we see things differently. We believe there are exciting opportunities for collaboration that brings benefits to both type of investors – and at the end of the day makes it easier for early stage companies to access capital necessary for growth. That’s why we entered into a collaboration agreement with FundedByMe in the end of August this year.

Less risk, more money

The opportunities come from the complimentary nature of the solid investment knowledge of experienced business angels and the market validation mechanism that the online crowd provides. Connect has identified three areas that we want to explore together with our business angel network and FundedByMe.

Market validation

Sometimes otherwise interesting early stage deals may have question marks related to the actual interest from the market. A campaign on a crowdfunding platform such as FundedByMe can be used to validate market interest for the service or product and provide a business angel or business angel network with valuable data to help making a better investment decision. 

Syndication 

By combining their investments with online investors an experienced business angel could take the lead for a larger round with a smaller amount. This opens possibilities to engage in more deals and build a more diversified portfolio. Crowdfunded investments could also be used to fill rounds where a sole investor might not be able to meet the funding requirements by the company.

Improved trust

Knowing that an experienced lead investor is participating in the deal can make less knowledgeable investors feel at ease. The lead investor provides his or her experience from due diligence and company valuation processes and builds trust for the deal and reduces risk. It also creates a natural learning opportunity for new investors to become better investors over time.

”Collaboration between crowdfunding platforms and business angels 
is a natural development that benefits entrepreneurs as well as investors”

Connect and FundedByMe explore new models

Connect has the largest network of connected business angels in Sweden and in the Stockholm area more than 140 investors are connected to the network. Through the recently signed collaboration agreement with FundedByMe these investors will be offered new ways to interact with the crowdfunding platform and the online investors at FundedByMe.

Connect’s business development program for early stage companies Språngbrädan, is a proven process to help companies become investor-ready. Through the collaboration with FundedByMe we are creating new ways for companies on FundedByMe’s platform to improve their chances to reach their funding goals. Companies that have participated in Språngbrädan will also be given special opportunities to participate and be highlighted on the platform.

For more information please contact Hannes Helander, hannes.helander@connectsverige.se.

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