Investing platform FundersClub has closed the largest ever seed round from a Y Combinator company. The company raised $6 million for its marketplace that lets accredited investors invest in startups online.
There is a lot of buzz surrounding FundersClub for its innovative approach to venture capital. It carefully selects startups to feature on the site. Each company creates a profile and sets a fundraising goal. Once granted membership, individuals with an annual salary of over $200,000 or net worth of over $1 million can peruse the list and, if they choose, make an equity investment directly on the site.
FundersClub essentially carries out the due diligence process, acting as an intermediary between angel investors and the companies. Vetting companies and negotiating terms is time-consuming, and FundersClub assumes these duties to make the investing process more efficient. It also gives investors access to companies they wouldn’t otherwise be exposed to.
Once the fundraising goal is hit, the money is pooled together and invested under the FundersClub name, as one entity on the cap table. If/when there is a liquidity event, FundersClub distributes the proceeds to the participants in the fund.
Since launching in July, FundersClub startups have collectively raised millions of dollar,s and there are 3,400 registered members. FundersClub raised its initial $529,000 in capital using its own platform, with this official seed round tallying up at almost 12 times more.
The amount itself is not the only impressive facet of this round. The list of venture firms and investors is notable as well. Institutional participants include First Round Capital, Y Combinator, Draper Associates, Felicis Ventures, Spark Capital, Digital Garage, Intel Capital, Andreessen Horowitz, Start Fund, SV Angel, and General Catalyst Partners. Individual investors included Chris Dixon from Founder Collective and Box CEO Aaron Levie.
The money will go towards forming partnerships with a wider array of financial institutions and expanding the network. It will also accommodate high legal fees, stemming from concerns with SEC regulations that the team insists it does not violate.
With a seed round that dwarfs those of most other startups, it is the Coco de Mer (palm tree seed) of the investment world. Read more on VentureBeat.
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