Just over a year ago, I made my first equity crowdfunded investment.
The start-up I invested in, Betable, aims to conquer the world of legalized online gambling.
At the time, I thought the deal had a lot going for it:
I was investing alongside top venture capitalists (TechCrunch called it one of the year’s top deals), and Betable was addressing a $500 billion market.
But as reported in Crowdability’s very first article, here was my state of mind before I wired funds:
“Sweaty palms. Rapid heartbeat. Bulging eyes. Uh oh. Was I having a heart attack?
No. After taking a deep breath, I recognized the symptoms. What I had wasn’t dangerous to my health; it was dangerous to my wallet. “
I’ve been building and investing in start-ups for nearly 20 years, and I’m not a dramatic guy…
So what was I so worked up about?
Today I’ll tell you about the major concern I had back then, and the lessons I’ve learned since –
Maybe it’ll help as you begin your own journey into equity crowdfunding…
Wait a second… Who Am I Investing In?
I’d been involved with start-ups for years at this point, and I’d started to invest in more and more of them. Betable looked like a good addition.
But as I prepared to make my investment, I had an unexpected reaction:
Wait a second… who am I investing in?
I’ve never met these guys!
You see, traditionally, angel investing is something you do in person…
Not only do you spend time with the entrepreneur before investing in him, you spend time with him afterwards, too – to help if you can, and to keep tabs on the company’s progress.
Investing online, without knowing the entrepreneur, felt foreign to me.
So I took my foot off the accelerator…
And I re-examined all the thinking I’d done not just about Betable, but about angel investing, equity crowdfunding, and everything that Wayne and I were trying to do with Crowdability.
Eventually, my thinking crystallized:
While the “old fashioned” approach to angel investing made sense to me, it had significant flaws:
It’s incredibly time-consuming…
It limits you to investments in a specific location…
And unless you’re a brand-name angel with a lot of deal flow, you’re severely limiting yourself in terms of the number of deals you’ll see.
I decided I’d be better off focusing my angel investing efforts online, where there’s an ample supply of high-quality deals, and an efficient way to sort through them.
So, in the end, I made the investment.
I followed top venture capitalists like Greycroft and Founders Fund into the deal…
It gave me peace that they’d met the entrepreneurs in person, and would be helping (and hounding) them constantly.
My investment took place on an online platform called MicroVentures.
Now MicroVentures keep tabs on my investment for me, and they update me on everything from Betable’s sales figures and business development pipeline, to changes to Betable’s management team.
They’re really looking out for me. Since they only make money on Betable if I make money, our interests are entirely aligned.
No More Sweaty Palms
All’s well that ends well:
I’m excited about my investment in Betable…
No more sweaty palms or rapid heartbeat.
Betable is well positioned to be the leading real-money online game developer. Potentially, they could become one of largest gaming companies in the world.
And the fact is, I couldn’t have gotten access to it without equity crowdfunding.
So welcome to modern-day angel investing:
All the benefits of early-stage investing – with less commuting, and better deal flow.
P.S. If you’re interested in deals like Betable, and you’re looking for a way to get some diversification, MicroVentures recently launched a “fund” >>
It’s a way to invest in many of their deals with a single check.
P.P.S. Crowdability has no relationship with MicroVentures – but Matt does own a stake in Betable.