They like to say they are Bloomberg, Nasdaq, and AngelList rolled into one. If so, they could become quite successful
Funderbeam, a global investment platform for would-be startup investors, is rolling out its service today in the hopes of extending venture capital to a larger community.
The company is launching Funderbeam Markets for early-stage investments in startups, aiming to become the first and last stop for those investments online. They will secure their system and verify payments with blockchain technology.
Co-founder Urmas Peiker spoke with Geektime ahead of the announcement, telling us that they are looking to create a primary market event similar to an IPO where all funds are pooled together to form syndications of investors. The platform already includes five startups with their own syndicates: Huntloc, Paytailor, Shipitwise, SportID, and Sportlyzer.
The syndicates page on the site resembles the browsing page for Kickstarter: how much money have these companies raised, how much are they looking to raise, and how much longer their fundraising campaigns will last.
From there, the “secondary market means trading. Syndication through our platform means that the investors will receive tokens against their investment and such tokens become tradeable on the platform. Literally, this means that there is now on-demand liquidity for all the investors available and investors do not have to wait X number of years for the actual exit event.”
Fundraising for their own company has focused on Estonian and British investors thus far. They’ve raised from Jaan Tallinn, Rockspring, and angel investor David Gammon. They also have money from Kei Aar and #TS Capital Partners with some bootstrapping cash from co-founder Kaidi Ruusalepp.
— Funderbeam (@funderbeam) April 16, 2016
They now find themselves against other small investment platforms like AngelList and equity crowdfunding firm OurCrowd. It is another indication that private markets are growing and startups are eager to escape the perceived financial (read that “regulatory”) burdens of going public.
Shift from public markets to private ones
With some even calling IPOs the “new down round,” there is a good chance there will be more attempts to open private investments to a larger crowd of people who aren’t seeing chances to invest their funds in increasingly fewer initial public offerings.
“Our platform contains the features that are resembling or in some cases are identical to a crowdfunding model. However, we also have data analytics (more than 150,000 early stage companies’ profiles globally), primary and secondary market together. We like to say here: if Bloomberg, AngelList and Nasdaq would have a baby, it would be Funderbeam.”
When asked if the platform was prepared to deal with compliance issues and be in line with local laws around the world, Peiker told us that Funderbeam took those laws very seriously. That being said, the platform would not be launching in the United States just yet, presumably in order to prepare with American regulations. Their home base of Estonia, though, is clear for take off.
So will more private market brokerages change the game and get more people with smaller wallets into the startup equivalent of penny-stock investments?
“There are multiple assumptions regarding the future. Firstly, we truly hope that making cross-border investments and raising funds cross-border is now made simple. Secondly, investing in early stage companies are made more liquid.”
Perhaps inadvertently hinting to the issues that will soon challenge these sorts of platforms, Peiker added a third point.
“Thirdly, the early stage companies learn that they will benefit more [from] my being transparent and disclosing information that is needed to make an investment decision. The barrier of investing has been lowering over the last years anyway. However, by combining primary and secondary markets we believe that this creates more investing opportunities to everyone.”
It is this reporter’s suggestion that Peiker’s words could allude to a new regulatory future for private investments. While mega startups (or should we say giga startups?) like Uber raise billions without the same rules imposed on public companies to have transparency, such as publicly available quarterly reports, the increasing prevalence of private investments could mean that investors will demand a similar level of transparency from private companies in the near future.
Funderbeam was co-founded by Kaidi Ruusalepp, Villu Arak, and Urmas Peiker in 2013 as a data aggregate for startups and their investors. They have 15 employees and are based in Tallinn, Estonia.